Tech Talk: McLaren‘s Financial Situation and My Thoughts !!!!

Join me on a VERY sensitive subject where I share my thoughts on the Business and Financial Models at one of my favourite and most supported car brands!
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[@J18kon]

Being an employee for McLaren Automotive I really hope someone in corporate sees this. It's simple and you nailed it!

[@RobertMitchell]

I know it’s been to the hingehest levels there.... whether they see it a s feasible or just crap is not known.

[@J18kon]

McLaren Greenwich supports you for CEO

[@Fee.1]

Justin Konda nobody feels mclaren’s aspirations are worth pursuing in a natural way?

[@jasonn2284]

McLaren needs to be like Koeinigsegg, produce a limited amount of cars and keep the supply down and demand high. They went after the big leagues too fast chasing Ferrari and Lamborghini and are failing miserably.

[@dalecomer5951]

@@jasonn2284 What, produce insanely overdesigned cars for people with more $/€/£ than little grey cells?

[@MWHM2]

I love how Roberts intro is like 2 seconds and goes straight to the point. Take note youtubers

[@shanescarlife]

I like your attitude towards manufacturers. It raises your status as a 'real' car enthusiast, if it was ever being questioned. As for the topic, very informative, and thanks for sharing your thoughts

[@10Tenths]

Agreed, great content! 👍

[@RobertMitchell]

Thx guys!!

[@ericpisch2732]

Bang on, when mclaren started my friend was interested in buying one, I pointed out their business model was to sell huge numbers of cars right of the bat and how would they hold value. As a long term 911 buyer he was able to buy a 911 GT3 RS instead and made money when he sold it.

[@duncanbleak3819]

Interesting take on their "Financial Situation". Now, how about an honest assessment of their reliability/quality control issues? This is also a major issue. Thanks...loving the recent content!

[@CITRUS--]

kzbin.info/www/bejne/oWHYhqSLjcaDgJY guys watch this video aswell if you want even more insight into this whole mclaren situation. it echoes ALOT of these sentiments.

[@TeamAtterz]

JLR has the same issues, piss poor build quality and unreliable vehicles. People won't take that for long before switching brand.

[@ChrisPlow]

@@TeamAtterz your just on some metaphorical band wagon look up Thorney Motorsport and watch a couple of educational videos on MCL

[@DoctaM3]

This is the problem of Mclaren balancing their balance sheets on the back of their customers. It’s a business model they adopted to grow their brand fast artificially. It’s not sustainable and now the chicken is coming home to roost, sadly. Hope they make it through and start building reliability into their cars to match their performance.

[@martindeoliveira5128]

Enjoyed your insights on this. Keen for more of "Boardroom Robert"

[@johnadams2933]

Yes more please. Do Lotus next ;)

[@Daggi78]

I like his perspective, and realisme! Volume or Brand(Profit).

[@CITRUS--]

kzbin.info/www/bejne/oWHYhqSLjcaDgJY guys watch this video aswell if you want even more insight into this whole mclaren situation. it echoes ALOT of these sentiments.

[@taicit]

This is absolutely on the money, and honestly I’m shocked that the McLaren board don’t understand that fundamentally they are operating a luxury brand. Enzo Ferrari is quoted as saying always produce one car less than you think you can sell, and on top of that you had the early ’80’s demand for Rolls Royce Corniches that suddenly tanked, resulting in an oversupply that ended up with them being used even as London taxi’s. This basically destroyed that brand to the extent that only a decades later buyout allowed them the capital investment to once again become relevant. So being an English brand and not learning the lessons from Rolls Royce as well as Ferrari being the competitor who they set their technical sights on, it’s honestly sad that they are in this position where they haven’t understood the commercial model that they need to operate in. It was an amazing technical achievement that the 12C came out swinging, and its successor was basically being on par (if not superior) with Ferrari on its launch which is a huge achievement given the history of the market it needed to be successful in (Honda NSX successor anyone ?) Yet this corporate short sightedness may result in the entire venture going under despite the amazing technical developments achieved in a comparatively very short period of time.

[@gregshrimpton1630]

You should be running McLaren sales or at least be teaching their sales department lol

[@dennisb5319]

Agree with that.

[@Buzz_15900]

I was just about to comment that

[@robertmaddock1813]

Agreed but not just sales, go higher ... the entire strategy for the business driven by the directors

[@mrhick87]

HMM, do you have info that they did not get anything from the bank or the government because there bad financials. My understanding is that they are owned by wealthy Bahrain and Saudi wealth fund so they been told by government that they have other avenues to get that money. Also there is a formula1 huge cost cut that just got signed in and will remove 2/3 of the budget for next year which is causing all the teams to lose employees that you did not mention.

