September saw the launch of the supercar brand McLaren in the local market with a new showroom in Downtown’s 3 Beirut complex, with its vehicles on sale for the first time in the country. Executive sat down with Chief Executive Officer of McLaren Automotive Mike Flewitt to talk about the relatively young brand and their local partnership with Fayez Rasamny, CEO of Rasamny Younis Group of Companies (RYMCO), the parent company of McLaren Lebanon.
E Why open in Lebanon?
When you go into a country, it’s partly about the market, and partly about the partner you find in the market. I see Beirut is a city that’s now developing very, very much. There’s a lot of investment, and it almost feels like it’s a center for luxury in the region—this is really a market. I drive around and I see sportscars, supercars, and I see people enjoying these kinds of cars. We’re a young company, so it was important we waited for the right time, but I think the market is now ready for McLaren. We also waited till we found the right partner. The partner we have here is Fayez [Rasamny], and he knows the country, the automotive market, he knows our cars, he has made tremendous investment [and has] real confidence in McLaren. So we brought those two things together, and I think this is a good time, [and] we have a good future. We have to build a future from this very strong base.
E What are your expectations from the market? Your Lebanese presence, is it a sales figure that will decide if this is successful? Or is it more about positioning? What are you really looking to achieve from your Lebanese venture?
You do these things for the long term, so this is a start. We have this beautiful showroom, and [at the opening we launched the 570S Spider]. There are some cars here now. [In the past] people had bought cars from the region and brought them home to Lebanon, but this is now the start of us selling cars here, so think about this as a start for the future. Obviously, we’re a business. I always think in car companies there are two things: One is you make cars, you love cars, and you have a passion for driving. The other is you’re a business, so you have to make money. I think Fayez and the team here will make the business very successful. It’s hard to volume, maybe 20 to 25 cars to start, and then it builds year after year. It’s really about building a strong future, making and helping people in Lebanon understand the value [of McLaren], to understand why McLaren is special. This isn’t a brand that’s just about showing off a lifestyle; this is a brand that’s all about the pleasure of driving cars.
E So in making the decision [to launch in Lebanon], most probably the executive board at McLaren Automotive had to make the case for it. In a few sentences, what were the pitch lines that were used to convince the board?
In McLaren, we have what we call an executive team: myself, our global sales and marketing, our chief financial officer, and so on, and then we have regional managing directors. Andreas Bareis is the managing director for the Middle East. We always knew that we had Lebanese customers, some in Lebanon and some elsewhere in the world. When Andreas moved to the Middle East a year and a half ago, he was looking at the region, at the potential in different markets, and was starting conversations with different partners here. When he met Fayez, they talked about [partnering], they built confidence, then they brought the proposal for McLaren, talked about how they could develop the opportunity here, how this made business sense, and they pitched it to us. It’s about the market, the business, and the right time.
E I understand that there have been changes in the chairmanship of the company …
Correct. Ron Dennis has been with McLaren since 1980 and built the Formula 1 team with all its success in the 80s, 90s, and 2000s. He was one of the founders of McLaren Automotive back in 2010, a shareholder, and also chairman of both companies. A few weeks ago, it was Ron’s 70th birthday, and he decided to step down. He’s no longer chairman or director in the company—and he [had] always decided that when he reached 70, that would be the time to go do other things. He has a charity, he helps the government, he does different things, and the other six shareholders have bought Ron’s shares—all the other shareholders are exactly the same.
E So here we’re talking about Mumtalakat [Holding] in Bahrain, TAG …
Exactly. Mumtalakat in Bahrain is the senior shareholder, and Sheikh Mohammed bin Essa Al Khalifa is now chairman of the company.
E McLaren automotive is all about R&D, all about experimenting—and the biggest differentiator is the use of materials, which have a lot of impact on the performance of the car. What are the challenges when making your case to the board, which is not necessarily as well versed with the technicalities, especially when you have sovereign wealth funds and investment funds? What type of agreement do you have with your board so that they allow you to continue experimenting?
First of all, the shareholders understand the vision. They agree with the vision of the company, [which is that] we invest in technology, and we use that technology to make a better racing car or a better sports car—that’s the whole premise. So it’s not selling technology, it’s actually about selling a racing car or a sports car that is a better car because we use the best technology in materials, software, and aerodynamics. The next thing is that they are the people who employ the managers—they employed me, they employed Andreas, they employ the team—and they understand the recommendations we make. They analyze the recommendations, they could also look at the success of what we’ve done, and then we agree on a plan. I think they have confidence in the team; they see what this team has done in six years. In 2011, we sold our first car. Now we’re in 2017, McLaren sells cars in 30 different countries, with 84 dealers around the world, it’s a competitor with brands like Ferrari, Lamborghini, and Porsche, who have been in the business for 70 or 80 years. So I think the management have proven that they understand the market, that they understand what makes it a success, and the shareholders have confidence to support them.
