Features - News Feature
DECEMBER 22, 2000
What Renault wants to achieve in F1
BY JOE SAWARD
When Renault announced plans to withdraw from Formula 1 in January 1997, the company chairman Louis Schweitzer said that the firm would be back "in three or four years". There were more important things to do than extending Renault's incredible run of success in Grand Prix racing. Schweitzer was about to announce a $750m losses for 1996 and he needed to cut costs.
So Renault quit the sport and Schweitzer axed the vast Renault factory in Vilvoorde, Belgium. He told the French unions that they were lucky to escape with only 2750 cuts in France. And very quietly he expanded Renault production outside France. The intention to return to Formula 1 remained unchanged and the company was able to keep up with F1 engine development through its involvement with Mecachrome (which had taken over the old Renault engines) and with Supertec, which arrived to sell the engines for Mecachrome. Renault Sport engineers simply changed their shirts.
The only question that needed to be resolved was what form Renault's F1 return would take. The recent trend in F1 is for car manufacturers to buy into teams but to leave the running of the operation to the experts in Britain. Renault was expected to follow suit with Tom Walkinshaw carefully lining up Arrows as a logical choice with a deal to produce "Renault Sport" versions of the Clio at his AutoNova factory in Uddevalla, Sweden. His partner Morgan Grenfell Private Equity wanted to sell its shares in the team. The shares would be cheap. It was assumed in the F1 paddock that Renault would follow the trend. A purchase was expensive and tied up money in assets and people. A partnership was more logical. Honda, BMW and Mercedes-Benz had all followed that route. No-one thought that Renault would go it alone.
Part of the reason for this was because F1 remembered Renault's disastrous period as team owner when the company was humiliated in 1980, 1981 and 1982 by the small British teams with their Cosworth engines. Then BMW and TAG Porsche turned up and by the end of 1984 the Renault team was in disarray. A non-racing manager was brought in to sort out the mess but he failed and at the end of 1985 the team was closed down. A few months later the manager was charged with diverting funds from customer engine deals to a Swiss bank account. It was embarrassing. At the end of 1986 Renault walked. For the next two years it licked its wounds, learned from its mistakes and then returned in 1989 as an engine supplier. Two years later Renault V10s were dominant and for six years Renault picked up the Constuctors' title in addition to five Drivers' titles.
Patrick Faure, the chairman of Renault Sport, rode the success and seemed to be on course for the top job at Renault when Schweitzer retired. But after Renault quit F1 Faure was put in charge of the company's industrial vehicles division. There were new rising stars, notably Carlos Ghosn. Faure's trump card remained Renault Sport. If he could revive its success - in a high profile way - perhaps there was still hope.
This may have something to do with the decision to buy Benetton.
Whatever the motivation behind it, the decision took F1 by surprise. There was no hint that the Benetton Family was interested in selling the whole team. It had been an amazing asset and for which they had paid peanuts back in the mid-1980s. As recently as the summer of 1998 the family had rejected an offer from Ford to buy a share of the company. That was a disastrous mistake by the Benettons and led to the departure of the team's chief executive David Richards. Rocco Benetton was placed in charge but the team drifted in 1999. The $16m which Benetton invested in the team was still a cheap price to pay for the publicity generated. The problem for Benetton was that it very nearly lost the $30m from Mild Seven for the 2000 season. Early last year the Honda Racing Developments team had reached agreement with Japan Tobacco for the Mild Seven money. Fortunately for Benetton the Honda project collapsed and Japan Tobacco was convinced to continue to support the team for one more year. That deal staved off disaster but there remained a pressing need was for an engine supply which did not cost money. Paying Supertec $20m a year did not make sense and because of poor results new sponsors were difficult to find. Marconi joined the team this year with a rumored $6m, but the going rate for the space Benetton gave Marconi was around $20m.
Announcing the sale Luciano Benetton said that the decision to sell came about as a result of the rising costs of Grand Prix racing and the need to have a manufacturer behind the team. This made sense but it did not explain why the family decided to dump the entire team rather than continuing to reap the benefits of the cheap advertising in F1.
The only obvious explanation for this was that the Benettons were not comfortable with Renault's desire to put Flavio Briatore in charge at Enstone. The Benettons had dumped Briatore at the end of 1997, apparently because of his failure to keep the team successful after he lost Tom Walkinshaw and Michael Schumacher. But while Briatore had been unable to convince the Benettons of his talents, he was always able to convince the Renault Sport management that he was the best man for the job.
In the end the Benettons extracted a good deal from Renault. The $120m was about what the team was worth and the family will get another two years using the Benetton and Playlife brands on the cars. Benetton's half-yearly results revealed that the actual cash payment from Renault was only $82.4m so the other $37.6m is believed to have come in the form of free advertising for the 2000 and 2001 seasons.
The question of cost is obviously still important to Renault as it now has to answer to shareholders and Faure has made a point of stressing that being a team owner is less expensive than being an engine supplier because of the revenue from sponsorship and TV rights. Renault will have less difficulty than Benetton in raising outside sponsorship as it will be able to lean on suppliers such as Elf and Michelin. But the intention is to use the team to publicize the Renault which the company intends to move into the luxury car markets with the intention of going head-to-head with Mercedes, BMW and Jaguar.
Renault's aim is to completely change the Renault image in the next 10 years, in order to differentiate the brand from Nissan, Samsung and Dacia, which the company is rebuilding at the moment. The plan appears to be to follow the Volkswagen lead of having a group of brands aimed at different market sectors with Renault becoming the flagship marque and Nissan producing the small runabouts for which Renault is famous. In order to achieve these goals Renault is planning a completely new range of cars which will begin next year with the launch of the Vel Satis and Avantine models. These are both top-end models, the Vel Sartis being a four-door replacement for the Safrane and the Avantine being a sporty two-door coupe.
The Formula 1 program is obviously an important part of that plan and as an indication of its importance the company put its manager of the production engine design division Jean-Jacques His back to Renault Sport as technical director. His is one of the most respected engine designers in Formula 1. He has been with Renault since 1972 and was head of research and development at Renault Sport between 1984 and 1986. He then moved to Ferrari where he oversaw work on the Ferrari V6 turbo, the Indycar V8 turbo and the new 3.5-liter V12 F1 engine. In mid-1988, however, he returned to Renault Sport and then worked on the Renault V10 engines until the company withdrew from F1 at the end of 1997.