[@valter_vava74]

Not just sales, the whole company because this type of strategy and thinking has to come from the very top. If not, it will be quickly undermined and subject to the whims of people above the sales department.

[@billdewhitt8694]

Robert, just found your channel and appreciate your knowledge and understanding of the market. I wish you much success with your channel we need more insight such as yours. You are spot on with your comparison especially between McLaren and Ferrari. McLaren needs to dramatically improve their relationship with McLaren owners and up there marketing and sales game from the corporate level to the dealership level. Ferrari beats McLaren hands down in creating a car community which helps create an emotional need to upgrade or buy the next Ferrari even though your going to lose money on the car. McLaren from the get-go with the 12C to 650S situation left owners feeling used and abused. McLaren has never created the emotional need to "upgrade" even though they have outstanding cars and have pushed Ferrari to improve their cars. However, Ferrari needs to be careful, currently there are a lot of 488 and 488 Pista owners who are terribly upset. Ferrari announced the F8 essentially a refresh of the 488 and touted as being as good as a Pista while many Ferrari owners are/were still waiting to take delivery of their 488 or 488 Pista. Many Ferrari owners view the F8 as a money grab. Adding to the Ferrari frustration rumor has it the F8 will only be around till 2022 when the next mid-engine car comes out on the new Ferrari platform. Ferrari owners are becoming increasingly frustrated over Ferrari’s announcing yet another new car and doing so in shorter and shorter time frames, therefore Ferrari owners are feeling pressured (be it perceived or real) to flip there Ferrari sooner than in the past.

[@TheIantonna]

Ferrari have nwo announced more new models then Mclaren

[@marknorton1999]

There is also the feeling with McLaren that the model churn is so high that by the time you get your car, it will soon be replaced if not already. That encourages would-be buyers to sit on the fence.

[@alexlam24]

I know some people that held off on getting a Senna because they thought there would be a Senna LT or something.

[@AndersVestlund]

Exactly! This is what brought Sony (Before SonyEricsson) in the phone market. They released a brand new flagship phone every 5-6 months and that destroyed every new models since it would be old very soon. This is showed in a lot of markets but brands fail to see this.

[@peterdelamare]

All sports car companies have had financial issues throughout their histories. Ferrari and Porsche couldn’t survive as independent companies in times gone by and needed rescuing, or a huge change in business to survive. Porsche wouldn’t survive without their SUVs for instance. Running a successful sports car company is incredibly hard.

[@splyce9712]

@pete pure facts! Its like a right of passage. U want to be elite brand, u need to nearly go bankrupt before u smarten up. I really hope they do. Well said

[@christopherosborne7483]

Mclaren need a parent company like Ferrari and Porsche have to help them, both those companies were struggling until they were taking over by Fiat Chrysler and VW.

[@Tracked350Z]

Porsche wasn't neccessarily struggling. They made some debts that were unnecessary and VW bailed them out. Otherwise, they were doing just fine.

[@amraceway]

Morgan and Caterham are pretty successful.

[@betaich]

@@Tracked350Z Porsche nearly bought VW in the early 2000s.

[@johnm5131]

Don't forget they have a "disposable" attitude towards both car & buyer. The cars are frequently shoddily built/engineered. The depreciation that results is staggering. As the cars age, they become more of a liability, so you wind up with buyers who will own a Mclaren for a short period of time, and then "dump" on to the used-market. These cars go into free-fall in both value and reliability. The loss? ...Cache. "Short-term lust" will not build a future "ferrari" brand.

[@thatcopenguy]

I like how you mention "disposable". I don't know if it's a part of their strategy ( I hope not ), but the saying "the sales person sells the first car, the service department sells any other cars" applies. Their build quality will affect their overall growth. As far as I'm concerned, the most successful businesses/ companies focuses on clients' satisfaction and the life-time value of a customer, not short term gains. I see this a lot on Mclaren, really. They focus a lot on short term gains and comes up with a ridiculous amounts of "limited runs".

[@jorehir]

I agree with what you said, but there is more: - There is bad customer service. It involves especially "low tier" customers, and it's related to the dealership system that McLaren have built. You can hear stories about this from other KZbinrs. - There is lacking quality. Cars are very well made in general but, like Teslas, they lack the attention to some details that more experienced manifacturers have. - There is the lacking emotional factor. McLarens feel great and fast when they're new, but when they become old generation they don't have much to offer. I'm especially talking about the engine.

[@AtypicalDriver]

Lacking quality? Well most of the folks working at McLaren came from Lotus if that tells you anything. ;) (As the owner of two Lotus I can joke about their poor quality!)

