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Thread: McLaren cuts 30% of its workforce

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    Default McLaren cuts 30% of its workforce

    https://news.sky.com/story/coronavir...force-11994843

    Maybe McLaren survives. Maybe it doesn't.

    Their platform is excellent, with the carbon tub. Their engines are fun. Their chassis engineers are great.

    But their platform can't make an SUV. The engines aren't easily converted to hybrid, and McLaren doesn't have the resources to build a really good hybrid system for the next round.

    I thinik either bankruptcy or acquisition are in their future.

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    Ricciardo bankrupted McLaren. Blame the Aussie.

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    I saw a 570S and 720S driving in south Calgary today and I would buy one if I could. Saw the 720S right after the hail, that would have been scary if he was out in that...

    And I am constantly amazed how much mileage they are getting out of the engine and carbon tub. I hope they can survive. The added competition in that category is a good thing.

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    Quote Originally Posted by blownz View Post
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    I saw a 570S and 720S driving in south Calgary today and I would buy one if I could. Saw the 720S right after the hail, that would have been scary if he was out in that...

    And I am constantly amazed how much mileage they are getting out of the engine and carbon tub. I hope they can survive. The added competition in that category is a good thing.
    I agree. But they are building cars on the tail end of a generation that is quickly going extinct. They need a big manufacturer owning them, an SUV, and some kind of electric strategy.

    Their next motor is going to be a V6 hybrid, but nobody knows if they have done the engineering right.

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    Quote Originally Posted by Buster View Post
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    I agree. But they are building cars on the tail end of a generation that is quickly going extinct. They need a big manufacturer owning them, an SUV, and some kind of electric strategy.

    Their next motor is going to be a V6 hybrid, but nobody knows if they have done the engineering right.
    The P1 is a hybrid, derived from their KERS F1 program when they built their own hybrid setup coupled to the Mercedes engine. It was the best system of the bunch until KERS became integrated into the Powertrain in the hybrid f1 era. So ya, I think they’re fine.

    Also, I think you’re underestimating the financial power of the people that own McLaren.
    Originally posted by SEANBANERJEE
    I have gone above and beyond what I should rightfully have to do to protect my good name

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    Quote Originally Posted by rage2 View Post
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    The P1 is a hybrid, derived from their KERS F1 program when they built their own hybrid setup coupled to the Mercedes engine. It was the best system of the bunch until KERS became integrated into the Powertrain in the hybrid f1 era. So ya, I think they’re fine.

    Also, I think you’re underestimating the financial power of the people that own McLaren.
    P1 owners are starting to get bill for $100,000 - $200,000 to replace their batteries. I didn't say MacLaren couldn't build a hybrid, I'm just not certain they can build them in high volumes effectively. It's a big manufacturer game. MacLaren's middle east money just turned them down for additional funding.

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    Quote Originally Posted by Buster View Post
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    P1 owners are starting to get bill for $100,000 - $200,000 to replace their batteries. I didn't say MacLaren couldn't build a hybrid, I'm just not certain they can build them in high volumes effectively. It's a big manufacturer game. MacLaren's middle east money just turned them down for additional funding.
    That's not that much on a $million car though, is it? I suppose most of these have <10,000km on them, so that part makes it seem like horse shit.
    Not good news about the middle East $ denial.

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    Quote Originally Posted by Buster View Post
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    P1 owners are starting to get bill for $100,000 - $200,000 to replace their batteries. I didn't say MacLaren couldn't build a hybrid, I'm just not certain they can build them in high volumes effectively. It's a big manufacturer game. MacLaren's middle east money just turned them down for additional funding.
    The hybrid battery is treated as a high wear item on these things. LaFerrari and 918 are expected to have a similar battery shelf life. The Middle East money pumped in 300m 2 months ago, they're just TRYING to get some socialism bailout money first.

