De Lorean's view of capital was certainly shaped by working within one of the world's largest companies. "When you work for General Motors and want to build a new foundry in Tonawanda, N.Y., and you need $600 million," he once explained to a reporter, "you fill out a form and send it away. You might get a phone call or two, or you might not. Then within a few months this document comes back with 100 signatures on it that says 'go spend the $600 million."
Getting the capital for his own project turned out to be a bit more complicated than it was at GM, but De Lorean was highly visible and knew how to capitalize on his reputation. To launch DMC he raised almost $10 million from 345 automobile dealers who were eager to sell his car, which he called De Lorean, and another $18 million from 134 limited partners, including such celebrities as Sammy Davis Jr. and writer Ira Levin. To this he added, eventually, some $200 million in grants and subsidies from the government of Northern Ireland. Remarkably, De Lorean himself put in very little money (less than $20,000 by some estimates) yet wound up with more than 80% ownership of the companies that bore his name. In the recorded annals of personal money-raising, few, if any, have scaled such heights.
Monday morning quarterbacks say that DMC was undercapitalized from the beginning. They are correct. But what De Lorean raised should have lasted considerably longer than it did. Accustomed to the perquisites of his high position at GM ("I don't think the heads of state of many countries came close," he once admitted. "You travel like an oil sheik."), he seemed unable to adjust to his new reality. Virtually from the outset, De Lorean's financial excesses jeopardized the company. De Lorean household servants were carried on the company's books as public relations employees. DMC cars were used, and, on occasion, wrecked by De Lorean's friends. His personal expenses ran $1,000 a week in addition to a $475,000-a-year consulting fee (in lieu of a salary). He made frequent trips on the Concorde, often demanding to be met at the airport by staff. DMC headquarters in the United States was a plush 43rd-floor tribute to Park Avenue ostentation. "You can't sell Gucci shoes from the corner of Broadway and Seventh," De Lorean explained. But a British critic saw it differently. "John," he said, "would sooner be sterilized than go second class."
Lifestyle aside, De Lorean seemed to have difficulty focusing on his central aim: to launch a sucessful auto company. Funds and energy went to dubious projects and goals. DMC paid more than $1 million in legal fees for non-DMC projects -- up to $30,000 a quarter to arrange the purchase of a Utah-based company, which made ski-slope grooming equipment, and nearly $500,000 for an unsuccessful bid to buy Chrysler Corp. According to Brown, $17 million was paid to GPD Services in Switzerland, which provided DMC with no apparent services. Later, De Lorean bought the Utah company with money drawn, in part, from a Swiss account (a "red flag" that prompted one of his key executives to resign). The car company's activities were confused with those of private De Lorean ventures.
In the three instances, money may have been drawn against one De Lorean holding to pay another. His sideline wheeling-dealing, which involved, among other things, a potato farm, a bus-building scheme, maritime services, optical lasers, replica cars, and an attempt to import Alfa Romeos, Suzukis, and Daihatsus, kept him from the principal task at hand and yielded minimal results, several lawsuits, and numerous cries of "crook." At a certain point, Brown began to question De Lorean's motives, wondering aloud whether the point of the company was to build a car or to generate a cash flow capable of maintaining the founder's lifestyle and illusions. When he finally called De Lorean on his use of "other people's money," De Lorean told him, "It's my company, and I'm going to do it my way. When you get your own company, you can do it your way."
De Lorean's use of management was early as wasteful. He had assembled a talented and experienced team -- including William Collins and Robert Dewey, formerly of GM; Eugene Cafiero, the esteemed ex-president of Chrysler; and Brown, who had taken Mazda's U.S. sales from zero to 120,000 units per year in just two years. DMC's relatively smooth start-up and auspicious introduction were largely a tribute to the team's efforts. The dealer network, the plant, quality-assurance centers, car financing arrangements -- all were the handiwork of the men De Lorean had hired. But, as he had at GM, De Lorean took all the credit. "John arranged it so that it looked like he was doing everything," explains Brown. "If the press did anything on the company, John was there. . . . What the press didn't realize was that John was there only when it was."
At the same time, De Lorean pitted himself against his top people, played one against the other, and ignored recommendations that didn't corroborate his conceits. They dissuaded him from issuing a 25-year warranty on the De Lorean body panels but didn't prevail on the gold-plated car. "I told him he would rue the day he thought of it," recalls Brown. DMC built two of them (De Lorean had wanted a fleet of 100) at a cost of about $125,000 each and sold them for $85,000 apiece. According to Brown, DMC still has about $50,000 worth of gold-plated panels in inventory. "It was not a credible activity for a neophyte car company," he remarks dryly.
In its brief life, DMC went through four chief financial officers. "They couldn't do what they felt was right," says Brown. "They couldn't serve both their charter as a CFO and John's objectives." Several executives quit, and Brown was "terminated" after he refused to let De Lorean's people seize cars that technically belonged to Bank of America, which had financed them. DMC's board proved equally ineffective. When it nixed one proposal (DMC's assets were meant to secure a $600,000 loan from De Lorean's personal corporation), it was quickly reconstituted.
All this occurred in the face of considerable obstacles to the success of DMC's product. Originally conceived as a competitor to Chevrolet's Corvette, the De Lorean was expensive and had a limited market. As production time lengthened, the initial target price of $10,500 rose to $25,000, narrowing the market further. "As you go up the price ladder, the volumes fall off damn quickly," one analyst explains. Worse, people weren't buying as many cars as they had in De Lorean's halcyon days at GM. Rising gasoline prices forced sales down beginning in 1978; by 1980, the Big Four were reporting aggregate net losses of $4.2 billion.
