Renault pins rescue on return to Alpine
Renault SA, which is losing sales faster than any other European carmaker, is pinning a turnaround in part on the revival of a sports-car brand that’s been dormant for almost two decades.
The plan relies on a partnership with Caterham Group, a British manufacturer of offbeat track cars that typically have exposed front wheels and roll bars rather than roofs. For enthusiasts of Renault’s mothballed Alpine marque, the key factor is just getting the brand back on the road.
Renault, which also makes budget Dacia vehicles, is shifting upmarket, mimicking the strategy of Volkswagen AG. Europe’s biggest automaker relies on Audi for 48 per cent of operating profit, even though the upscale brand accounts for just 14 per cent of deliveries.
Renault’s goal is to carve out a niche in the luxury-car market, which could in turn give its mass-market models an edge.
“It’s a good idea to introduce Alpine as there will be a halo effect” for Renault’s other models, said Neil King, an automotive analyst at research company Euromonitor International.
The move follows similar steps by PSA Peugeot Citroen and Fiat SpA to attract wealthy buyers. With auto demand in Europe contracting for the fifth straight year to the lowest level in 17 years, mass-market carmakers are looking for ways to boost revenue as the effects of the debt crisis weigh on demand.
Renault halted Alpine production in 1995 after four decades because of poor profitability. Sales peaked at about 2,000 cars a year in the 1980s. The cooperation with Cater- ham, Renault’s Formula One racing partner, is aimed at spreading costs that could approach $1.3 billion, according to an estimate from Bankhaus Metzler.
“Alpine and everything that goes with it has high emotional and business value,” said Bernard Ollivier, CEO of Renault Alpine.
While production ended years ago, “generations of people have seen this car,” said Ollivier, who vows that the revived brand will be profitable. “They represent live embers. You just need to blow on them to make them burn again.”
Renault and Caterham will each own 50 per cent of the Alpine venture, according to an agreement signed last month. Both companies will introduce their own versions within three to four years. Alpine vehicles are set to cost slightly more than the Renault Espace minivan, the carmaker’s most expensive car at $46,300. That price range would put Alpine in competition with the Toyota GT86, BMW Z4 and Audi TT.
“Renault’s new Alpine may end up looking like the poor man’s Porsche Boxster,” said Philippe Houchois, an analyst with UBS. “There’s some room for that.”
For now, any sales boost would be welcome. The French carmaker’s European deliveries plunged 18 per cent through October, outpacing the industry-wide 6.9 per cent slump as the market heads for its worst drop in 19 years.
The company has suffered more than most as it seeks to hold incentives in check to protect profit.
Peugeot was prompted to seek $9 billion in government loan guarantees for its banking arm as sales tumble and cash reserves dwindle.
The new brand faces volatile demand. The entry-level sports-car market is driven chiefly by new models and can swing wildly depending on the confidence of its customers, which are more sensitive to the economy than buyers of Ferraris and Lamborghinis.
Sales in the segment last year totalled 46,900 vehicles, 71 per cent below the 2006 peak.