[@ENO371]

Atypical Driver i believe he is speaking from an enthusiasts POV of “emotion” within the vehicle

[@Joolz1982]

You are right I also hear they are built like crap. See Tesla with panel gaps.

[@fidelcastro9579]

I worked at McLaren for a short time years ago. The atmosphere was nothing short of toxic. Production numbers back then were only 7 cars a day and mostly just for dealer stock. The P1 and 675LT undoubtedly gave them a financial stay of execution. The new board have tried to run the company like their previous employer, Honda, and churn out cars 24/7. Most of the “staff” laid off were contractors and this was by email at the end of February. They planned to shut down for all of April anyway so have used Covid as an excuse. Truth is, as a company they are broke. Investment after investment has resulted in having to keep repaying loan after loan without any direction from above. Personally, i think they are doomed and will not be around in 2 years time.

[@MCHD4]

I dont think they will go away. If its just a financial issue then some big auto manufacturer will buy them off.

[@fidelcastro9579]

KZbin Fan why would they? They can’t make a profit. That’s the whole point.

[@tcolley]

trying to be Porsche w/o reliability or good service! 1. six versions, same car 2. same basic drivetrain, all cars 3. evolution over revolution of lasting principles

[@ciello___8307]

Also without the support of a huge company, VW

[@lotion90]

@@ciello___8307 in 2009 Porsche almost took over VW

[@ikigai47]

except that Porsche speculators often profit from reselling

[@lop8828]

@@720sobsessed6 720 and 12c are decades' apart. Complete nonsense

[@pauln0371]

They all use the same Carbon Tub as well as Engine and Gearbox. I know the 720 is a 4 litre and the 540/570/600 are 3.8 litre but it's the same block with a different bore and or stroke. Reliability and build quality are the main concerns for them at the moment. If they produce as Richard says 2500-3000 cars p.a they can take more time on these issues. Thus creating a more saleable article and creating more demand...

[@IndependenceCityMotoring]

McLaren's issue is reliability, and their financial issue is being a very young company/automaker who have not been able to amortize startup costs over the long run yet.

[@JoeAchilles1]

Another amazing and insightful video buddy! McLaren are definitely in trouble unfortunately, 90% of the UK dealer network are terrible too! Gonna be interesting to see what happens in the next 18 months when these ridiculous PCP deals end, their ridiculously inflated guaranteed final values are gonna be way off and surely be the final nail in their sexy MSO carbon fiber coffin.... Let's hope not!

[@MrArronmcphail]

Let's hope not they are fantastic cars and look amazing

[@fastdays_1]

I fully agree and I understand your point was more about business management but there's a lot more...reliability, sales, after sales, dealers network..it's a company that needs a COMPLETE revolution.

[@RobertMitchell]

100%!!!!

[@Beneluxsupercars]

A true bussines man. I hope McLaren listens to youre advice

[@byrong1561]

Your assessment is bang on Robert. Well explained.

[@888mf4]

Agree with most of your points, however if you want a company to change you can't at the same time support their product by buying new cars. People have to vote with their wallets. I bought a used 650S from a McLaren main dealer in April 2017 for £148,000 thinking that the car had suffered the bulk of its depreciation (my car listed at £220,000 in 2015). However, when I tried to trade it in for a new Lamborghini Performante Spyder (cost £274,000) I was told that no one wanted to buy the car, including McLaren. I was offered an initial 'trade-in' price of £95,000. So McLaren need to stand by their products and buy them back. This is something that Porsche are very good at. Porsche are also very good at offering used car warranties (extended warranties) for a very reasonable £1000 plus VAT. McLaren charge around £5000 for an extended warranty! Finally, I don't think ousting Ron Dennis, who created the brand, was a good idea. Once he was gone all the owners cared about was preparing it for an IPO. Speaking of IPO's, you will notice that Ferrari are producing a lot more models now than ever before. I know customers still waiting for their Pista orders whilst the F8 Tributo is being sold. Similar to what described McLaren were doing....

[@diazzsama]

This is one of the realest business talk on youtube.

[@edwardianedward548]

A friend of mine worked there at a senior level. He had some interesting stories to tell.They might struggle moving forward.

[@rasalghul474]

I can personally tell you the situation there is not good.

[@cmoore42]

I can too. Being a current employee who is still waiting to find out if I have a job or not

[@rasalghul474]

@@cmoore42 Hope you're met with good news mate. I left anticipating the current state of things.

[@Andtewt]

Spot on. Bleeding cash, they are now dependent on JP Morgan’s bailout package because the Sultan of Bahrein & other minor shareholders (nor Boris) are going to pull them out from the brink of collapse. Furthermore, if they’d had to mortgage their entire car collection in HQ, you know they’re in trouble. They most certainly will also need to integrate urgently a solid post pandemic (digital) business transformation model supported by a much improved sales and customer service relations ecosystem in order to compete and most importantly, survive. Mr. Flewitt, it’s time to wake up to a new reality = disrupt or die

[@MuliCraftOfficial]

I'm currently an employee of McLaren on furlough, tough times!

