How will Honda quitting affect F1?

Honda is expected to confirm its immediate withdrawal from Formula 1

Honda is expected to confirm its immediate withdrawal from Formula 1

It now seems inevitable that Honda will announce in a few hours’ time that it is going to sell its F1 team or close it.

F1 could be left with only nine teams, drivers will be left without seats, and the continued participation of other manufacturers may be in doubt. How will Honda’s departure affect Formula 1?

Three-car teams?

Formula One Management is understood to be required to bring at least 20 cars to each Grand Prix (there is some doubt over the exact figure – some suggest it could be as little as 16). If no buyer for the Brackley team is found, F1 will have only nine teams with 18 cars.

Therefore it may be necessary for some teams to field three cars. This potentially creates all kinds of complications:

How would it be decided which teams run three cars? Would all three be eligible for championship points?

Are the FIA and FOM able to demand teams run three cars if they have to? The commercial deal that governs F1, the Concorde Agreement, lapsed some time ago.

Are Toyota next?

Will other car manufacturers follow Honda in ending their F1 teams? Honda are by no means the only car manufacturer taking a hammering on sales and profits at the moment.

Once one team has been pulled we could see a domino effect where other car manufacturers look at what Honda has done and reason: ‘if they can cut their F1 programme, so can we’.

Given Honda’s decision to pull out, Toyota’s continues participation suddenly looks decidedly vulnerable. Toyota originally entered F1 in 2002 to go up against its major domestic rival which, at the time, was an engine supplier.

Toyota has reported a similar huge fall in its American market sales within days of Honda doing so: Honda’s sales fell by 32%, Toyota’s by 34%. Toyota has slashed its profit forecast for the current fiscal year from ??1.25tr to ??550bn ($13.4bn to $5.9bn).

Its $445.6m F1 budget may seem small by comparison but as the company drastically cuts back on car production and faces a huge fall in profits, sustaining an F1 team at great cost for little reward seems indefensible. There is already speculation that Toyota is not interested in competing in F1 without its chief rival and is preparing to pull out.

Meanwhile Renault has shed 6,000 workers and made deep production cuts. Could it be next in line?

What about their drivers?

Will Jenson Button have an F1 drive in 2009?

Will Jenson Button have an F1 drive in 2009?

Honda were expected to continue with Jenson Button for 2009 and pair him with either Rubens Barrichello, Lucas di Grassi or Bruno Senna. Barrichello, F1’s oldest and most experienced driver, may find it hard to get a seat with another team.

Jenson Button has been with the team since 2003, scored their first win (for the modern incarnation of Honda), and has stuck with them through their 2007-2008 slump. If he is able to get any seat for 2009 his options seem limited to Toro Rosso or possibly Force India.

And its IRL programme?

It’s not clear whether Honda intends to continue its exclusive engine supply deal with the American-based Indy Racing League.

If Honda indeed decides to keep its IRL programme and drop its F1 team Bernie Ecclestone should take note – he allowed both of F1’s North American races to be priced off the calendar, despite objections from many fans and team owners, including Nick Fry.

What about the future cost-cutting plans?

The prospect of losing one of the manufacturer-backed F1 teams will surely harden the resolve of FIA president Max Mosley to increase the size and scope of his cost-cutting proposals, including the demand for standard engines.

The Formula One Teams Association met today to discuss future cost-cutting plans and claim they have “agreed to further measures implementing substantial cost cutting for 2009 and 2010″. Details of how this will be achieved are not known yet.

They also called for a move to a new specification of engine from 2011 – a 1.8-litre turbocharged unit using energy recovery systems, which it claims will use 30% less fuel. Will that be enough of a fuel saving to offset the development cost of these new engines?

And will it be a strong enough proposal to delay Max Mosley’s effort to impose standard engines on F1?

Could it affect the Japanese Grand Prix?

Will Honda-owned Suzuka keep its place on the 2009 F1 calendar?

Will Honda-owned Suzuka keep its place on the 2009 F1 calendar?

