Thursday 28th April 2011

Caterham Sale: The Full Story

PH talks to both Tony Fernandes and Ansar Ali to find the real story behind Caterham's new ownership

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'Team Lotus Enterprise buys Caterham'. There's a headline to send internet forums and chatrooms into a frenzy of speculation and comment. Another independent British sports car company lost to a foreign buyer, in this case Tony Fernandes, the Malaysian multi-millionaire airline owner who also helped bring back the Lotus name to Formula One.

So, does this move mark the beginning of the end for the much-loved Dartford-based maker of extreme road cars and trophy-grabbing racers? After all, things didn't work out so well for TVR once the young Russian, Nikolai Smolenski, got his hands on that company...

Of course, short of a crystal ball there's no guaranteed way to know for sure, but PistonHeads was given exclusive access to the two key players in the union between Team Lotus and Caterham: Ansar Ali, who has owned the company for the past six years (having previously worked at Lotus), and Tony Fernandes, frontman of the new owners, Team Lotus Enterprise, the company also responsible for the Team Lotus F1 outfit.

Tony Fernandes
Initially it's perhaps not so reassuring to hear Caterham's new owner confess that, "I'm not really a petrolhead and until recently I didn't have much interest in road cars."

In fact, until a couple of days ago, and despite having worked on the Caterham deal for the past four months, the amiable and talkative Malaysian hadn't even been in a Seven, much less actually driven one. And he hadn't visited the Dartford factory.

"Two days ago was my first time out in a (Caterham) car and I was scared shitless by Simon (Lambert - Caterham's motorsport manager) as he roared through the Dartford area - I kind of wanted him to stop, but then he just kept going quicker!

"Then I had a go and didn't get it out of third gear, it just felt so fast. But when you drive a Seven it feels a spectacular experience - you get out of it and feel a new person, it's so different to any other car. Formula One and Caterham, the emotion is just the same. Heikki (Kovalainen, Team Lotus driver) drove the car today (at the Duxford-based announcement of the takeover) to do doughnuts for the crowd and he was blown away by it - we had to tell him to stop!"

Enthusiasm for the product is all well and good, but might not Fernandes blunder in and upset the workings of a tightly knit team that has been running a successful business in recent years? "I met everyone at Dartford the other day and they're a really great team, a unique team. And Ansar is so passionate and so knowledgeable; I will just let him get on with it. I believe in people; my role is to help with a strategic vision."

Fernandes is maybe understating his role here, as he's also bringing significant investment to the table, of a magnitude that should allow Caterham to pursue some development avenues previously blocked off by lack of capital. Not that the company is about to go wild with ambitious new model programmes and abandon its past.

Having gotten involved in Formula one, particularly with a Lotus connection, Fernandes understands the importance of heritage.

"The Seven is the Seven - it can't be touched. And while it's a very important car to the British and to a lesser degree parts of Europe and Japan, we can now use the F1 platform to introduce it to new territories."

The core of the Seven's appeal will be in motorsport, reckons Fernandes, and with the near-inevitability that the Caterham name will soon appear on the Team Lotus F1 cars, it will have extra credibility in emerging markets such as China and India. The ultimate plan is for Caterham to create a motorsport 'ladder' with its base supported by karts, rising up through various Seven series, endurance models, single-seaters, and sitting on the top rung the Formula One cars.

And what of the Formula One connection, will it really have any impact on Caterham in the short- to mid-term future? "I want to see some of the tech from our F1 team provide the inspiration for our road cars, not at the very high end, but in £20-30,000 cars. We've made our F1 racing cars more accessible and affordable than previous generations and I believe that Caterham offers the same things."

With the prospect of Lotus moving the Elise more upmarket, could there be an opportunity for Caterham there? Fernandes doesn't answer directly, yet his wry smile hints at where his mind might be wandering. "We have lots of dreams for the future, but the reality right now is taking Caterham into other parts of the world to grow.

"There's definitely a market for creating more race series with the Seven. And there may be a market that others have abandoned for an affordable sports car..."

Other ideas also ricochet around his fertile and fast-moving mind. "We could ultimately create an engineering division," he muses. "We're very good at composites, for example. And it would be great to have a car factory and a race team and a test track all together in the same place."

Ansar Ali
Ansar is an intense bloke. He takes even the slightest criticism to heart. Today he's nervous and on stage during the press conference momentarily forgets his speech; he has to drag written notes out of his pocket. He's desperately concerned about how people will view the sale of Caterham.

So concerned, in fact, our interview starts with him asking the questions. "Tell me honestly," he implores, "do you think I've done the right thing? Do you thing I've sold out?"

Well, Mr Ali, we were rather hoping you'd tell us. And then he does. "If I didn't believe this was right for Caterham then I wouldn't have done it. When I first met Tony (Fernandes) I knew that it was right, and the more I know of him, the more I believe that.

"He's very passionate about Caterham and has the drive to ensure we will always produce cars that are accessible to all. At the Seven's 50th anniversary I stated that the company would be around in another 50 years, but to be honest I'm not sure I truly believed that. Now, however, I really do believe Caterham will be around in 2057, for the Seven's 100th anniversary."

