Caterham Cars, Inside Caterham Cars

Manufacturing in Action, Source : The Manufacturer
Published : July 2004

There’s more to Caterham Cars’ Seven series sportscars than distinctive looks, Ruari McCallion learned from Simon Nearn

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The world’s fastest production car isn’t a Ferrari, it isn’t a Porsche, nor a Jaguar or Aston or even a Dodge Viper. Measured as performance to high speed and back to rest, the fastest production car in the world is a small, open-wheeled two-seater sportscar, based on a design that originated in the 1950s. It’s a Caterham Seven R500 evolution. When Colin Chapman designed the Lotus 7 and launched it in the early 1960s, he probably had no idea that it would become an icon and still be in production 40 years later. And he certainly wouldn’t have dreamed that it would out-accelerate and out-brake the finest modern Ferrari that money can buy.

“Autocar magazine has just done its annual 0-100-0 test and our Caterham Seven R500 evolution was two-tenths of a second quicker than the Ferrari Enzo – and it’s just one-tenth of the price,” said managing director Simon Nearn. When you trundle down to the supermarket in your people carrier or whatever this weekend, think of the Caterham’s peformance: 0-60 in 3.21 seconds; 0-100mph in 6.92 seconds – and back to zero again just 3.6 seconds later. Previous winners of Autocar’s annual test include the McLaren F1 road car and the Moser MT900S (a roadgoing version of a GT racing car). This year’s competitors ranged from ‘hot hatches’, in the shape of Peugeot 206Gti and Honda’s Civic R, all the way up to exotic dream machines: the Aston Martin DB9, Pagani Zonta and Ferrari’s Enzo. It is worth noting that just about all the previous winners had price tags in the hundreds of thousands of pounds: the McLaren F1 went out at £500,000 and this year’s Ferrari Enzo retails at £425,000. Caterham’s top-of-the-range R500 can be yours for just £42,500. So you could afford to buy a couple for your friends and family, and still have change from ‘supercar’ money.

The original Lotus 7 concept was of a low-cost, but exciting sportscar. Chapman was quite famous for coming up with innovative ideas and this one was years ahead of its time: every part on the car was made by someone else and designed by Lotus into a finished product – which we now recognise as the OEM model. Okay, that’s pushing it a bit: I’m sure that wasn’t the idea that Chapman had. And, of course, the true OEM approach is different.

“The original Seven was designed around whatever was available from manufacturers’ parts bins,” said Nearn. So the engine was a Ford with Weber carburettors added; the front suspension uprights were from the Triumph Spitfire; brakes maybe from an Anglia or Cortina; and so on,” said Nearn. One version even had bits from the Morris Marina, amazingly. Another differentiating feature was that Lotus didn’t actually build it. The customers collected the car as a collection of parts and put it together themselves. Buying a car in kit form meant that 25 per cent purchase tax wasn’t levied, and that measure brought fun motoring within the reach of ordinary people. When purchase tax was removed, to be replaced by VAT, the advantage disappeared – and that’s when the Caterham Seven story really got going.

“Caterham Cars started in the late 1950s.

In 1968, we came to a deal with Lotus whereby we became the sole agents for the Seven. Chapman wanted to stop building it but my father kept placing orders for, say, 30 at a time, which kept the production moving along. He would then spend his nights laying awake working out the best way to sell them on,” said Nearn.

Caterham bought the rights from Lotus and started building the cars themselves in 1973.

If it was exactly the same design, it wouldn’t be viable. Handling, acceleration, braking – and, indeed, comfort – have come on light years since the 1960s. And so have emissions and safety legislation.

“Externally, the Seven still looks very much the same: internally, it has evolved a lot,” said Nearn. Instead of being designed around what is available, Caterham now designs the car and contracts component manufacture to its supply chain. “We don’t make anything: our suppliers provide the parts and we assemble the vehicle. We go to the best brake manufacturers and get them to make them for us; same with suspension, steering rack and so on. All the chassis are made for us. When we took on the manufacturing of the Seven, we also took on a some stock of Formula Ford chassis from Chapman, all of which was made by Arch Motors, in Huntingdon. They have a good reputation for spaceframe chassis and a great reputation for building race and rally cars: they made other Lotuses and Lolas and the Ford RS200 Group B rally car chassis, for example.” Those cars were so good and so fast that – along with the whole of Group B – they were banned in the 1980s.

“We focus on design, development, assembly, marketing and sales. The only thing that isn’t made specifically for the Seven, now, is the engine. It’s an MG K Series unit, which we run in anything from 120 to 250bhp form. Our R500 is powered by a two litre K Series engine: we don’t turbocharge it or anything like that, it’s simply tuned to the required performance level by Minister Race Engines, who we work with to build and develop all our power units,” he said. The days of buying a Ford, Vauxhall or other lump straight off the shelf and dropping it into the chassis are long gone. Manufacturers no longer build for stock, so they don’t have engines just lying around, and legislation has moved the goalposts completely off the small manufacturer’s playing field.

