Renault Partners With U.K.’s Caterham to Build Sports Cars

PARIS – Two European auto makers, Renault and Caterham, are starting a joint venture to build sports cars that will take advantage of their respective Grand Prix racing activities in Formula 1.

Renault is reviving its Alpine brand and Caterham will have its namesake models in addition to the Lotus Seven it makes in the U.K.

Caterham builds about 500 Sevens a year, and the JV almost would be a joke if Caterham wasn’t owned by the Malaysian who started Air Asia on Sept. 14, 2001, three days after history’s biggest airplane disaster that resulted from terrorists’ acts in the U.S.

“People talk about recession and wonder about building a car company at this time. That never worries me,” says Tony Fernandez, chairman of Asia Air and Caterham group chairman.

When he launched his airline so soon after what has come to be known as 9/11, “everyone said we were crazy. In our first year, we had two planes and 200,000 passengers. We now have 116 planes and we carry 40 million passengers.”

Fernandez expects the same kind of growing success from the JV with Renault.

The partnership with Caterham assures the future of the small Renault factory in Dieppe that now has 60 employees and produces the Clio Sport – fewer than 3,000 units last year. The project is receiving financial support from Dieppe, the Upper Normandy region and the French government.

Caterham entered Grand Prix racing in 2011, one of four teams using Renault engines, and 18 months ago Renault raised the idea of the JV.

“When we first went into Formula 1, our goal was to build sports cars,” Fernandez says. A deal with Lotus collapsed, but now with Renault, Caterham will get its own models alongside the Alpines.

Caterham Group Deputy Chairman Dato Kamarudin Meranun says the plan is to develop Caterham “from a very well-respected niche brand into a serious player on the global motoring map.”

Renault says products will be differentiated, each with their own brand’s DNA.

Historically, both Caterhams and Alpines have been lightweight cars. This means they can share the basic platform that will be engineered by a forthcoming team, using resources from Renault, Renault Sport and the Caterham Technology and Innovation engineering subsidiary.

Anticipation will be high in France and England, where the two brands are known, respectively, but they are relatively unknown outside their home countries, says Jean-Michel Prillieux, analyst with Inovev here.

The Dieppe plant has a capacity of about 30,000 units, but is acquiring additional land for the project that could be used for expansion. A team of 40 engineers will develop the cars, and ultimately 300 people will work on the project.

Renault CEO Carlos Ghosn says the global market for sports cars is about 600,000 units annually. Of that, Europe represents about 100,000 sales, according to Inovev. But Ghosn expects the segment in Europe to grow 4% in the next four years.

The Caterhams and Alpines due in late 2015 or 2016 will have to displace sales of other sporty cars such as the Volkswagen Scirocco and Citroen RCZ.

Media reports say Renault is aiming at a volume of perhaps 5,000-10,000 cars starting at about €30,000 ($40,000). The vehicles will not compete in price with the more exotic Ferraris and McLarens, the only other brands with cars in Formula 1.

“Both those cars are exceedingly expensive,” says Fernandez. “We will produce a car that many more people can afford. When you produce a product that people want at the right price, there is always a market.”

The price of a Caterham Lotus Seven, a 2-seat open sports car, ranges from €17,480 to €54,600 ($22,400-$70,000).

The revival of Alpine could help raise the prestige of the Renault brand, analyst Prillieux says. “Alpine could become the luxury brand for Renault, as Infiniti is for Nissan.”

Renault also is developing a sub-brand called “Initial Paris” for its best-equipped cars, starting with the new Clio.

A Renault executive with a financial background, Bernard Ollivier, will be in charge of the new joint venture. “The road map for each car is clear and simple,” he says in a statement. “Respect the DNA of both Alpine and Caterham Cars. With the passion and expertise of the staff dedicated to this project, we are sure of meeting this aim.”