Op-Ed: On Renault’s official response

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Renault’s Chief Executive, Carlos Ghosn, has made a statement to Reuters news agency that a decision about the French car maker’s involvement in F1 would be made before the end of 2009.

“You will have to be patient,” Renault Chief Executive Carlos Ghosn told reporters. “We will make an announcement on our participation in Formula 1before the end of the year.”

In a previous statement by Managing Director Jean-François Caubet, it was suggested that Renault was staying put in F1 and has defined their budget as well as signed their drivers for the 2010 season.

Certainly one would see Caubet’s comments as matter-of-fact and in the hopeful column but Ghosn’s words are more cautious–more calculated. You would expect nothing less from the CEO and to those ends, it leaves room for doubt and rumor.

This comment seems to be an attempt to leave an open door and yet assuage the ravenous news media. It would not be hard to assume that the board members did not reach a complete agreement as some things may need time to mature in order for the board to make a final decision.

What things could those be? Toyota’s departure is apparently in breach of contract according to the Concorde Agreement they signed this summer. The FIA has made innuendos and asked for clarification from Toyota as to their intentions given this contractual obligation.

Renault could be biding time to see if anything comes from this threat of litigation and to what extent the damages may be as they are signatory to the same document which obligates them to participate through 2012.

This, alas, is all speculation but to delay a decision generally means that all the information necessary to make that decision was not present during deliberation. Most corporations collect all cost, revenue, risk and brand equity when making decisions regarding vertical markets and their presence in those markets.

The desire to enter F1 was most likely met with the creation of a proforma to determine the viability of the operation and to exit a vertical market is usually met with a similar proforma to show the exit costs and viability as well.

It remains to be seen if the cost of leaving F1 outweighs the cost of staying coupled with the brand equity impact of both decisions. This also assumes they will remain as an engine supplier. This offered as a consolation prize for leaving FOTA and F1 bereft of the French car maker’s existence in the series.

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