[@RobertMitchell]

I wish you luck through this. You guys have a wonderful product and I’m hoping this all goes in the right direction for each of you!

[@wasimyaseen6683]

Any advice on how to work in mclaren?

[@patrickr4762]

Nicely put and well said. I saw another video which tackled the same issue but your delivery is just much better. IMHO Ron Dennis’ strategy when he started Mcl Automotive was the right way. It just feels like the current board are selling normal road cars.

[@robertmaddock1813]

Great video, really think your breakdown of McLarens situation is what their directors should listen to - from a customer who has experienced their cars and has no axe to grind. Its actually staggering how wrong the directors at McLaren got their business model, especially given the general discussion on this subject over such a long period. It's almost as though they don't want to admit they got it wrong. Why not accept it (maybe they have now) and make the necessary strategy changes, it might save their bacon (jobs, business) in the medium to long term.

[@carlylekhan7007]

Happy Weekend Robert. Great Insight. They Also have to do something about their after sales service and quality control. I have heard about many Nightmares Customers have had with Dealerships and Quality. Stay Safe My Friends

[@seanm.collins9888]

Porsche also have after sales and quality control issues.

[@lp6704superveloce]

Thomas George True. But Porsche rarely does.

[@TheIantonna]

@@seanm.collins9888 yeah so does Ferrari and the likes, unfortunately for Mclaren it is very very common

[@danielcurtis3822]

Love your videos. I could listen to someone that is passionate about cars talk about anything from business models to form an function of a product. Keep it up!!!

[@recklessdiy2848]

+1 - as a startup, McLaren was a market disrupter making it difficult for Ferrari/Lamborghini to compete from their previously enjoyed 'Duopoly' in that price-point. Oddly, McLaren's "quantity" over "quality" approach hasn't REALLY affected quality as much as it has demand (with poor re-sale/depreciation now affecting demand for new models). To understand that, let's look at their TRULY celebrated models (of their time) - 12C, 675LT, P1, 720S. Everything in between has been fluff, inserted to capture different price-points and buyers (570S as 'entry level', Senna capturing wealthy track enthusiasts... the other models (sadly) aren't even worth mentioning - and I'm a massive fan of the brand). McLaren Corporate may have even recognized this - but are their financial woes too deep to change course/strategy now?!?! Are they "pot committed" on their current strategy?!

[@jd7042]

You are certainly correct, I own a 650s spider and it’s lost me 60% In value, it doesn’t make me want to rush and buy a 720s even though it’s an amazing car. On the other side my father has an f12 and is seriously contemplating the 812.

[@MrE30]

Robert your correct with your opinions, JayEmm said similar things about there being do many cars being produced and the model spacing wasn’t long enough.

[@s4madman]

Kudos Robert! This is one of the most informative videos. The information is essential to McLaren. They need to hire you as a consultant to get back on track.

[@nlsrdmr3453]

I love the regular uploads! Keep up the great work

[@TheQuestionTheAnswer]

I'm glad I'm not the only one that thought they were crazy to be doing that many different types of cars....Porsche does a lot of different types of models but they're distributed all the way up and down the bracket.

[@RealHIFIHelp]

Buying a used Mclaren or Alfa Romero is like the biggest time bomb ever. Many say that just changing the oil, tires and clutch on a mclaren costs about 200k.

[@dalecomer5951]

Robert has totally reinforced my take on McLaren. Can't keep up with the model changes and not so sure all those new models are getting the engineering hours the price point deserves.

[@RobertMitchell]

that is my concern too!

[@skrypka]

Thank you, enjoyed video very much! Great thoughts from someone who has deep understanding of cars and business. Typical KZbinrs usually have one or another, but not both:)

[@artturiharkonen]

What a wonderful video. Please Robert, we would definitely like to hear more about these business aspects on different matters! Your thoughts are very insightful.

[@stfu6397]

this is such an interesting video and finally someone who addresses Mclaren's business model properly

[@zobrian]

You are becoming my favourite KZbinr Robert! Keep up the good Work

[@dejavuking]

Hey Robert. Really good video it's refreshing to watch a video that's not just bashing a brand, but being analytical and constructive!. Unlike some other well known KZbin channels, not mentioning any names! That constantly bash McLaren, and now ferrari saying their crap, they catch fire, fall apart etc etc and then go on to say oh I feel so sorry for the people losing their jobs!. Ignoring the fact in my opinion their constant public bashing to their resonably big following will have had even if it's a small amount in my opinion added to those job loses, by spreading toxic views about brands!.