“The tie-up with MG is beneficial to us both: we get software expertise, bespoke engine management IT, on-board diagnostic systems and emissions-legal engines. They get the kudos of making the most raced engine in the world,” said Nearn. Racing is an important element in Caterham’s sales and marketing. Currently, about 650 Caterhams are registered in one championship or another across the world.

“About 20 per cent of our sales across the world are for racing. We don’t actually sponsor: we build race cars and design regulations for one-make championships, in the UK and across the world,” he said. “Our importers look after the overseas championships. In the UK, we look after three: the Academy, Roadsport and R400 headline championship, which is in the televised Formula 3/GT racing package.” The Academy championship is probably the easiest initial stepping-stone into motor racing. “We take away all the uncertainty. Everyone has exactly the same car, with exactly the same kit and the engines are sealed. We give technical support, arrange for the medical exam and undertake training – it’s a complete one-stop shop.” It’s good business, for two reasons: the company gets exposure and, of course, it’s making the cars that compete in the series – 56 each season, enough for two grids of 28 cars per race. The Academy allows aspirants to find out if they’re good enough. Eighty per cent reckon they are and carry on, either in other formulae or further up the Seven ladder. The 20 per cent of sales that are for racing still leaves 80 per cent that aren’t.

“Our market is people who have a passion for cars, whether they’re in their early 20s, in their 30s and earning good money, probably don’t have family responsibilities, on to people in their late 50s, whose kids have gone.”

Nearn said that Caterham ensures that all Academy cars are identical – but the method of manufacture will, inevitably, mean that there will be some variation between individual vehicles. And there are a lot of them about: Lotus itself supplied only 3000, during the whole time it was making them. Caterham has produced over 11,000.

“We produce using a one man to one car operation,” Nearn said. “The chassis arrives from Arch into the guy’s bay, together with a trolley that contains all the parts, and he bolts the whole thing together. It takes about 40 hours per car. Every car is slightly different and it’s a bespoke build, to customer specification. We get better quality that way: our people all take pride in their job and full responsibility for every car they make – they even test drive them.” Which is reassuring. If you’re going to hurl the car you’ve built into a slow corner after a fast straight, then you’ll make very sure the brakes work.

Purchasers have to wait three months for their car. With an output of between 600 and 700 cars a year, Caterham can’t be described as a volume builder. It also buys back and resells used Sevens, which means that customers enjoy good residual values and quality is maintained through changes in ownership. Its small size also means that control of the supply chain is imperative.

“We have quite a few suppliers and our supply chain organisation is pretty tight,” he said. “Chassis arrive just-in-time (JIT) and the use of kanban is integral to our operation. It’s not so much about manufacturing techniques, more about supplier strategies. We’re taking 85 per cent of the output of some of our suppliers; with others, we’re a tiny part. We get engines from MG delivered once a month, for example.”

Caterham is constantly evolving and developing the Seven idea. As well as comprehensive design revisions, to the extent that the car really is designed and built without compromise, rather than being designed as a compromise of what was available, the company continually looks at engine variants and supply sources.

“Caterham cars are only the sum of their parts. We’ve looked elsewhere for supply sources but, if it wasn’t for the strength of skills, artisanship and design engineering in the UK, we couldn’t build at all,” said Nearn.

Caterham’s sales and admin offices are still based in Caterham; production was moved to a factory in Dartford in 1987 and there’s a workshop in the Midlands. It employs 70 people across the three sites, generating around £14.5 million a year. The British specialist market is strong and enjoys a worldwide reputation. Conditions were tough in the 1970s, when Caterham started building its own cars, but it was the recessions of the early 1980s and 90s that saw off a lot of the other small, specialist manufacturers. Caterham was able to move into new markets, the US and Japan in particular.

“Our rivals or competitors are Morgan, TVR, Noble, Radical, Ferrari and Aston Martin,” he said. “We’re competing in similar markets and I really admire some of the things that others do. Grinall, for example: I have nothing but admiration for what they’re doing. They’re well-designed, well-engineered cars. That breed of people should be applauded and encouraged. They keep us on our toes, drive us to continue to perform and to make the best product we can.” However, Caterham isn’t the only producer of open-wheeled sportscars based on the Lotus concept. “I don’t wish to comment on some companies that simply copy what we’re doing and ride on the back of our efforts. I have no time for them at all.”

Nearn sees Caterham as the custodian of Colin Chapman’s original idea. And he sees a future for the company – not in huge expansion, but in serving a desire that will, he believes, persist.

“We don’t have grandiose ideas. We want to continue developing our niche market: we can’t do what BMW do, and they can’t do what we do. We like to think we’re a credit to the fundamental design of the car and guardians of the Lotus 7 legend,” Nearn said. “As long as there are free spirits, people will want true Sportscars like the 7.”

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