Ollie on BlogF1 points out that as Honda operates Suzuka Circuit its role as a Grand Prix host could be in doubt. Suzuka is set to return to F1 as the host of the 2009 Japanese Grand Prix.

As well as the loss of the race’s owner from F1, it could lead to a significant downturn in local interest.

Will someone step in and buy the team?

There is a lot of speculation about whether a buyer for Honda might be found. It is not clear whether Honda would allow a new owner to continue using its engines (James Allen thinks not, Autosport suggests it might).

Inevitably speculation will fall on companies who most tried to enter F1 most recently, such as Dubai’s Magma Group and Germany’s Weigl Group, who looked into purchasing Super Aguri in April, or David Richard’s Prodrive company, which was originally going to enter a team this year.

Autosport suggests that Brawn could bring a Ferrari engine supply to the team. Ferrari is no longer supplying Force India and so in theory may have engines available.

But the chances of finding a buyer able and willing to pump hundreds of millions of dollars into running an F1 team – however cheaply Honda sell the team – seems extremely unlikely in the current economic climate.

That said, if Ecclestone really does have a vested interest in finding a buyer due to the ’20 cars’ clause, then he is the man to get it done.

I hope it happens. Not just for the future of F1, but for the hundreds of workers at Brackley.

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61 comments on How will Honda quitting affect F1?

  1. Jonatas said on 5th December 2008, 2:21

    Tomorrow Honda quits F1 and then, the next day the world comes to an end!!!

    Come one people!! Get a grip! Grand Prix racing has been around and backed by manufacturers in some form or another for over 100 years. Even through the Great Depression, which was far worse than where we are now.

    This may be the beginning of end of Formula 1 as we know it, but it’s not the end of Formula 1!

  2. Pseudohendrix said on 5th December 2008, 2:45

    Yeh good point Jonatas. The only economic crisis in history that is comparable to this one is the Wall street crash and that was somewhat rectified by WWII. Grand Prix racing felt little or none of the rejuvenating economic effects of the US arms and export industry and then Marshall plan which re-stimulated the world economy. However, it kept going. People are always going to want to go racing and there will always be drivers. I see a couple of outcomes in the long run:

    – Middle grid teams pull out and are replaced by smaller independents that last one or two seasons but then are replaced by yet more independents of decreasing size and some privateers (not every crazy millionaire is going to go bust)

    – The top teams remain until the profit margins start to fall. This would be caused by a loss of competitive edge for whatever reason.

    – This would lead to a situation where 3 big teams would become 2 as the top two get an advantage over a couple of seasons, thus rendering the third team an unsustainable middle-gridder. The top two eventually become equilibrious or one becomes dominant, like Auto Union and Mercedes in the pre-war era.

    i don’t see the sport collapsing but it sure is gonna get ugly in the interim.

    One thing that will happen for sure is a discontinuation of F1 history.
    Top 100 lists and all time stats tables will be rendered useless as the series convulses through rule changes. Bernie’s medal system is an example. The F1 season of 2050 will be utterly incomparable to the 2008 season and the legacy of the next generation of drivers will be overshadowed by the lack of any relevant context against which to judge them.

  3. I agree with Jonatas. So Honda is going to pull out, its not a big deal. If there are 18cars, its not the end of the world. Contracts get re-negotiated, people arent going to boycott F1. Although some of the above comments seem to want it to end. Its got me beat why they are following the sport if they dont like it.
    Its sad to see Honda go, i hope they will return in a few years; and as far as 2050, hopefully F1 will be like Pod Racing in Star Wars. Hahahaha

  4. I wonder if this will herald the return of the independent – team/constructor or engine supplier?

    Manufacturers have dominated in this sport which used to be dominated by independents (Williams being the 1990’s top team) but now are looking more weakened as their need to survive lies at the hands of the consumer. If people don’t buy their products, they are done for.

    If Honda and Toyota are to pull out, I’m sure that there will be those companies/individuals that will take them over and a more independent look could come back to F1 circles. If they stop making engines, then those (and other) constructors may need to look at independent engine suppliers, such as Cosworth.

