- Amid the coronavirus pandemic, McLaren is going to cut 1200 jobs, a quarter of its workforce. Those cuts will be spread across its entire group, which includes the Formula 1 team and Applied Technologies.
- McLaren CEO Mike Flewitt says the hypercar maker expects to lose two years of product momentum while it deals with financial challenges, although the 765LT and the Elva (above) are still on track.
- The company is trying to raise money from a bond issue that’s secured against McLaren’s heritage car collection and its headquarters, but existing bond holders are crying foul.
While all automakers have been suffering in the COVID-19 crisis, luxury manufacturers have been struggling more than most with production shutdowns and collapsing revenues. We’ve already told you about Aston Martin’s battle to secure its future—one that predates the coronavirus—and now McLaren is trying to secure its future by raising emergency funding. The supercar maker will also cut 1200 jobs, which represent a quarter of the company’s workforce, British media reported Monday morning. A McLaren spokesman clarified to Car and Driver that the job cuts will be spread across the McLaren Group, which includes its Formula 1 team and Applied Technologies divisions.
McLaren suspended production at its Woking factory in March as the U.K. entered lockdown, and has both furloughed some of its staff and implemented what are meant to be short-term pay cuts. The company also raised the equivalent of $365 million in additional funding from its existing shareholders in March, but according to reports in the U.K., subsequently failed to secure a $182 million business continuity loan from the British government. According to Sky News, McLaren is now trying to raise about $394 million from a bond issue managed by J.P. Morgan.
But plans to secure this against McLaren’s HQ and the company’s collection of heritage cars—which includes numerous examples from its Formula 1 heyday—have resulted in a dispute with holders of existing debt. The Financial Times says that some holders of a nearly $650 million bond issued in 2017, which was used in part to buy the stake in the company owned by former chairman Ron Dennis, are threatening legal action over what they say is an existing claim to the heritage models.
Beyond the need to secure its short-term future, McLaren also faces substantial challenges as the world returns to something closer to normalcy, with worldwide demand for six- and seven-figure supercars likely to slide substantially. CEO Mike Flewitt has admitted that new models will be delayed, telling Automotive News that coronavirus “will have cost us probably two years. In 2020 we’re going to do very little. I think it will take us the whole of ’21 to climb back to where we are.”
Both the McLaren 765LT and Elva remain on track for production, but a development delay would likely push back several of the other models that Flewitt hinted at when we interviewed him following the cancellation of the Geneva auto show in March, including the next-generation Sports Series (which is set to be switched to a downsized hybridized engine) and also the son-of-P1, range-topping Ultimate Series model, which we were told to expect in 2024.
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