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Renault to Revive Alpine to Mirror VW’s Premium Success

Renault SA, France’s second-biggest carmaker, will revive the Alpine upscale brand as it seeks to reduce its reliance on Europe’s plunging volume car business.

The 113-year-old automaker will form a joint venture with U.K.-based Caterham Group to manufacture Alpine sports cars, bringing the first vehicle to market in three to four years, the French automaker said at a press conference its headquarters in the Paris suburb of Boulogne-Billancourt.

“The Alpine rebirth is only the beginning,” Chief Operating Officer Carlos Tavares told reporters at the event. “Now we need to make a great car, which is the most important thing. We will do the same on the premium side.”

Renault, Fiat SpA and PSA Peugeot Citroen, the European volume carmakers hardest hit by the region’s plunging auto market, are trying to develop high-end offerings in an attempt to mirror Volkswagen AG’s success with Audi and other luxury brands, which bring in about half of the entire group’s profit. European car sales are on track to drop the most in 19 years in 2012, the ACEA industry group forecasts.

The premium automakers are fairing better than their volume counterparts because their customers are less price sensitive to economic downturns. Sales at Bayerische Motoren Werke AG’s BMW brand are down 1.8 percent in Europe through September and Daimler AG’s Mercedes is 2.4 percent lower. Audi has increased deliveries 4.8 percent in the region. Renault has slumped 18 percent, Peugeot 13 percent and Fiat 17 percent.

Emulating VW

Renault’s new line boosts the number of brands at the carmaker to three, with the Romania-based Dacia selling no-frills vehicles. VW, which is Europe’s biggest automaker, this year took full ownership of sports-car maker Porsche, making it the group’s 12th brand alongside Bentley and Lamborghini.

Tavares said in a June interview that the French company is keen to emulate VW’s success with Audi, an assessment shared by other automotive executives. Fiat Chief Executive Sergio Marchionne said last week that he will introduce nine new Alfa Romeo vehicles and six Maserati models in the next four years to boost the brands’ contribution to the carmaker’s earnings. Peugeot announced plans last year to expand its DS line of upscale Citroen cars.

Renault has started adding the Initiale Paris suffix to its upscale derivatives, and is looking to develop the nameplate into a standalone brand.

“At the moment it doesn’t meet my expectations in terms of premiumness,” Tavares said. “It will evolve and improve, and it is going to be the starting point of a long-term story because premium brands are about decades.”

Expensive Undertaking

Building up luxury brands can be an expensive and prolonged task. VW in the last decade has poured 20 billion euros into Audi’s research and development alone. Audi now sells 12 model lines, twice what it had in 2003, including three sport-utility vehicles, the A1 compact and the R8 sports car. Audi’s deliveries in the last 10 years have doubled.

Alpine was founded in the 1950s and became well-known among sports-car enthusiasts for the A110 and Berlinette, which was introduced in 1962. Alpine signed a partnership with Renault in the mid-1960s and its cars were distributed through Renault dealers. Renault bought a majority of Alpine in the early 1970s. The carmaker stopped making Alpine models in 1995.

With no high-end marques currently, Renault’s most expensive car is the large minivan Espace, which has a base price of about 32,440 euros in Germany. The flagship A8 sedan from Audi starts at 69,600 euros.

Renault and Caterham will both bring vehicles to market under the Alpine brand, they said. Renault declined to say how much the two plan to invest in the project.

“We believe we can build an affordable car that people want,” Caterham President Tony Fernandes, who runs AirAsia Bhd., said at the press conference. “We’ll produce a car that many more people will be able to afford with F1 technology.”

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