    We will have to wait to see the developments over the next few months, particularly the closing of the first GP in Australia to see what happens.

  5. yorricksfriend said on 5th December 2008, 3:01

    If, like some of you have suggested – F1 sinks like a ship and something rises from the ashes, I shall turn my back on it

  6. S Hughes said on 5th December 2008, 3:15

    The Limit, don’t you mean capitalism? Since communism ended in Russia, the oligarchs have become monumentally and indecently rich, and poverty and unemployment has dramatically increased. Wow, a greater misunderstanding of politics I don’t think I’ve ever seen.

  7. Soulore Solaris said on 5th December 2008, 3:58

    nice optimism to think things will keep rolling along as they have been…

    the reality is different, the global economy is having major issues rebirthing itself for a completely new paradigm, car manufacturers have had a long time to get with the new program instead going along with the oil companies in a completely untenable unhealthy and unethical way.

    ecological economics is taking over big time, massive solar air, water and battery powered manufacturing is poised to take off, the 3 major manufactureres in the US are about to go bankrupt, at best.

    and you reckon its all gonna keep rolling on as it has for another 50 years?? i doubt it seriously within 6 months this transition will really take hold, Honda is smart if i were them i wouldnt want to be aligned with F1 if the best it can do is unsightly gross and low tech aerodynamics and pathetic internal combustion ancient technology… this isnt just about economics its about image and market placement…

    F1 is in serious risk of falling behind the times when there is so much awesome aerospace and free energy systems out there ready to implement…

    get with the times guys!

  8. What’s interesting to me as an American is that Honda — and Toyota for that matter — never seemed to me really to fit in with F1 to begin with. F1, here in the U.S., is not an everyman’s sport, so Ferrari and McLaren always made sense to me, but the Asian brands, not so much. I don’t profess to know how they play worldwide, but here in the U.S. both Honda and Toyota have sent decades building the brands on reliability, good value, good resale… these are solid, middle-of-the-road, family brands, and the farthest thing from the glitz and glam of F1. The very first post on this page said Honda should consider NASCAR; I think I agree. Toyota has been there for years, with some success, and in pure branding terms I think it suits Honda better than F1 does, too.

  9. So much to talk about here, but let’s start with the age-old debate about F1 and the USA.

    First up, I understand that Honda started up in F1 with marketing and brand awareness as priority Number 1. However, while this is one of their top markets, they also have sales all over the world, in countries where F1 is the mainstream form of auto racing. So if you think they joined F1 just to increase their presence in North America, I suggest you look at the big picture.

    Now, looking here at North America, it would no doubt be a good idea for Honda to consider NASCAR supply. However, they also have every right to want to have a successful presence in North America with their F1 team. In this respect, I believe Honda would have never thought they would go from two North American races to zero in two years. They also probably never saw Bernie unleasing a long series of negative comments and statements aimed at both venues before they were dropped. F1 is/was a global project for Honda- not just a North American one- but North America was a considerable slice of the picture for them.

    Lastly, if this is the end of Honda F1 as we know it, I will always remember the team for being perhaps the most outspoken on the grid for a strong and healthy U.S. Grand Prix. While it may have been purely from a commercial sense, Nick Fry would never quit in his desire to see an F1 return to this country, while most of the other team bosses sat back, sang the praises of the Tilkedromes, and did NOTHING to push for a healthy North American presence. Mr. Fry, your team may have floundered, but you will always be a hero to fans on our shores.

  10. Journeyer said on 5th December 2008, 5:19

    But Nick Fry, for better or for worse, oversaw BAR/Honda post-2004 – which was when their form began to decline (remember fuel-gate in Imola 2005, way before the 2007 slump?). I really think Fry was severely lacking in his role, and by the time they pulled Ross Brawn in, it was too little, too late.

    But, yeah, ultimately, it was the Japanese board, those who don’t really care too much about F1, who made the decision. And for most manufacturers (except Ferrari and Mercedes), that will always be the case.