E There’s a lot of signals that come with a change. I mean, when you have Ron Dennis, who has 158 wins or more, he understands technology, he’s the DNA of the company. And then, suddenly, you have a sovereign wealth fund that is chairing the company. What type of signal does this give to shareholders, and how are you going to try to make sure that the savoir faire that McLaren has stays at the top, that this wouldn’t change the perception?
Ron Dennis is deeply associated with McLaren—to some people, he is Mr. McLaren, he was there for so long. But we should also remember that TAG have held shares for 30 years, and that Mumtalakat have held shares for over 12 years, so they’ve been there through all of this success. They haven’t just come in; they’ve been a part of this history, creating this history. Ron Dennis recruited me in 2012, so I think we have shareholders who have been part of the history and have the same vision for the future, and we have a management team that worked with Ron, were recruited by Ron, and have been a part of the success through the years. Every business goes through changes. The automotive company is growing every year, it’s very successful, and [it’s been] profitable for four years. We build more cars every year, and we’re growing as a business. Formula 1 is having a difficult time right now, we have a relationship with Honda, we have a new engine. We’re going through, we say, teething troubles, because we’re learning. But we’re still the second-most successful team ever in Formula 1, and I think we’ll be successful again.
E Does this put more pressure on you? Because everyone will be looking at you, today as the CEO, as the one that carries the automotive technical pedigree, as compared to the financial knowhow.
You can’t get away from that. There’s always pressure financially—it’s a business. There’s pressure because we’re very ambitious. We have a very simple objective, and that’s to make the best car in the world. So when launching a car, we wait to hear what journalists say, what customers say, to understand if we’re successful. In a way, we put the pressure on ourselves—we really have very, very high ambitions.
E You doubled your sales figures in 2016. Some reports say you now sell as many as Lamborghini sells. Other reports compare you to Ferrari. How is McLaren trying to position itself, and what is the differentiator, just to clarify, to the market at least? Is McLaren the competitor of Lamborghini, Ferrari, or is it on a different playing field?
The reality for customers is that they have a choice. Different customers want different things. We don’t all buy the same watches; we don’t all buy the same designer clothes. People like choice. We do things differently. Ferrari is very successful, they sold two times as many cars as us, but they’ve been selling cars for 70 years. Lamborghini was founded in 1963. Aston Martin are 100 years old. Porsche are 70 years old. All [of them are] slightly different in the market. What we do is we invest a lot of money in technology, but we use technology to make a better car. It’s all about the driver. It’s not about status or fashion; it’s about how the car is to drive. That’s our passion. We all love cars. We race cars as hobbies, we drive cars, everybody in the company is so passionate about it, and that reflects through to our cars.
E McLaren has rolled out models much more frequently than other brands. Why this high frequency?
It’s just because we’re just starting. So in 2010 we had no cars. We started with the MB4-12C, which was a true supercar in the market. Then we launched the P1, which was really the first hybrid supercar in the world. Then we introduced the 570. So, it looks like a lot, but actually, we’re slowly building our product range. As we move into 2018, we’ll have cars in the sportscar segment, cars in the supercars segment, and cars in the hypercars segment. Our range is actually smaller than the competition, but we have to start building, start entering into these markets. Then you’ll see a more natural evolution as we replace vehicles, develop vehicles through, but it won’t always be new.
E When it comes to technology, the environment today is on everyone’s mind in the automotive industry. How are you integrating this into your strategy, and does it apply at all to the category of cars that you’re producing?
I think it does matter, partly because of legislation. Some countries will have to have legislation around emissions, and safety, and so forth. But it also matters because customers want it; customers are responsible people, and they want to do the right thing. Probably the biggest developments right now are in engines and changes in engine technology. When we launched our car, we had the cleanest engine in its category in the world. It had less CO2 emissions per horsepower than any other engine in the world, so already, in many ways, we’re market leaders for that. We then launched the first hybrid hypercar,because they’re very clean cars for what they do. So we’re developing all the time. We’re developing hybrid cars to bring to the market; we’re also starting to experiment a little bit with electric cars. We’re not ready to put them into production yet, but we understand the market. We have to respond to technology, and we have to find a way of making those requirements still exciting because you’re buying a car like this for fun—you buy a car like this to enjoy it.
E Will you have models in Lebanon or do people have to pre-order? How fast can they get their cars?
It’s different for different models, so typically, six to nine months if you order a car and you want a special choice of colors, etc. The local retailer may order some cars too, so you may have a car that you can buy, but then you can’t choose [the details]. It does vary, but I would say it takes six to nine months, typically.