[@vex123]

Great video and I think most of your points are bang on. Both Ferrari and Rolex generate revenue solely on EXCLUSIVITY, which allows them to streamline their operation down to a build-to-order basis. But it also requires a certain brand image, which I think McLaren does if they had the proper marketing.

[@RobertMitchell]

Just a bit of marketing and mclaren is there just as you say !!!!

[@bowiechris]

Great video Robert, I think you have nailed the issue with McLaren. However, there is a flip side to the enhanced demand/restricted supply issue that has affected myself many times, and I wonder if you have a view on how manufacturers can best decide how their premium products get into the the hands of their real long term brand ambassadors? For example, in my case, I have bought more than 20 Porsche's over the last 30 years. I've bought brand new, including factory collection from Stuttgart, and I've bought used as well. As I have lived all over the UK in those 30 years, I have bought from Porsche OPC's in Scotland, the middle of England, and the South East of England. And that is perhaps my issue, I have had many shorter term relationships with OPC's, and not a 30 year relationship with a single dealer. Which gives me a problem. Porsche are very happy to take my money for their normal road cars. Whenever I ask to go on the list for a GT car, I literally get laughed at. Im a 50yr old who has owned 20 Porsches, but clearly I am not taken seriously. I bought brand new daily drivers for my wife and I last year, the new Cayenne Turbo and the new Macan S, both from the same Scottish dealer that I have used for many years, but still I get shrugged shoulders when I ask if I can go on the list for a future GT car. In my case, the only way I could get a GT was to buy a 1yr old 991.2 GT3 RS from an OPC in the middle of England, at way over list, last summer. It had 1,000 miles on the clock and had never been tracked. I properly use that 3 RS, and have done many track days in the last year. I get all three cars serviced at my local OPC, I go to their promotional evenings, I engage with them positively on social media, yet clearly I am not the sort of customer they want getting an allocation to a GT car. Instead, given how many GT cars are up for sale with no miles, it appears those that do get an allocation are flippers? This takes me quickly from being a lifelong supporter of the brand, and an ambassador for the cars, to a position where I become increasingly frustrated with this business model. Do you have any views on how manufacturers can best decide who gets the premium product? Do you think they should prefer customers who use their cars in the way they are built for, or instead allocate to garage queen flippers? Lastly many thanks for your videos - your content is some of the most engaging and informative on youtube, and I for one am a massive fan of the less flashy presentational style!

[@ChrisPlow]

Robert you should definitely consult for MCL your bang on with your thoughts, make demand higher than supply. For all the MCL haters out there educate yourself and watch a Thorney Motorsport video on the product

[@davidbrown6193]

Very Savvy Robert 👍🏻👍🏻 A lot to learn by listening to your words. Thankyou. Also the drive in the Polo was awesome!

[@edbowejr6130]

He is on point, sad when companies that make great products implode because they can’t get out of their own way

[@RobertMitchell]

It’s really frustrating

[@MrDavidfball]

great words Robert. McLaren went down the Lotus route of kicking cars out to dealers in the hope that they'll sell in the rush quality dropped as well with many cars being reported with issues (sennas catching fire etc etc). its a great car with an engine derived from an IRL (Indy Racing League) design for Nissan by Tom Walkinshaw Racing (TWR) but the whole operation on the road car needs to be reshaped as you pointed out if there's many units available they will get discounted and resale costs will plummet. entry level cars should be within reach and a short lead time for those (540/570's) but the sports & super series should have a wait time and be built strictly to order seems theres been some slack in the running of the automotive group since Ron Dennis stepped aside from the MD role

[@wardtam8836]

I love McLaren, and the thought of them going under hurts

[@alex0711a]

Fully agreed. And you did not even mention their practice of "avoiding" plunging values by offering huge residual values. They will bleed cash when they won't be able to resell all the cars at the guaranteed residual values. My best guess: the Chinese will buy the company

[@marcnobel3938]

Yes - I guess some big company will buy it.

[@ciello___8307]

They already have middle eastern backers.

[@FlexRogers]

You guys are crazy, the Senna is beautiful, shame it's so damn expensive

[@RobertMitchell]

I think it’s a cool car and beautiful in its own way:-)

[@DahRidlah]

clear and objective , seems that they really missed out on the points of emotion and sale prices in their market thanks for your thoughts and that you´re one of the few who use them for what they were made for (despite the loss on value )

[@valter_vava74]

Robert's channel gives away, apart from his profound knowledge on cars, his profound knowledge on business... and consequently why he can afford all the cars he owns and operates.

