Bugatti buys Lotus from General Motors: Car makers to continue as separate operations, but share engineering skills

BUGATTI International of Italy has bought Group Lotus from General Motors in a move that joins two of the most famous names in motoring.

The deal, for an undisclosed sum, brings to an end GM's seven-year reign at Lotus, which was signalled when it scrapped production of the Elan last year. It wrote off pounds 24m and immediately put the group up for sale.

Lotus's management came close to buying the group in the spring. Other companies that examined it included Toyota and Kia of South Korea. However, they were beaten to the mark by Bugatti, which says the two companies will continue as separate operations, although they will share engineering skills.

Bugatti International shares nothing except a name with the original company, which was founded by Ettore Bugatti in 1924 in France and lasted only 16 years. This gained an unrivalled racing reputation with models such as the T35 and T51. The monstrous Royale, produced in the 1930s, featured ostentatiously when the market for classic cars boomed half a century later.

The new company was founded near Modena, Italy, in 1990. It is 20 per cent owned by its president, Romano Artioli, with the rest held by a Luxembourg holding company. Shareholders are believed to include the French groups Aerospatiale and Michelin.

It is lavishly funded, and has been able to develop a supercar in a purpose- built factory. The pounds 300,000 four-wheel- drive quadruple turbocharger EB110 went into production last December, and 4O have been delivered so far.

Lotus was founded by Colin Chapman in the 1950s and built a formidable racing reputation before moving into chic sports car production. The company's car-making fortunes declined after Mr Chapman died. GM backed the new Elan, but was unable to make it for less than it sold for, and Lotus switched increasingly to engineering consultancy - including the design of Chris Boardman's gold-winning bicycle. Lotus has halved its workforce in the past two years to 700 people, only 200 of whom work in car manufacture.

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