Renault considering official return to F1?

There are stories today that Renault SA, the French automobile company, may be considering buying back control of the Formula I team that bears its name. The company sold 85% of the team to Luxembourg-based financial company Genii Capital at the end of last year, when the car industry was still in a mess and the team was beset by a scandal surrounding the 2008 Singapore Grand Prix. The team then underwent a change of management and a complete rebranding, in order to break the link with the old team. But the new owners have not put in the money that was hoped for and the funding in recent months has been somewhat piecemeal, with small sponsorship deals coming from banks. The team’s performance has improved dramatically and with the name Flavio Briatore now part of the history of F1, it is possibly a good moment for Renault to return. The company’s financial situation is a lot better than it was with the recent announcement that Renault earned $1.01 billion dollars in the first half of the year, which was good compared to losses of $3.5 billion in the same period a year ago, the company’s turnover was up 23 percent to $25 billion and there was growth across the board, both geographically and through the model range. This means that the company is easily outperforming the market, even if investors are still cautious, with shares trading at around a third of their 2008 value.

Investment in F1 makes a great deal of sense, when seen in the context of the firm’s global expansion. F1 goes to India for the first time in 2011 and Renault has recently said that its Indian subsidiary is aiming to build its own cars at Pune, beginning in the middle of next year. Renault’s partner in Russia AutoVAZ is planning to introduce the Lada Granta in 2011. This will be similar to Renault’s Twingo. If this is successful it is expected that Renault will buy the production line and begin selling the car in other markets. The cars will be priced at $7,000, which will make them the cheapest in Europe. This process has already been done with the Logan, originally built by Renault’s Romanian subsidiary Dacia. This was a success in the emerging markets and now also sells well in western Europe. The alliance between Renault-Nissan and AvtoVAZ plans to capture 40% of the Russian market by 2015.

It is clear that Renault is going to have fund much of the F1 operation if Genii Partners cannot find new backers – if only to protect its longterm investment – and so it makes sense to buy back the entire operation. Bernard Rey, who was the Renault F1 chairman until the Genii deal, appeared at Spa for the first time in months and his presence may have kicked off the current rumours. There is also talk of Renault wanting to sign Kimi Raikkonen. The former World Champion is currently rallying with Citroen and he recently said that “I will probably never return to F1″ and added that “I had many great moments. I won a World Championship, which is what I always wanted, but times have changed. Now I’m in rallying and there are many other things apart from F1 in life.”

Raikkonen says that he would also like to compete in the Le Mans 24 Hours, if the right opportunity presented itself. This will no doubt be listened to at the management of Citroen’s sister company Peugeot, which has tried to win the event for the last four years and won just once.

Driver dealings these days tend to be concluded some years ahead and with Robert Kubica signed for Renault until the end of 2012 the team has some stability, but Kubica’s form is such that it is very likely that he will be snapped up by another team for 2013. That may already have happened, although such long-term deals are generally denied as they tend to demotivate the current driving staff. The current situation is that McLaren is believed to have Lewis Hamilton and Jenson Button under contract to the end of 2012; Red Bull Racing has Mark Webber on a one-year deal in 2011, while Sebastian Vettel is contracted until at least the end of 2012 and possibly until 2015. Red Bull might want to look elsewhere, but that would negate all the investment that the company has made bringing on new young drivers, as there is little point in a young driver scheme if one fails to use the youngsters… Scuderia Ferrari Marlboro has both of its drivers contracted until the end of 2012 as well, but may change after that.

At the moment there is some discussion about Kubica’s team-mate in 2011. Vitaly Petrov has done a decent job this year – and will be better next year – and he is a key figure in a number of important markets for Renault. However, there is an argument that there are better choices available in Adrian Sutil or Timo Glock. There is no real urgency for a decision as the market will remain blocked until that decision is made. Petrov has some more races to show his capabilities and I suspect that the decision will wait until November.