The C16 was originally designed around a Ford Zetec engine, but a decision in November 1996 to switch to Ferrari power late in the development cycle created significant engineering challenges for the team's technical director, Leo Ress. The Petronas-badged Ferrari SPE-01 engine featured a different layout to the Ford unit — with a V10 configuration including cylinders positioned in the V of the block and additional components mounted at the rear — requiring Sauber to substantially rework their engine bay, gearbox, and rear suspension geometry.
The redesign brought some benefits. With the new engine positioned closer to the driver, the team had greater flexibility over the fuel cell's size and placement. The revised suspension geometry allowed engineers to consolidate the upper suspension elements into a single integrated piece, reducing drag in a critical aerodynamic zone and improving airflow over the rear diffuser. The C16's wheelbase was also elongated as part of the overhaul.
During pre-season testing, burn marks appeared on the rear engine cowling, indicating insufficient cooling for the engine's peak operating temperatures. A temporary cooling fix was applied for testing before a permanent bodywork update addressed the issue.
Johnny Herbert, in his second year with the team, was joined by Italian Nicola Larini. Larini's seat came as part of the arrangement that secured the Ferrari engine deal, as he was Ferrari's test driver at the time. However, Larini was unhappy with the team environment and left after five Grands Prix. Fellow Italian Gianni Morbidelli was brought in as replacement, but suffered arm injuries on two separate occasions during the year. Argentine rookie Norberto Fontana deputised for Morbidelli during both recovery periods. All three replacements were comfortably out-paced by Herbert.
Against expectations, the C16 was competitive at the start of the season, though the car fell away as better-funded rivals out-developed it through the year. Herbert delivered the team's standout result at the 1997 Hungarian Grand Prix, where he secured their third-ever podium finish — notably ahead of both works Ferrari cars on the day. He scored all but one of the team's points across the season. Sauber finished seventh in the Constructors' Championship with 16 points.
Years after the season concluded, photographs emerged showing a previously undisclosed test conducted by Michael Schumacher in a de-badged C16 at Ferrari's Fiorano circuit in September 1997. The nature and purpose of that test has remained a subject of speculation.
The C16 established the Petronas-Ferrari partnership that would shape Sauber's technical identity through the early 2000s, providing a stable and competitive engine platform that helped the team maintain its position as a consistent midfield presence.