[@_56mph]

The McLaren Director who stands up and says "Ya know, I think we need to be a bit more Ferrari". I completely agree with your logic Robert but that conversation will never happen.

[@RobertMitchell]

Then be ready to burn a lot of investor cash:-). They do however need to build a brand and a hype around it. They’re not doing so atm

[@_56mph]

@@RobertMitchell Ok, so here's a prediction. Before April 2021 Mr Ron Dennis is at the helm of "Aston Mclaren Martin" .

[@andrewminton-cudworth8767]

Problem is Ferrari is getting into the same mess too many models released to quickly

[@vuyosono3352]

Andrew minton-cudworth ever since Ferrari became a PLC they’ve been pumping out the models. They’re not even waiting for deliveries to announces the next version. Eg. F8 coupe and spider. SF90 is coming, there will be a spider version, 812 GTS, LaFerrari replacement, Ferrari SUV, Roma. Go look at the Ferrari configurator, the whole screen is jammed full of models. And there’s still more coming.

[@soundofeighthooves]

Ferrari has Fiat behind them

[@rmr5184]

You are right, yet customers are still standing in line to get their products! A good friend of mine works since 14 years as head of sales in a Ferrari dealership at 15km from where I live and he tells me always, that his customers call him the next day after Ferrari announced a new product, to buy it. They are ready to even pay more, to get it quicker! It's crazy how Ferrari was able to built this aura of perfection around their cars over the last years!

[@Splexant]

They are so leveraged they need to pump out as many cars as possible to keep up with the debt payments. Very poor situation to be in

[@RobertMitchell]

It’s a very tight position:-(

[@SChapps]

To me, seeing them as a British brand making waves across the pond in the US etc as quickly as they have shows how much potential they have

[@RobertMitchell]

100% agree.

[@buck101850]

Better sound. Common sense good business model. Seems like their problem is business, not the car. Maybe too many different models as well.

[@davidc4946]

Robert, you have a great taste in cars, however, I'd personally go for awd drive cars because I live in Minnesota and winter driving would be fun. You should some day go over the difference between awd and rwd performance at the ring. Thanks- David C

[@RobertMitchell]

I will for sure do a talk on awd!

[@MRVSKIN]

Absolutely brilliant video. The thing that is the problem is the boardroom. And the CEO. They need to get rid of him. Ron Dennis didn’t want to sky rocket production like Flewitt is trying too. And look what’s happened. Prices crashing. Customer service, absolutely shocking. It’s such a shame. As like you say some of the cars are amazing. I totally agree with what you have said. Absolutely spot on. The job losses should be at boardroom level.

[@RobertMitchell]

a lot of people say that its hard to change a leader's mindset.. coming from ford volume is king

[@peter8084]

I have visited the Woking site and car prep sites on several occasions, always struck me as clean and clinical but I agree that they produce too many variations of the same car !

[@PenguinScotty]

Real Talk with Robert. Love it! I'm no business guy and greatly enjoyed the explanation. Sounds completely reasonable. As much as i dislike the concept of keeping supply below demand, i'm not in a place where i could buy one anyway. For the people who CAN though, i can definitely see the appeal of exclusivity and 'rarity'. The business model at McLaren seems to be strange in the sense that they are running it like a high-end restaurant but with the variety of a Taco Bell. Compared to something like Pagani and Koenigsegg (i understand they're a different league), which are running it like a michelin restaurant, selling 2-3 models, albeit allowing some great customization in there. Sometimes it may be better to shrink your Menu. Mind you, all this is coming from somebody who has no idea and goes to Taco Bell, for the food and the cars, lol. Great vid! Definitely enjoyed your take on it, Robert.

[@rivaterrier]

Just subscribed. What a smart insightful video. I loved your succinct 101 of how to run a luxury sports car business! Genius.

[@Robjess100]

Very well articulated Robert, a joy to watch

[@velvetjones1856]

McLaren continues to build 720S and other cars at a rate much higher than they are being sold. They dump them at dealers who didn't order them and do not have proper indoor storage. And there are lots of quality issues. No thanks McLaren. I'll stick with my 911.

[@Ren_1106]

Nah, I'll take Old Nissan GTR for daily and track. Then tune it.

[@captainrex9016]

McLaren need to fire their current Economist and hire Robert 😂 It isn’t difficult it’s basic economics of the demand and supply chain. I study this at college and even I can recognise the problem 😂

[@splyce9712]

Wow! Great insight. People for years have been saying Mclaren business model does not work. Love the look and engineering of the car and would buy an Elva if could. I too hope they fix their money problem, one day I may be able to afford one.Love your videos.

[@Vangent87]

100% agree, for years they have been their own worst enemy. Ive thought about buying a McLaren but have always been wary of doing so because they are the iPhone of the supercar market. The rate at which they devalue their own product is insane, its purely the business model and i think its causing some of their quality issues as well because they are just trying to move so many hand built cars.

