Caterham boss plans new model blitz

It turns out that Tony Fernandes, co-chairman of the Caterham Group, once shared a London postcode with former PM the late Mrs Thatcher.

It seems, too, that she wasn't a supporter of Caterham's staunch commitment to the cause of lightweight sports cars.

He recalls catching the Iron Lady’s eye one day while he was making an exuberant departure in a Caterham Seven. “I saw her looking in my direction as if to say, ‘Who’s the lunatic in that car?’” recalls Fernandes with a grin. “You don’t see too many Caterhams flying around Belgravia.”

It sounds as if the lady wasn’t for handbrake turning. However, the enterprising Mrs T would surely have admired Fernandes’ ambitious growth plans for the sports car manufacturer.

It has been two and a half years since Fernandes and business partner Kamarudin Meranun bought the company from venture capitalist Corven. At the time, the Malaysian was embroiled in a dispute with Group Lotus owner Proton over the use of the Lotus name for his Formula 1 team.

While that was going on, the opportunity to buy Caterham Cars arose in what Fernandes describes as “a happy accident”. Not only could his F1 team be rebranded with a fresh identity that put the Lotus confusion to bed, but he could also own a car company faithful to Colin Chapman’s engineering philosophies, which is something close to his heart. As he dug deeper, Fernandes could see untapped potential in the British engineering talent at Caterham’s Dartford premises.

“Caterham is the people,” says Fernandes. “They live, eat and breathe the brand. There’s nothing I can teach them; all I can do is give them a direction. We didn’t plough in like a bull in a china shop. We didn’t go to motor shows and say we were going to come out with 10 new models. We found our feet.”

As the new owners bedded in, the group grew. Caterham Technology and Innovation (CTI), headed by Mike Gascoyne, was set up in Hingham, Norfolk, to focus on future model development and external engineering projects. An advanced composites division in Germany was acquired.

There was upheaval last year when Caterham Cars’ top management, Ansar Ali and Mark Edwards, departed. Long-time lieutenants such as chief financial officer Graham Macdonald (now chief executive) and David Ridley (commercial director) stepped up. With the structure in place, attention has turned to the future, with the AeroSeven concept as its focal point. 

The car presages a three-pronged strategy. The first element is that the Seven will remain largely unmolested. “We will never alienate the purists,” says Fernandes. “We would be foolish to move away from our DNA. I think we can keep the Seven for another 50 years.”

The next foundation, says Fernandes, will be “cars that hold a more contemporary appeal”, such as the production version of the AeroSeven concept and the sports car yet to be born out of the joint venture with Renault.  

Finally, and most contentiously, there are plans for more functional crossovers and city cars that blend the fun factor with more practical body styles. The key to this, he says, will be forging further joint ventures that enable Caterham to use the technology of major manufacturers to create new models cheaply and efficiently. 

The success of Fernandes’ vision could hinge on whether customers can accept a Caterham that is anything other than a focused sports car.

“There are two trains of thought,” he says. “The first is whether it is still a Caterham if we do a hatch or a crossover. We will have to make sure you get into the car and say, ‘This is a Caterham’. That means fun to drive and a good power-to-weight ratio. On the other hand, in 95 per cent of the world Joe Public doesn’t have a clue what a Caterham is, so it’s ripe for development. It’s a balancing act.”

Fernandes points to Porsche and Jaguar as examples of brands that have successfully stretched their line-ups, but it is Lotus that he holds up as the main inspiration behind his plans. 

“I’m trying to take on the mantra of Colin Chapman,” he says. “It’s the affordable dream. When I was young, I could afford a Lotus. I couldn’t afford a Porsche or a Ferrari even if I wanted one, but actually, I’ve never had as much fun with any other car as a Lotus.

“We want to give you cars that make you think, ‘That’s great value for money’. I think we can do that in a hatch. You can have a four-seater, but it still has the fun of a Caterham.”

If the plans sound ambitious for a company that has mostly produced variants of one core model for 40 years, it is worth noting that Fernandes has form for spotting hitherto untapped market niches. In 2001 he bought the ailing AirAsia for 25 cents and took on its $11 million of debt, before rebuilding the company as Asia’s first low-cost airline.

“We built the airline out of nothing,” he recalls. “It had two planes and no brand; today we have 150 planes and carry 44 million passengers per year. I sometimes wonder how we did that, surrounded by aviation industry politics.”

Which begs the question: does he think establishing Caterham Cars will be child’s play compared to growing an airline?

“I think it’s going to be more difficult,” he says. “When we started AirAsia, we hit a sweet spot. There wasn’t a low-cost carrier [in Asia], so we created one. There’s plenty of established competition in the car industry and it requires more cash than the airline business. I didn’t build planes; I leased them. You can’t do that in the car industry because it wouldn’t create a brand.”

Fernandes feels the foundering global economy has forced the industry to embrace more flexible working methods, and this has created opportunities. “You see more joint ventures and platform sharing,” he says. “A small car company can benefit from that pragmatism, whereas maybe five years ago the big car companies might have said no to a joint venture.”

Fernandes acknowledges that there are no short cuts to success and cautiously puts a 10-year time frame on his plan. “For me, the car industry is painfully slow,” he says. “I want a new model tomorrow. In some ways it’s good because 

I would have made mistakes, so slow and steady has to be the motto. But we can’t stand still.

“In a decade we’ll know if it is successful, but starting with the AeroSeven, brand recognition will start growing. The company has been reborn and I’m excited about what we’re doing.”