Why are the manufacturers leaving F1?

July 31, 2009

On Thursday night I was interviewed on the BBC World business programme about BMW withdrawing from F1. To get my five minutes of fame I had to drive from my home in Ampthill up to BBC Radio Northampton in the pouring rain. Once there I was courteously placed in a corner, facing a camera, on a seat which looked like it had belonged to an old tractor. I then had a piece of plastic tube placed in my ear which just about enabled me to hear what was going on. Unfortunately the BBC World people had not checked the availability of the feed which was to be used for Look East at 6.30pm – the time of my interview. So I had to wait for another slot at 7.40pm before doing my stuff and then driving back in the rain to consume my rather cold tea, such is the glamorous life of an academic media star.

The point of the story is that during the interview the presenter asked me whether the withdrawal of BMW, and possibly other manufacturers, meant that F1 would no longer be the pinnacle of motorsport, I was quite surprised by the question, but then on reflection I shouldn’t have been. Most people today would associate F1 with names like BMW, Honda, Renault and Toyota as that is what F1 has become. However the involvement of these manufacturers as fully blown teams is only a recent phenomenon. It is only since 2000 that manufacturers such as Ford (Jaguar), Renault, Toyota, Honda and BMW had committed huge resources to F1, prior to that a number of them did periodically produce F1 engines, but the idea of acquiring or building an F1 team was not on their to-do lists. Between 1986 and 1999, with the exception of Ferrari, there were no manufacturers involved in running teams or building chassis, they just made engines. The reason why the manufacturers entered F1 in droves from 2000 on was that they had done all they could in terms of driving down costs and improving reliability. Now they had to conquer emerging markets and create differentiated brands that commanded a price premium and the best way to do this was F1.

Now we’re in a very different place, although the emerging markets still offer huge growth potential, the manufacturers have gone over a cliff. They have over-produced into a falling market, they have huge stocks and cash flow issues, they have to mothball factories and lay off staff, so while funding F1 may not be a huge expense in the grand scheme of things, symbolically it represents excess at a time when everyone needs to tighten their belts and hold their breath until we get through this. And then of course when we do come out the other side the world will be different. It will be carbon neutral and will be embracing ‘clean’ and sustainable technologies. If F1 is seen to be both financially excessive and using ‘dirty’ technology (ie the internal combustion engine) then it really will become an anachronism of a different time and nobody, especially the car manufacturers, will want to come back in.

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