[@barfmeister8509]

And this boys and girls is why Robert is a successful business man 👌

[@shimeih2287]

McLaren also runs an F1 team, that's hella costly.

[@highlanderfreelancer4553]

Mercedes pays for it

[@highlanderfreelancer4553]

@Adrian Hicks Mercedes McLaren F.I.M. Formula one race team. not F1 three seat super car.

[@fazeobama8872]

Mclaren Bahrain GP =/ Mclaren

[@shimeih2287]

@@highlanderfreelancer4553 ohh.. you must have stopped watching F1 a long time ago. Mercedes has their own formula one team since 2010. McLaren have changed engine suppliers to Honda and then to Renault. Mercedes has nothing to do with them in F1. McLaren is however going back to using Mercedes engines in 2021 but they're two different entities. Mercedes is dominating right now (for the past 6 years) and McLaren is the 4th best team at best. No link between the two. Just a company buying parts from another.

[@reighbh13]

you are 100% correct, look at getting Rolex Sports model at the moment!! But there is another financial ticking time bomb for McLaren!! As you have stated the dealers are flooded, to ensure these cars are sold, the financials need to look good on finance deals. Finance companies are taking (underwritten by MCL) residual values on car that are financed. But these values are dropping below the threshold, SO MCL will have to payout the shortfalls when these contracts end. I know they must be aware of this issue looming on the horizon. Paying out £20k on car that prob didnt even make 20k margin in the first place is absolute madness!!! Way too greedy, poor dealer experiences makes customers walk. As you say the brand isnt strong enough to withstand so many customer issues and be forgiven.

[@gtv6chuck]

I stopped by the local McLaren dealer today, for the first time since this whole virus thing happened. I asked the sales manager how things were going, and I was quite surprised to hear him say they have had record sales the past 2 months. They have added Aston and Lambo in the past year, but their bread and butter is McLaren.

[@futte2303]

it's really well explained. and you are absolutely right. I am not an expert, but have grown up in a family of independent companies. so I have little knowledge of what it takes. making so many models made many joke with MacLaren and say, which model is coming this week. I hope they realize it and save the company in time. As an investor, one does not always have to think about quick profits, but long-term solutions and building the brand

[@jimsound7888]

Very well put together Robert. If you ran the company like you do at apex, top results

[@fenix2k1]

A fair and honest assessment. I think these cuts were always coming at some point this year. As much as I love the baby McLarens I think trying to compete with Porsche at the low end and Ferrari at the high end at the same time was probably a mistake.

[@ericgoldstein7220]

Spot on.. It’s not that complicated. Look what Ferrari has accomplished, $33 billion market cap. McLaren has muddied up their brand with too many vehicles and a push model - loading up their dealers with inventory. They make such great cars, they should be way more exclusive, and they should have been more focused on building the value of their brand vs hitting volume targets.

[@trut52]

Eric Goldstein Ferrari itself was on the verge of bankruptcy a few times.

[@ski567]

Thank you for this 'peek behind the curtain' of the business world !

[@Sean_Farmer]

100% accurate Robert. A detailed yet concise evaluation.

[@nismobeach]

Excellent video. It's tough seeing McLaren struggle like this. I think things started to go bad when Ron was forced out of the company by Mumtalakat and Mansour Ojjeh. They might have been most of the money behind the brand, but the ethos of modern McLaren is pure Ron Dennis. Unfortunately I don't have the means to afford a McLaren yet, but I've had the pleasure of driving a 12C and sitting in a 675LT. Awesome cars. Definitely things I aspire to own one day. Nice rare roof scoop option on your LT by the way. That definitely mitigates some of the standard McLaren depreciation. ✌👍

[@artsolano6762]

I was looking to buy my 12th McLaren but everyone seems to have one now and I want something more unique.

[@samieb155]

My worry is that McLaren has saturated the market without the customer / after sales backup and satisfaction. You also hit the nail on the head when describing McLaren V Ferrari.

[@JayEmmOnCars]

Wise words. I agree entirely.

[@UweCaspart]

First of all: I really like ur channel. Quality information, no "show". KZbin for adults. Thanks for that. When it comes to McLaren it´s always the same: Great cars, BUT.... I´ve never driven one, even never seen one close up in real live, but it has a very bad reputation to me. To make it clear, i dunno if these are good or bad cars (well ok, in Assetto Corsa they are the worst cars to drive. Seems their only purpose is to kill its driver), but they managed, that I have a bad image of this brand. And I guess it´s not only me. It´s like reputation of FIAT in Germany. Ur thoughts are great, but I think even if they do it, it´s already too late.

