LONDON (Dow Jones)--Less than two years after Russian millionaire Nikolai Smolenski surprisingly bought the Blackpool based TVR, the specialist sports car company is on its knees.
What else can one conclude about a company that says it's not prepared to sign a new lease on its main factory and lays off another 71 workers? Even the refusal to call in the receivers suggests the owner doesn't want to save it.
TVR produces less than a handful of cars a week, but it's still a well-known brand among the double-income, no-kids brigade.
The company was struggling when Smolenski bought it. The racy-looking cars with the throaty roar are still well-loved and respected, but TVR has been losing sales since 1998.
Too pricey, perhaps? They cost less than a Porsche and by all accounts are reliable.
Smolenski, whose reasons for buying the company are hard to fathom, has only himself to blame for its current problem. The company depends on exports and Smolenski failed to recognize that renewing Euro IV-type approval concerning emissions.
He also landed in a dispute with former TVR owner Peter Wheeler, who still owns the Blackpool factory in which the cars are made. Rubbing the Transport & General Union up the wrong way over union recognition didn't help.
At 26 years of age, Smolenski just doesn't have much business experience. It shows.
In the sports car market segment, sales are generally falling, and competition is tough. TVR cars are good, but customers can turn to Porsche, BMW or Japanese brands. And they have better dealership and distribution structures to provide sales, support and maintenance.
To survive, TVR will need to make its components abroad, and maybe assemble them there, too. And it will need to set up a dealership structure across Europe, assuming he gets the emissions approval.
Shipping TVR lock, stock and barrel to another country - one that can make the cars much more cheaply than they cost to produce in the U.K. - seems sensible.
That would leave Morgan, Caterham and Westfield as the last makers of specialist sports cars in Britain. They all produce cars that were essentially designed decades ago, and fall into a different class of sports car.