    And btw it's McLaren not MacLaren haha.
    Originally posted by SEANBANERJEE
    I have gone above and beyond what I should rightfully have to do to protect my good name

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    Quote Originally Posted by rage2 View Post
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    The hybrid battery is treated as a high wear item on these things. LaFerrari and 918 are expected to have a similar battery shelf life. The Middle East money pumped in 300m 2 months ago, they're just TRYING to get some socialism bailout money first.

    And btw it's McLaren not MacLaren haha.
    Haha. I still do that on the MAclaren forums - for some reason I can't get my fingers to stop injecting the A without me even knowing it.

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    Brands like McLaren and Aston Martin have a massive following in the middle east. That's where they make most of their sales as well. Those oil rich Arabs aren't gonna let the brand go extinct I feel. That being said, with Aston Martin I was surprised the dough came from Canada as opposed to the middle east. lol. Well Canada lead consortium and Toto. That's why I say @Buster if you find one you like, go for it and don't let that hold you back.

    Also @rage2 my car as been at Distinctive since Monday. I had to leave it back there and took there new X5 loaner as they were trying to diagnose the issue with AM. The codes were cylinder misfire, evaporation system error and turbo boost leak. Apparently AM thinks it could all be triggered due to a leak and they had DC performing smoke tests to detect any leaks. Car went through the entire front without issues or leaks, but today they have found a leak from the gas tank filler. I don't know how something like that can cause all these errors but apparently that's what AM thinks. So the part has been ordered from UK and hopefully by the weekend it'll be ready and the issue(s) won't repeat itself - but I guess time will tell.
    Last edited by shakalaka; 05-27-2020 at 10:55 AM.

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    Quote Originally Posted by Buster View Post
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    P1 owners are starting to get bill for $100,000 - $200,000 to replace their batteries. I didn't say MacLaren couldn't build a hybrid, I'm just not certain they can build them in high volumes effectively. It's a big manufacturer game. MacLaren's middle east money just turned them down for additional funding.
    The battery packs are outsourced, so it's not really an issue of McLaren achieving efficient volumes (same with Porsche and Ferrari).


    Quote Originally Posted by ThePenIsMightier View Post
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    That's not that much on a $million car though, is it? I suppose most of these have <10,000km on them, so that part makes it seem like horse shit.
    Not good news about the middle East $ denial.

    Never underestimate the thriftiness of supercar owners... yes, the cars are expensive to buy and maintain, but there's expensive and then there's ridiculous. A lot of owners have been spoiled by strong resale market over the past 6 or so years... It's one thing to swallow a big service bill when your car is going up in value, but it's salt in the wound in a down-trending market. the The cost and concern of (eventual) battery replacement is already weighing on prices... LaFerraris, P1s and 918s are all down ~40% from the highs and 20+% in just the last year or so and the financial underwriters are being very conservative, which will further depress prices.

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    I'm not aware of the ultra-exotic market dynamics too much. But there is a misconception that the people who buy supercar level cars are all people that can light benjamins on fire. It's just not true. A large portion of the pricing in the market are determined by enthusiast with much more modest means.

    As for the P1 - McLaren has shown they can make an ultra-exotic without the need to scale. Not sure if they can do the same for an entry level supercar.

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    Quote Originally Posted by you&me View Post
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    Never underestimate the thriftiness of supercar owners... yes, the cars are expensive to buy and maintain, but there's expensive and then there's ridiculous. A lot of owners have been spoiled by strong resale market over the past 6 or so years... It's one thing to swallow a big service bill when your car is going up in value, but it's salt in the wound in a down-trending market. the The cost and concern of (eventual) battery replacement is already weighing on prices... LaFerraris, P1s and 918s are all down ~40% from the highs and 20+% in just the last year or so and the financial underwriters are being very conservative, which will further depress prices.
    Meh, let's call it roughly 15% of the value of the P1 and compare it to, let's say a $200k used Ferrari.
    Ferrari will spec a $30k "service" on that thing whenever they feel like it. I think they would expect you to smile if they spit on it before shoving it inside you. True - not all owners will allow their shit to be pushed in by that, but a P1 is quite a different league.