[@RobertMitchell]

Odd that they drive so poorly in assets Corsa?!?!

[@peterh225]

“Simple”... sell emotions like Star Bucks😊 Great content!

[@RobertMitchell]

Easy Peasy 🤣🤣

[@Krushe]

Exactly, create the brand, They will come. Thats what the Hyundai N division is trying to do now. Hire the guys, build the brand, race and they will come. :)

[@TheCRSgt]

I completely agree with your assessment but it goes further than that. The deterioration of quality was also driven by over stretching their finances. From the very beginning they have chased profit rather than quality and that was the start of the downward spiral. While the cars are engineered well the build quality is terrible. The first cars such as 12C had an audio and SatNav panel that barely worked. Each new model has seen a downward trend and quality and dealers were stuck with the problem. Multiple dealers were spending time and money fixing newly sold cars rather than servicing customers in the traditional way. Additionally the availability of parts was terrible so cars were not only in the shop being repaired but often had to stay there for extremely long periods. By the time the 720s arrived the problem had only gotten worse and there are multiple stories of customers returning cars or refusing them due to issues. One dealer told, just after the release of the 720, that they had 6 new cars back in the dealer within a week of selling. Mine was one of them. It drove exactly 25 miles before it went into safe mode. I know multiple owners who “tried” McLaren and without exception they tell me they will never buy another one, ever. They broke down repeatedly, cost a fortune to service and then to add insult to injury, lost an absolute fortune when they sold them. McLaren’s arrogance has cost them dearly. Unlike in F1 where competition can be kept at bay due to politics and F1’s financial structure the real world is not like this. They were completely exposed by this arrogance. The management screwed their customers, their dealers and now themselves. They deserve to be in the pain they are in and the sooner they clear out the board the better. They destroyed the company via greed and contempt for the people who actually pay them, the customers.

[@RobertMitchell]

there is 100% more to it as you say!!! The constant pumping of new cars does not give proper time to test and trouble shoot.

[@asdf51501]

Their cars look pretty awesome, and almost certainly are pretty awesome. Hopefully they figure their issues out so they can stick around to sell plenty more.

[@R1j0hn]

I completely agree with everything you said... EXCEPT the fact that the COVID-19 pandemic hasn't effected car sales - even if it's exotics. It's effected every industry, globally. You can't deny it.

[@RobertMitchell]

Hold up.... I didn’t say covid hasn’t slowed sales! I said mclarens financial situation is not cause by covid. It already existed, the trajectory was already evident and covid made it worse. May be worth a Watch again :-) Hope all is well on your end!

[@AA-jx7lj]

The P1 and Senna look beautiful. The technology in those two are awesome.

[@vivid_racing]

Every manufacturer is going to have some weak spots, and its incredible that you recognize these things. Who knows, this might open a door for you to help build their company side by side!

[@RobertMitchell]

Doubtful they’ll call on me hehe. I hope they can make some solid changes as you know there is so much potential here

[@mabee7ify]

Mclaren did this to themselves. it might be that share holders pushed the production line more. They need to hold and rethink their business models.

[@Ikakusya]

The new GT is a marketing failure from my point of view and didn't get the press or client acceptance McLaren hoped it will.

[@dangriffiths9813]

Very good analysis. Enzo Ferrari said decide how many cars you can sell and then build one less than that number. McLaren are building too many cars and the residuals on the used cars is hurting as a result. That affects customer confidence in buying a new car and the surplus of cars increases even more...

[@HG504X]

Some good points raised. Think Mclaren need to really rethink that big strategy otherwise people aren't gonna be wanting the next Mclaren models.

[@RobertMitchell]

You’re right on the money there

[@rickyho2140]

The Mclaren technology centre is amazing. I was there last year and was just in awe. But by limiting their production for next few years where are they going to get cash flow to survive? Like you mention banks aren't going to lend them money based on their performance prior to covid. So it's all going to be leveraging their assets such as MTC?

[@Splexant]

Exactly. They need the CF from pumping out cars. They are extremely leveraged

[@paule_5351]

Interesting insight. Haven't thought about this whole sales strategies topic that much befor. But sounds logical

[@baloobagheera5482]

Agree with most of Robert’s analysis; however, this is not about boardroom decision making...rather its about management itself who have chosen volume and plethora of models rather than exclusivity which generates brand value...

[@RobertMitchell]

you can be certain that the boardroom was pushing for revenue and the management you refer to responded :)

[@wackyrc1394]

Very interesting argument, the problem clearly identified, and for free, thank you Robert!

[@TobiasHenreich]

Super interesting topic! Thanks for sharing, Robert!

[@arunbensla5623]

Loved the video bomb at 9:00