Norfolk-based Lotus, the British sports car maker, is being bought by China’s Geely, which also owns the London Taxi Co and Sweden’s Volvo Car Group. Geely will take a 51% stake in Lotus and a 49% stake in Proton, which owns Lotus (via DRB-Hicom).

Lotus is essentially two companies: one is a highly successful engineering consultancy with expertise in composites and lightweight materials; the other is a loss-making manufacturer of sports cars.

Lotus made a loss of £28 million in the 12 months to March 2016, with car sales down by 240 to just over 1,500.

The attraction for Geely is Lotus’s light-weight technology, which the Chinese company hopes to use to meet emissions targets in its home market and Europe; it also wants the know-how to produce right-hand-drive models for markets in South Asia, Australia and the UK.

Daniel Donghui Li, chief financial officer of Geely Holdings, was quoted in the Financial Times as saying: “Reflecting on the experience we gained revitalising Volvo Cars, we also aim to unleash the full potential of Lotus Cars and bring it into a new phase of development by expanding and accelerating the roll-out of new products and technologies.”

It is another step on the road towards internationalisation for Geely, which aims to produce some three million cars across all of its brands by 2020 — and plans to use Proton’s manufacturing operations in Malaysia to enter new
Asian markets.

Meanwhile, Proton itself has been struggling recently and did not have the resources or technology to back Lotus. Proton made just 150,000 cars last year and was suffering declining market share in its home market.

It was bailed out to the tune of £280 million by the Malaysian government, which told it to find an overseas partner to enable it to expand its range of products and improve the quality of its cars.

Lotus has been losing money for years. Chief executive Jean-Marc Gales went “back to basics” when he took over in 2014, axing expensive R&D programmes and concentrating on making its core products lighter and faster. The firm cut its losses to £27 million last year.