GM BUYS LOTUS

February 17, 1986

(FORTUNE Magazine) – General Motors chief Roger Smith is still on a buying spree. GM acquired 60% of Britain's Group Lotus for $20 million and wants to shell out $12 million more for the rest. A longtime producer of classy sports cars, Lotus avoided bankruptcy by beefing up its engineering and consulting businesses. Current consultancy contracts total $43 million and account for more than half the company's profits. Lotus is widely respected for its work on engines, suspension systems, composite materials, and other design technologies. GM has been its biggest customer. Chrysler also has been a client, as has Toyota, which coincidentally owns 21% of the company. Will the Japanese giant, which has a joint car-making venture with GM in the U.S., sell out? Toyota isn't talking. GM spokesmen say they prefer total ownership, but can live with Toyota as a partner. They also say that Lotus would work for other automakers with ''continued confidentiality.'' The Lotus deal is the latest step in Smith's drive to rev up GM's image and technology. Says David Cole, an automobile expert at the University of Michigan: ''There is a shortage of first-class design talent in the world; $32 million is a low price to pay for such talent.'' In addition to engineering expertise, GM will be getting a line of world-class sports cars: the $55,000 Lotus Esprit, and the $20,000 X-100, similar to the once popular Elan and scheduled to debut in 1988. ''GM could almost develop its own version of Porsche, which is half engineering and half car manufacturing,'' says Daniel Jones, a senior fellow at the University of Sussex. ''It would also be buying an image of European styling and performance that it has never had.''

Lotus, renowned for its lightweight design philosophy and mastery of chassis dynamics, exerted a subtle yet profound influence on the C4's development. While the Corvette retained its characteristic American bravado, a newfound emphasis on handling finesse and structural rigidity emerged. The car's suspension geometry, steering response, and overall chassis balance bore the hallmarks of Lotus's engineering expertise, a stark departure from the more traditional American muscle car paradigm.

This nascent Lotus influence reached its zenith with the C4 Corvette ZR-1, a technological tour-de-force that showcased the full extent of the Anglo-American partnership. The ZR-1's LT5 engine, a marvel of engineering designed in collaboration with Lotus, represented a radical departure from the Corvette's traditional pushrod V8s. Its all-aluminum construction, dual-overhead-cam valvetrain, and high-revving capabilities were more akin to European sports car engines than the brawny American powerplants of the era.

However, the ZR-1, despite its impressive performance credentials, remained tethered to its American roots. GM, ever mindful of the Corvette's mass-market appeal, imposed limitations on the car's design and engineering, prioritizing cost-effectiveness and production feasibility over the unbridled pursuit of performance.