Why Renault's new 'car guy' CEO couldn't pull plug on F1

When the coronavirus pandemic wrecked worldwide automotive businesses, the risk of Formula 1 losing manufacturers was extremely high.

With the car industry battling for survival, wide-sweeping cost cuts were essential. And in such a scenario, just as played out in the financial crisis of 2008, 'luxury' activities like having an F1 programme can easily get knocked on the head.

For Renault, the risk seemed especially large - as its future had been up in the air even before the coronavirus crisis hit. Amid the fallout of the Carlos Ghosn affair and poor sales, a major internal review of its business approach had already targeted whether or not to continue in F1.

The final call on that would ultimately come down to new CEO Luca de Meo. His official start date of July meant he had plenty on his plate from day one, tasked with steadying the ship of a Renault Group facing its biggest ever half-year loss of 7.3 billion Euros.

But there were two key factors that led to de Meo quickly agreeing to the Concorde Agreement that commits Renault's team to F1 for the next five years, and throwing his weight behind the new plan to rebrand its grand prix efforts as Alpine.

The first was the new financial structure that Liberty Media is rolling out for F1. The combination of the budget cap, allied to a fairer distribution of the sport's revenues, meant that F1 would no longer be a bottomless pit of money for manufacturers intent on success. Finally, it made perfect sense to be a part of it.

But the second reason was more personal, and perhaps offers us a glimpse of why the soon-to-be-renamed Alpine-Renault team should feel at ease about where it fits in with de Meo's grand vision. It's that de Meo is a fan of both racing and cars; his modus operandi is not as a bean counter.

On Sunday, ahead of the Italian GP, Autosport asked him if, amid the fallout from the coronavirus crisis, he had ever seriously weighed up pulling Renault out of F1.

"Of course you always have this tension, because the situation is so dramatic in general, and specifically in Renault," he said. "It's the easiest thing to want to do this kind of thing [with something] that some people consider hobbies.

"But I'm a car guy. I'm not going to be the guy that turns off the light on 43 years of commitment on this series. Not me. That's why I'm coming up with this idea to turn the thing around, and build a new story that maybe has also, from a business point of view, some potential."

"I was one of the kids that, when he was 10 years old, came here in Monza with the flag, etc. That was me" Luca de Meo

It's clear that De Meo has wasted little time in coming up with an action plan. A strategic review is underway about how best to lift Renault's core brands - involving Renault F1 boss Cyril Abiteboul being assigned to devising a strategy for Alpine.

De Meo added: "Sometimes you need to remix the ingredient that you already have in a different way, and that's exactly the case. That's the beauty of this story of Alpine. But of course, I've been challenged [within Renault] - as I have many times [in my career].

"It's a classic one, and I don't know how many companies I have been at, and when I was in charge of motorsports activity, you always have someone who has the nice idea of not doing that, and you can find arguments [to support that].

"But I was one of the kids that, when he was 10 years old, came here in Monza with the flag, etc. That was me. So I'm not gonna do that [pull the plug]. I like [F1].

"Now the situation that in general we are experiencing, puts also responsibility on the people that are in the system to make sure that we don't throw money out of the window. Otherwise, it's complicated to justify.

"But I think that what we're building could be potentially good and an interesting business case."

De Meo is a protege of Sergio Marchionne, and his career made great gains during a spell when he worked under the imposing Italian as head of business units of Lancia, Fiat, and Alfa Romeo, as well as being CEO of Abarth. He played a significant role in the relaunch of the new Fiat 500.

After Fiat, he moved to the Volkswagen Group in 2009 as marketing director of the brand, before working on the board of Audi. He became president of SEAT in 2015 until the start of this year, when it was announced he would be joining Renault from July. While not as outwardly confrontational as Marchionne could be when speaking in public, de Meo shares a smart business brain and is not afraid to do things differently in a bid to find success.

The plan to throw Renault's motorsport push behind Alpine is a brave one, especially because the results from it in the wider world could take years to bear fruit as there is not a road car business that is yet built up around it.

But it's something de Meo is eager to see through, and he sees F1 in a healthy place with very strong names up and down the grid.

"I am a big believer that Formula 1 should be a championship of constructors with brands that make people dream," he said, "with the connection possibly between racing on Sunday and selling on Monday, and with a connection that the customer can touch in the street: looking at Ferraris, Mercedes, some glorious names like Williams, Aston next year and Alpine (pictured below is Ove Andersson's 1971 Monte Carlo Rally-winning A110).

"It's good for the sport. You need that and you need people, very characterful, strong, courageous drivers."

The win on Sunday, sell on Monday mantra may seem strange for a non mass-produced car company like Alpine, which has just one car model at the moment. But de Meo says a strong business case can be built up with a small selection of cars that perfectly fit the F1 brand.

De Meo accepts that it will never be a main profit driver for the company, but he sees tremendous opportunity on many other fronts

"We are looking more at the life cycle management, a la 911 from Porsche. I mean Porsche has been for a long, long time a car with a brand with a mono product. Then it has had Cayenne and Cayman.

"So let's be patient on that, because we need to find the right solution. But we have a product, and there might be other things that we could do, and we might find point of contacts between the Renault models and the Alpine version of them. We had that in history (De Meo was instrumental in some Fiat Abarth models), so we know it."

What's key for the Enstone operation right now is that it has been put in a realistic position within the Renault Group.

De Meo accepts that it will never be a main profit driver for the company, but he sees tremendous opportunity on many other fronts. This includes the marketing of F1's hybrid technology, of transfer of knowledge of lightweight materials, and the sharing of aerodynamic expertise that he thinks could become hugely important to future electric cars.

"The business case of Formula 1 teams from a pure financial and operational performance is not the place where you would want to invest," he said. "There are more profitable businesses.

"But I think that the budget cap has two advantages: one being that, of course, it caps the budget, so you don't have the temptation to really go beyond. It's a fundamental change.

"The other thing is that it is levelling the playing field. So that means that we will be able, everybody, to compete with the same resource. This will make the sport, let's say, more interesting.

"We are not here in F1 necessarily to make it a super profitable business case. I could put the money on other things. But what I want to avoid obviously is that this becomes a burden, a weight for the whole system.

"Don't forget that my biggest priority is to actually turn around the company, a company that is overall not performing as it should. But at least we have a little bit of predictability on the thing with the budget cap.

"And on top, I think that the interesting part will be the business that we create around the motorsports, to potentially finance the motorsports activity. My idea is that this thing should be closed itself into a loop, so that we can secure and give perennity to the commitment and engagement of the group in motorsports."

Equally encouraging for Enstone is that de Meo is not the kind of big boss who has ideas beyond his station. Even being a long-time F1 fan, he understands that he is not as qualified to make decisions of a sporting nature compared to those who have lived and breathed the sport for decades. That is why he counts Lamborghini CEO Stefano Domenicali, the former Ferrari F1 team boss, as a trusted sounding board for anything to do with the sport.

"He likes Formula 1," says de Meo about Domenicali. "He is more [an] expert on Formula 1 than I am so, so I listen to him like a mentor and a Maestro.

"I listen because I like to learn and I'm just a fan for the time being. Now I'm involved in the thing, trying to learn from your world and trying to help these guys to do their job without trying to interfere too much in their activity.

"I'm kind of designing the [picture] frame, and they have to do the job. I'm not on the pitwall, that's not my thing. I have other things I can tell you that are more urgent."