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    Interesting Forbes piece on McLaren.

    https://www.forbes.com/sites/sap/202.../#7c37c53747cb

    Late last week British television network Sky News reported that the owners of the McLaren Formula One team are considering selling a stake in the squad as they try to raise hundreds of millions of Dollars to navigate the coronavirus crisis. It came as a surprise to some in the industry but it shouldn't have.

    Last month we revealed that the McLaren Group, which also manufactures supercars, is facing a cash crunch due to the timing of payments to suppliers. In light of this it seems unlikely that McLaren would be able to fuel its F1 team's ambitions to return to the front of the grid after years of reversing results.

    McLaren was founded in 1963 making it the second oldest F1 team after Ferrari. It is also the second most-successful squad with 12 drivers' titles to its name thanks to some of F1's most famous names including Alain Prost and Ayrton Senna. However it hasn't won the championship since reigning champion Lewis Hamilton steered it to victory in 2008. Five years later Hamilton joined the rival Mercedes team but it wasn't until 2015 that McLaren's performance hit the skids when it began using Honda engines.



    The Japanese auto giant returned to F1 after a six-year hiatus and failed to get to grips with its new 1.6 liter V6 turbo engines. It led to McLaren crashing from fifth place in 2014 to to a low of ninth in 2015. However, its performance has accelerated since 2016 when American sports executive Zak Brown took over the wheel of McLaren from its former boss Ron Dennis.

    Brown replaced Honda with Renault and signed up rising race stars Lando Norris and Carlos Sainz Jr. It boosted the team to a peak of fourth in the standings last year but it came at quite a cost.

    Although McLaren fell on hard times whilst Dennis was in the driving seat, he had more impact on the company than anyone else in its history. When Dennis bought McLaren in 1981 it was a struggling F1 team but he transformed it into one of the sport's most famous names and a supercar maker which sold 4,662 vehicles in 2019.


    Over the years Dennis sold down his stake in McLaren leaving him with 25% which the company bought off him for $333 million when he stepped down. As we have reported McLaren financed the transaction by borrowing money and there were two components to this.

    One was a Sterling bond of $450 million (370 million) and the other was a $250 million Dollar bond traded on the international stock exchange. The proceeds weren't just used to acquire Dennis' 25% stake but also to settle transaction fees, refinance debt and repay shareholder loans.

    It left Bahrain's Mumtalakat sovereign wealth fund in control of McLaren with a 57.7% stake. The Saudi TAG Group holds 14.7% whilst 10% is in the hands of Canadian tycoon Michael Latifi and the remainder is owned by minority investors. There has been talk of them exiting through a flotation though we revealed in The Guardian in 2011 that this isn't likely.

    McLaren's bonds are secured on a suite of assets including its Intellectual Property portfolio, its palatial premises in Britain and collection of historic race cars. This security is what has driven it into a tight spot.

    McLaren is most famous for F1 but supercar sales drive the bulk of its business. Last year they generated 83.9% of its $1.8 billion (1.5 billion) revenue with F1 representing 12.5% and the remainder coming from McLaren's engineering division which applies developments from racing to other industries.

    As McLaren headed into 2020 the outlook was so rosy that it planned to reduce the number of cars it produced in order to make them more exclusive. As we revealed in Britain's Daily Mail newspaper, McLaren's shareholders injected $368.8 million (300 million) into the company in February and March to keep it ticking over as it scaled down. When the coronavirus crisis began McLaren had to use this funding to keep its wheels turning and it soon became apparent that even that wouldn't be enough.

    In the first three months of 2019, McLaren sold 953 cars but this crashed to just 307 in the same period this year due to the closure of dealerships to prevent the spread of coronavirus. It led to McLaren's revenue falling $217.7 million to $136.2 million whilst its pre-tax loss accelerated by a staggering 600% to $165.6 million. The worst was yet to come.

