F1 is profitable for Renault

The situation is therefore quite different compared to 2009: at that time, the management seriously considered the question of staying in F1 while the Renault team was in the eye of the storm after Nelsinho Piquet’s revelations about his deliberate crash in Singapore in 2008. A complete withdrawal was clearly contemplated, which could have been justified by the fact that other manufacturers (Toyota, BMW, and Honda) were following this path.

Finally, an intermediate solution was found: sell the Renault F1 Team but retain the engine manufacturing activities to showcase its excellence in a field where the French manufacturer has always been recognized for its excellence since its entry into F1.

This turned out to be a winning bet since the sale, as Renault has become twice the world champion by providing engines to Red Bull and Sebastian Vettel. At the same time, the former team bearing its name has only recorded five podiums.

That is why Carlos Tavares, the new CEO of the brand and a motorsport enthusiast, reaffirms the engine manufacturer’s commitment to F1, which had already been confirmed by the five-year agreement made with Red Bull: Formula 1 is a highly profitable investment for Renault. It costs a net investment amount in double digits (in millions of euros). It is an investment that is highly profitable. It’s been a long time since I gave up the idea of calculating the profitability of F1.

This profitability of the F1 program for the brand is also due to the adopted economic model. Indeed, unlike what McLaren could benefit from (until 2013) with the free supply of engines by Mercedes, Red Bull has so far only been a customer of Renault. When the first agreement was signed in 2007, the team with the red bull was just a mid-tier team, whereas Renault had just won the last two drivers’ and constructors’ titles. Red Bull was therefore not perceived as a strategic partner and only had customer status. The situation is obviously quite different now, and thanks to the new agreement signed last September, Christian Horner’s team will have Renault engines for free.

But the presence in F1 has another dual interest for the brand: gaining recognition on the international scene (the visit of Carlos Ghosn and Carlos Tavares during the Indian Grand Prix is an obvious sign of this, as the Indian subcontinent is strategic for its international development) but also showcasing the excellence of its products, which helps create value for the brand. This is achieved even more easily as Renault has a subsidiary dedicated to sports derivatives for the general public with Renault Sport Technologies.

The switch to the V6 planned for 2014 is thus excellent news for a group that specializes in small engines: We are witnessing a reduction in engine displacement due to the pressure to reduce emissions, which drives the entire engine population towards Renault’s center of gravity, namely the so-called mid-range engines. This is where we excel and where we apply all the lessons from F1 that our engineers here gradually bring back to the mechanical engineering of production vehicles.

With the participation of RacingBusiness.fr