Ali realises that everyone's first fear about the new ownership of Caterham will be what happens with the Seven. But while he starts with a word of warning, he's otherwise very positive and reassuring about Caterham's core offering. "The Seven as it stands will eventually be outlawed as a road car. Britain is now the only country that allows the self-build of the Seven for road registration. But we'll continue to evolve the car until the legislators stop us doing it."

How much evolution can there possibly be, though? Ali explains: "The further you move away from Dartford, the more hardcore our customers become, particularly in places like Germany. So it's not inconceivable that we could produce an R500 that passes EU5 emissions regulations. That would certainly open us up to a much wider European market."

Being a motorsport devotee, Ali is excited by the notion of the Team Lotus connection allowing Caterham to expand its racing activities into new markets, especially in Southeast Asia. The ultimate purpose of this, of course, is to sell more cars, and with labour so cheap in, say, Malaysia, Fernandes's homeland, is there a temptation to move Caterham production out of the UK?

"Absolutely not," insists Ali. "The whole infrastructure for building Caterhams is here in Britain, all our suppliers are based here. And the beauty of a Seven is that there's hardly any labour in it; there'd be comparatively little saving to be made."

For the moment, at least, Ali doesn't see Caterham expanding massively, despite the fresh investment opportunities brought by Team Lotus Enterprise. "Caterham is very profitable on 500 units (the company's sales last year), so with new markets 1000 cars annually seems like the right number on a global basis. We need to continue doing what we do, and doing it well."

Ali confesses that during six years at the helm of Caterham, the need to focus on running a business during some pretty tough times has meant he's felt like a caged animal, locked in his office. Now that Fernandes and crew have effectively opened the cage door, he's not quite sure in which direction to run. What he won't be doing, however, is indulging in a massive spending spree.

"I'm telling everyone in the factory that we will still be running a very tight ship. We've done well on nothing. And we're innovative when we've only got two brass farthings to rub together, so I feel we mustn't now get carried away."

Yet there is a need to move Caterham on, a process that has already started with the forthcoming SP/300.R sports racer-cum-trackday-special, development of which has slowed over the last few months while the Team Lotus deal was being negotiated. "When I first got here," reveals Ali, "I wrote a story in the Caterham club magazine and said 'please don't love us to death.'

"That created an instant furore. What I meant by it was that the company ultimately won't survive on enthusiastic support alone - we're a business and we need to make money. So as well as the Seven we do need to do other things. The SP/300.R was born out of requests from some customers to move on from the Seven.

"I'm very excited about this car because it proves that customers are prepared to accept a sibling for the Seven. There's been a lot of interest in the car from the States, and early development figures coming off it are surprising even Lola (the race outfit helping to engineer the SP/300.R)."

Does that mean Caterham might countenance a new road car, something akin to the S1 Elise, now that Lotus appears to be moving away from this area? "I'd be lying if I said we haven't thought about it," admits Ali, "but when you're looking at this type of vehicle, you're moving into the realms of Whole Vehicle Approval, which is massively expensive and complicated.

"It would also mean meeting legislative needs for airbags and stability control systems etc, all of which add weight and move us away from our traditional philosophy of lightness and affordability. So for now we'll stick to small series production."

Whether or not the words and thoughts of Messrs Ali and Fernandes bring you hope and solace or fail to assuage your cynicism, there's no doubting that Caterham will be in the news for many months to come.

[Ex Boy Racer]

Could someone get Ansar Ali back at Lotus. He seems to understand the importance of heritage and history, and that things can't be changed overnight. He might stop the disaster that will inevitably happen at Hethel.

[Ex Boy Racer]

cathalm said:

Ex Boy Racer said:

Could someone get Ansar Ali back at Lotus. He seems to understand the importance of heritage and history, and that things can't be changed overnight. He might stop the disaster that will inevitably happen at Hethel.

Absolute cobblers.

And how could i possibly respond to such a well thought out argument???

[Ex Boy Racer]

Some Gump said:

Cathal, am I correct to read that you think Behar's plans have a chance of sucess? I just can't see it. Time and time again, the market has proven that petrolheads are NOT the buyers of exotica. Take the Evora. Apparently it trounces the 911 dynamically, but they're selling them in 100's whilst Porsche sell in 1000's.
The 911 is a brilliant car. I'm not having a pop at it. However, you only need to join PCGB (don't, it's ste), to see that at least 50% of Porsche owners buy them to show off, not to drive them properly. Lotus doesn't have, and never will have the brand heratige of Porshe, Ferrari, McLaren, Lambo, Bugatti, Merc, BMW, the list is waay long. To get that heritage will take 2 generations (after all, most of us like cars our dads liked when we were below 10).

Bahar hasn't got that long. He has 5 years, IF he can hit plan - I can't think of any car manufacturor that has turned around in that time...*

• Skoda / SEAT don't count. Once their brands were just rebadged polos etc, the cars the former companies made don't come into it...

Edit - it's PCGB - PCCB are brakes. Sorry for the typo =)

Edited by Some Gump on Friday 29th April 02:33

Sadly, all of this is true. Wishes do not a strategy make - Lotus is trying to do the impossible in my opinion. Even if the product they produce is superb, they still will fall far short on brand perception.