    With dealerships still closed, McLaren's revenue is on track to be down in the second quarter of this year as well and, to make matters worse, that is when it needs to foot the bill for the cars which it built in the first three months. This is because it pays suppliers 60 days after the end of the month that they submitted their invoice. These costs need to be met despite McLaren having greatly reduced revenue and this explains why it forecast last month that it will face "an unexpected need for liquidity which will impact the Group around the middle of the year.

    "Working capital funding is being sought to support the Group's liquidity requirements with discussions with third parties ongoing. McLaren Group is currently looking at a number of potential financing alternatives, secured and unsecured, of up to 275 million [$333 million]."

    To summarize, McLaren needs money to pay the bills for the cars that it made before the pandemic began because it isn't selling enough of them to cover the costs. The dent this has made in its fortunes recently came to light in a lawsuit filed by McLaren.

    In order to raise more money, McLaren wants to release the security over its property and historic car collection so that it can sell them or secure another loan on them. McLaren recently proposed this transaction to the owners of its bonds, known in the trade as Note holders, but they refused to release the assets from the security.

    The Note holders proposed an alternative financing plan because they said they would be left high and dry if the money owed by McLaren is no longer secured on the assets. McLaren disagreed and sued the Note holders in the hope that the judge will declare that they have to release the assets. There is a lot at stake.

    In legal filings for a hearing in London's High Court on Friday, McLaren said that "the Proposed Transactions will enable the Group to access the additional liquidity that is required to ensure that the Group can continue as a going concern into 2021. This will provide a significant benefit to the creditors of the Group (by preventing a cash flow crisis and a value destructive insolvency)."

    In summary, McLaren says it will become insolvent if the Note holders don't allow it to release the assets from the security and sell them or secure a new loan on them. It adds that the judge will need to issue a declaration in favor of McLaren in just 17 days so that it can get the deal over the finish line.

    The filings reveal that "the Group needs to obtain declaratory relief in advance of 17 July 2020. Due to the period of time required to sign the contractual documentation and arrange for the relevant funds to be paid, declaratory relief would in fact need to be granted at least five business days before the funds are required. In other words, declaratory relief is required by no later than 10 July 2020."

    That deadline is right between the first and second F1 races of the season which drives up the pressure on McLaren. It says that the Note holders' case is based on a clause in the bond agreement which prevents McLaren from disposing of "all or substantially all" of its assets.

    In response, McLaren says that "even if one excludes the value of the McLaren brand and intellectual property, the Heritage Cars and the Properties are responsible for about a fifth of the Group's revenues and about a quarter of the Group's total assets."

    It may seem clear cut but according to the legal filings, the Note holders' lawyer wrote to his counterpart at McLaren on June 14 saying that the litigation would not be fruitful as it "will not be concluded before the Group runs out of cash." The letter added that if this happens, "the one remaining realistic financing option open to the Group, namely the transaction with the Note holders will collapse and the Group will then have no realistic prospect of avoiding an insolvent liquidation."

    Despite this ominous outlook McLaren is persisting with the litigation and on Friday asked Judge Anthony Mann to expedite the proceedings. He reportedly agreed that a swift trial was justified given the risk of insolvency that McLaren says it is facing. However, he added that the suggested trial timetable was "ambitious" and the "most aggressive" he has ever seen.

    A case of this magnitude would normally be spread over months but the parties have proposed to deal with it at a two or three day trial starting July 2. The race is on.

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    Originally posted by SEANBANERJEE
    I have gone above and beyond what I should rightfully have to do to protect my good name

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    Quote Originally Posted by rage2 View Post
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    I think this outcome became inevitable.

    I'm still not bullish on the long term prospects for the company.

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    Quote Originally Posted by Buster View Post
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    I think this outcome became inevitable.

    I'm still not bullish on the long term prospects for the company.
    Has anyone ever been "bullish" on a car company that is British?
    Asking for SKR.
    LoL.

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    Combustion engine is done. Too many cross licensed patents, everyone wants a piece of the pie when they should have been making cake.

    $8K electric car will be a reality.
    Elon needs Nickel

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