McLaren plans more models and higher margins
McLaren Automotive turned a profit in 2013 – which was ahead of schedule – and plans to remain in the black while aggressively adding models and dealers over the next three years.
Beyond that the supercar maker’s “dream” is to achieve profit margins closer to those of rivals Ferrari or Porsche within five years, CEO Mike Flewitt told Automotive News Europe.
The niche brand's success comes just three year after the carmaking arm of Formula One’s McLaren Group was formed. Without being specific, Flewitt said the Woking, England-based company made a “few million pounds” in operating profit last year. “The plan was only to break even in 2013,” he said.
News of the positive results has given shareholders confidence the bold idea to start a UK-based supercar maker in the midst of a deep and long European auto recession is working, Flewitt said.
It also proves that the company can be successful away from its former partner, Daimler’s Mercedes-Benz.
McLaren Group chairman and F1 team figurehead Ron Dennis took a big gamble late last decade when he persuaded shareholders to invest in a new company dedicated to making supercars.
Unlike the SLR McLaren that the company built for Mercedes between 2003 and 2009, the new automaker would operate without the backing of any major manufacturer, which some experts believe leaves it vulnerable.
“It is often the case that highly specialist carmakers benefit from being part of a larger automotive group, not least because development costs tend to be high and so being able to tap into research elsewhere in the company is a big advantage,” Jonathon Poskitt, head of European sales forecasting at LMC Automotive, told Automotive News Europe.
McLaren had previously created a supercar on its own, but the firm only made 107 of the critically acclaimed F1, which was launched in 1994. By contrast, McLaren Automotive last year sold “about 1,400” units of its debut model, the 12C, which arrived in 2011, and the limited-edition P1 hybrid hypercar that went on sale last year, Flewitt said.
The plan is to boost volume to 3,500 to 4,000 cars a year by 2016, the CEO said. By comparison, rival Ferrari sold 6,922 cars last year.
To reach its goal, Flewitt said McLaren next year will launch its most affordable supercar, which will start at about 120,000 pounds (146,000 euros) and sit below the newly launched 195,250 pound 650S, which replaced the 12C.
Separately, a company spokesman confirmed McLaren will launch a fourth supercar, which will fit in above the 650S and below the 866,000 pound P1.
The new car is due in 2016, which would help Flewitt keep achieve his stated aim of launching an all-new car or variant every year up through 2019.
Flewitt said McLaren Automotive spent 70 million pounds last year to develop new models, up from 68 million pounds in 2012 and 67 million pounds the year before that.
Like bigger automakers, McLaren saves by sharing technology between models. The new, entry-level car due next year, dubbed the P13 internally, will use a variation of the carbon fiber tub chassis that’s also at the heart of the 650S and the P1, Flewitt said. The new car also is expected to use a less powerful version of the turbocharged 3.8-liter V-8 found in the current lineup.
The extra volume created by adding the P13 will help spread costs. “You actually make a smaller margin on that car,” Flewitt said, “but a larger margin on the 650S because some of the overhead is shared across a greater volume.”
LMC’s Poskitt believes that McLaren Automotive’s ability to tap into the parent group’s F1 specialist knowledge in areas such as carbon fiber construction will keep a lid on costs.
No SUVs, more stores
So far the company has ruled out making SUVs or building sports cars with two small seats in the rear as Porsche has with the 911.
In addition, the company will add another 20 dealerships this year, raising its global total to 70. The next target is 100 dealerships by 2016, Chief Financial Officer Richard Molyneaux told Automotive News Europe. Like Flewitt, who was Ford of Europe’s head of manufacturing before joining McLaren in 2012, Molyneaux has experience managing costs at a volume automaker from his time as Opel/Vauxhall’s finance director of product development and purchasing.
Between them the two executives are realistic about the chances of achieving profit margins to match those of Ferrari or Porsche. Ferrari’s operating margin last year was 15.6 percent while Porsche’s return on sales was 18 percent.
“Our absolute dream would be a 10 percent return on sales,” he said. When pushed on when McLaren could achieve that, he laughed and said: “Come back in five years and ask me.”
You can reach Nick Gibbs at firstname.lastname@example.org.