  11. Now, let’s turn to the future of the sport.

    F1 is not going to stop operations anytime soon. However, the sport could be headed for a dark age of sorts if Bernie and Max don’t reverse several disasterous rules, attitudes, and proposals.

    First up, cutting costs is critical for F1 teams at the moment, but I believe Max’s standard-engine deal may have had a direct impact on Honda’s decision to leave. If Max is serious about saving the teams money- and keeping the teams in the sport- he should look at proposals like the Force India/McLaren deal, and stop forcing changes on the teams that they don’t want.

    On Bernie’s end, if the teams don’t like the medal idea, then don’t force it on them- form what I can see, the system dose nothing in rewaridng points to teams in the midfield, and offers little to measure the progress of a developing team. Also, for as much as some people may argue with me about it, North America is a critical market for the teams, and I have little doubt that going from two races to none in under two years had at least something to do with their decision to bolt.

    McLaren, Ferrari, and BMW are in good shape- they are at the top of the grid, are well-sponsored, have premiere drivers on their books, and probably aren’t hurting as much in terms of sales as the Japanese teams are. Same for Renault, although perhaps they would close up shop if the results son’t start coming. Force India is good shape, esp. now that they have McLaren’s help. Red Bull is also going to chug along, although STR may be in some grave danger if they are indeed to be sold. The ones to watch are Williams and Toyota- I think Toyota is in better shape than Honda was, but if Max continues to push his bad legislation, they could want out in the near future as well.

    We’ll just need to wait and see what the press releases say tomorrow….

  12. Jonesracing82 said on 5th December 2008, 6:28

    VERY odd, consider they spent all of this season on next years car, to the dtriment of results this year and they rnt even going to be around to race it…………..

  13. For those who listen to what the “prophets of doom” have to say , it is predicted the world economy is heading into it’s worse depression since 1937 , which I think was know as “The Great Depression”. Personally I don’t think it will be that severe , but nevertheless there is no doubt there is currently financial strain on everything , and in particular the motor industry , so that coupled with the fact that Honda’s past performances on track have been less than acceptable in terms of expenditure , would have been the catalysts for the final decision. Did hit me as a surprise though , but probably because of the suddenness with which it was announced. The positive is if there facilities are bought out , and they become an independant team , will also be up Mosley’s alley.

  14. My understanding is that Honda is looking for a quick sale and will let its F1 operation go for a nominal sum. If so, this could open the door for someone to come in and run the team using the rebranded 2009 Honda chassis and customer engines. With the right backing it’s a near perfect turnkey operation for, say, Prodrive, ART, Carlin or even a management buyout led by Nick Fry and Ross Brawn. Whether anyone could find that kind of money at such short notice is the big question.

  15. Adrian said on 5th December 2008, 8:43

    I wouldn’t be suprised to see Bernie do a deal with someone to get a buyer for HondaF1 fast. Prodrive would seem an obvious candidate, first because they wanted into F1 as recently as last year but couldn’t afford the setup costs, second they obviously have plenty of rich “fans” – look at their 77 project – so I’m sure they could find backers even in these hard times, and third because of David Richard’s history with the former BAR.

    From what I read a deal could include the engine manufacturing facility – so they should be alright for engines. I’m sure Jenson, Brawn, Fry et al will agree to work for no salary if it means staying in the sport (obviously the “normal” employees won’t be able to, but if the top guys take a pay-cut it reduces the budget by a sizeable chunk) and they could easily bring in a pay driver for the second seat (how much has Rubens got in the bank??).

    Yes, I expect to see a new team on the grid next year using the HondaF1 setup.

    BUT, I also expect to see a very different F1 in the years to come as costs are finally brought into check, and signs this morning seem to suggest that Max is starting the get the message – he’s finally realised that he shouldn’t force a standard engine on everyone (for those who haven’t seen yet, he’s announced a low cost engine & transmission deal from Cosworth and then teams have the option of building their own engine to the same spec, or continuing with their current units).

    As for sponsors, there’s still money out there. It might be harder to find, but there’s money to be got in places like India, Russia and the Middle East.

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