It’s been an up and down year for Caterham. In March 2014, their Joint Venture with Renault came to an end, and with it the dream of producing a Porsche-challenging sports car. While the iconic Seven has gained several new additions (the 270, 360 and 420 models), becoming the best it has ever been in over 40 years of production.
Then there was Formula One, and the crowdfunding campaign which raised £2,354,389, helping the Caterham F1 team race in the final Grand Prix of the 2014 season in Abu Dhabi. You’ve got to love a fighter, and nearly six and a half thousand fans and enthusiasts showed their support for a small group of people that had come to symbolise the essence of the British bulldog spirit.
Sadly, attempts to save the team failed and its assets are now available to buy after administrators Smith & Willamson LLP gave up trying to find a new owner.
But our focus today is firmly on the future as we sit down with Caterham Cars CEO, Graham Macdonald and Chief Commercial Officer, David Ridley.
We meet in the company’s new 25,000 sq ft showroom in Crawley, West Sussex – known officially as Caterham South – where more than 500 Caterham owners and guests gathered for an Easter Monday celebration and showcase of everything that defines Caterham in 2015 and beyond.
It’s an impressive facility, directly opposite the shiny head office of Virgin Atlantic, the company founded by the entrepreneur Richard Branson, and a world away from Caterham’s dilapidated old factory in Dartford, Kent.
It may seem somewhat ironic then, that taking pride of place in the new 40 car showroom are two former Caterham F1 cars, purchased from the administrators as a memento of the brand’s four years competing in the top theatre of motorsport.
I start by asking Macdonald about the Caterham Group business (co-chaired by Tony Fernandes), which previously comprised Caterham Cars, Caterham Technology & Innovation (CTI), Caterham Composites, Caterham Bikes, Caterham Moto Racing Team, Caterham Challenge and the F1 and GP2 race teams.
During the past year, many of the divisions within the group have either been closed or sold, so I wonder how the remaining businesses were now structured to benefit ‘Cars’.
Export sales account for well over 50% of Caterham Cars’ business, with 345 vehicles sold to customers outside the UK in 2014 (just shy of 500 units in total). Their budget for 2015 is a total of 650 vehicles (15 units per week), but according to Ridley this could increase to nearly 800 units once improvements in their supply chain are made.
Knowing many of the company’s suppliers, that last point may touch something of a raw nerve. I get the feeling that running an F1 team and investing in a major industry JV has taken its toll on more than just group finances, and MacDonald seems relieved that the challenge ahead is more within his grasp.
As Caterham’s dealers will know, cars are not being supplied quite as quickly as they would like, with frustrations boiling over to the benefit of their newer competitors.
Reading between the lines, I ask whether these problems are a case of finding new suppliers or giving existing suppliers sufficient confidence in Caterham’s business? Both Ridley and MacDonald confirm it’s a bit of both.
But Formula One also created concerns about Caterham’s business, whether that be the business of winning or making sound commercial decisions in the best interests of its stakeholders.
When we last interviewed MacDonald, he talked about his goal of “..creating another British success story, a global brand that is recognised for the excellence of its products.” So, I wanted to know what had changed (if anything) and whether Tony Fernandes remained as committed to Caterham’s future as previously stated.
But when we spoke in March 2013, MacDonald said “Tony didn’t invest his money in Caterham to produce just 500 cars a year and £20 million revenues”. So what does Fernandes now expect from Caterham?
Okay, that’s not the answer I was looking for. Let’s ask a more direct question. Is Caterham for sale?
Beyond the Seven
As we walk around their new flagship showroom we see the AeroSeven, CK-01 kart and the SP/300.R LMP1-lookalike track day vehicle. So, are any of these still planned for production?
And what of the closed cockpit two-seater sports car that Caterham were developing with Renault Alpine?
MacDonald has taken plenty of heat from the breakdown of the Renault JV – their investment in CTI, which closed its doors in February, was primarily to work with Renault, so they’ve had to cut headcount, remove overheads and let go of several senior people. MacDonald described this as “..a painful but necessary process.”
“My first task is to return the business to a profitable state,” said MacDonald, “because we were recruiting and spending money to develop the business. My goal as agreed with Tony is to get it back to selling a reasonable number of cars, profitably, and let’s see where we go from there. And if someone comes along and offers however many millions that Tony wants for it, I’m sure he’d sell it tomorrow.”
We leave Caterham more optimistic about its future than when we first arrived. Not the ambitious future once described by Tony Fernandes, but one grounded on the principle of delivering a simple thrilling product to its growing customer base.
It should come as no surprise that the business is being prepared for sale, but it comes with some relief that Fernandes wishes to leave it stronger than when he first acquired it.