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Honda Quits F-1, Mercedes wants to cut costs by 50%. Is the F1 in Trouble?
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by mazevedo | December 5, 2008 at 11:47 am
284 views | 5 Recommendations | 3 comments
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After one of the most exciting years the Formula 1 competition has ever had, a championship which was decided in the final lap of GP Brazil. To many right there and then the astonishing driving on behalf of both Ferrari's Massa and McLaren's Hamilton which ended up winning the championship, brought about the grace to the F1 championship yet again. However just recently Honda has announced that it is quitting the F1, according to the company the credit crisis has lead the company to analyze the competition as "unsustainable" as the team spends annually over $1.6 billion. Honda which was founded by Soichiro Honda has had a F1 team since 1964, which is before Honda even began making cars in 1967. Honda later stopped participating in the F1 however returned in 1980s as an engine supplier and in 2004 it bought a part of BAR which later was later bought as a whole and became the Honda team in 2006. The questions raised are: Could the F1 be in serious trouble or is everything going to be alright for next year? It is also important to remember that most technological advances in the car industry ussually comes from competitions such as the F1, what might be the implications then for Honda? Where will Honda pilots head off to? Honda's two pilots are left with no team for now. (Button and Barrichello)
Honda Motor Co. quit Formula One racing, cutting at least 20 billion yen ($216 million) in costs after the carmaker slashed its earnings forecast, fired assembly workers and reduced production.
Japan’s second-largest automaker may put the Brackley, England-based team up for sale, President Takeo Fukui said today at a news conference in Tokyo. Honda will also no longer supply engines to other teams.
Honda cut its profit forecast 13 percent in October as the recession in the U.S. cripples car demand. Max Mosley, president of F-1 ruling body the Federation Internationale de l’Automobile, said the $1.6 billion teams spend annually on the racing series is “unsustainable” and the sport could lose more teams unless expenses got under control.
“Honda’s withdrawal highlights just how awful the situation surrounding the auto industry is,” Koji Endo, an analyst at Credit Suisse in Tokyo. “Other teams may follow, and the F-1 may not be held in the future.”
R.I.P. Honda Team
On that note Mercedes has also announced this Friday F1 teams must reduce costs by at least 50% over the next 2 upcoming years.
"Within the Formula One Teams Association (FOTA) we're working very hard on measures to cut costs, and over the next two years we must achieve cuts of at least 50 percent," said Norbert Haug, the head of Mercedes Motorsport which powered Lewis Hamilton to victory in this year's championship.
"Our Formula One involvement is built on financially solid foundations and is in large part financed by our sponsoring partners," Haug added in response to an announcement by Japanese rival Honda that it was pulling out of the sport.
"This pullout is very sad," he said. "It only shows how important the cost-cutting measures are that we've been advocating for more than five years, and which have only been realised to a small degree.
"Mercedes-Benz's contribution is cost-efficient, the resonance in the media and in the public which last season and Lewis Hamilton's win generated was worth many times our financial investment," he added.
Most RecentMost Recommended Comments (3)
at 12:41 on December 5th, 2008
Honda F1 Team at the 37th Brazilian F1 GP.
Its now public: Honda has announced its quitting F1 due to the bad performance on the last two seasons and the effects of world financial crisis.
There are now two possible ways: bid the team or shut the doors.
We are looking for the first or else we'll have only 18 cars for the Adelaide's GP 2009.
alemirojr has contributed a photo to this story.
at 12:57 on December 5th, 2008
Thanks a lot for the comment, pretty scary news for the F1. The word in the street is that many of the racing teams might be financially down because of the credit crisis. I hope everything turns out ok for Adelaide's GP 2009!
at 15:01 on December 5th, 2008
Because Honda is willing to hand over the team for 1 pound sterling, there are already 3 interested parties who have contacted Fry and Brawn. The Honda engine supply deal is clearly dead. The alternatives seem to be Ferrari engines (possible) or the new standard Cosworth engine planned for 2010. I expect one of the contenders to take over will be ProDrive/Aston-Martin/Cosworth. The facilities at Brackley are good, if somewhat spatially small, being essentially in the center of town and lacking in a dedicated test track on site. They probably have too many employees now as well, particularly if future engines and transmissions will come in off the shelf as it now appears. The best strategy might be for a buyer to take only those parts of the operation (and employees) which have a role in the stripped down operations of an F1 team in the medium future. Hope it works out.