Honda: a one-off or the first of many?

Rubens Barrichello in Honda\'s final Grand Prix at Brazil

Rubens Barrichello in Honda's final Grand Prix at Brazil

Did Honda drop its F1 team because it was performing too poorly to be worth keeping? Or are car manufacturers going to begin cutting their F1 teams, irrespective of how well they’re doing, to save money?

A one-off

This side of the argument insists that although Honda was faced with severe economic pressures, the board wouldn’t have dropped its F1 team had it been more successful. Therefore, Honda’s withdrawal from F1 was just a one-off: the natural culling of an un-competitive outfit.

It’s not difficult to paint a picture of Honda as a struggling team: The Brackley outfit had been on a downward trajectory since 2004, when the team was still called BAR and run by David Richards. Once Nick Fry took over things began to go wrong: starting with the 2005 fuel tank controversy and the team’s poor form, failing to score at all in the first half of the season.

It over-promised in the off-season before 2006 and then under-delivered, except at the Hungaroring, where Jenson Button took a fortunate win thanks to wet weather. The team’s woeful 2007 and 2008 campaigns revealed its true performance level, and when the credit crunch came Honda had no reason not to strike a line through its $400m entry on the balance sheet.

Even if you don’t agree with that pessimistic assessment of Honda’s three years as a full-blooded F1 constructor, its decision to focus development in 2008 to maximise its opportunity with the new 2009 regulations may have added another nail to its coffin. If the RA108’s development had not been sacrificed for the RA109’s, perhaps it could have been a regular points scorer in 2008 and things might have been different.

Either way, although Honda needed to cut costs, it wouldn’t have canned its F1 team if it had been doing better. Therefore, the other manufacturers are unlikely to leave, as four out of the five won races this year and can expect to be in championship contention in 2009.

The first of many

Are more F1 teams going to quit the sport?

Are more F1 teams going to quit the sport?

The counter-argument to that says that car manufacturing is in such grave trouble and F1 costs are so high that it is inevitable more manufacturers will withdraw.

Yes, F1’s major manufacturers re-affirmed their commitment to the sport in the wake of the Honda pull-out. But not all their words came from the CEOs, the Carlos Ghosns and the Norbert Reithofers. They either came from the manufacturers’ motor sports directors such as Norbert Haug, or as unattributed statements. As Max Mosley himself admitted:

The man who runs the competition department wants a big department with the maximum budget and maximum employees. Those on the board want the maximum success from motor sport with the minimum cost. It is really only the man on the board that is concerned with cost.

The people who run the motor sport team won’t make the decision to cut it or keep it. This quote from James Allen reveals the dizzying speed with which an F1 team gets axed in the present economic climate:

It seems that the November sales figures arrived on [Honda CEO Takeo] Fukui?óÔéĽÔäós desk on Thursday and were far worse than expected. Against that backdrop Fukui took the decision. Interestingly Honda had held a press conference on Thursday to announce a new car and he made no mention of F1 then. When quizzed about this after the withdrawl announcement on Friday morning Fukui said that it had been a sudden decision.

And Honda isn’t the only car maker in trouble: Toyota’s US sales fell by 34% in November. BMW’s worldwide sales fell 25% in November. Mercedes’ fell by 27%. Most F1 sponsors are taking a hammering too.

At these times a nine-figure sum on a balance sheet is going to attract attention a long time before an eight-figure one. The fact that Honda has withdrawn from F1 but not British Superbikes, Moto GP and the Indy Racing League proves two things: the motor sport is a justifiable activity for a car manufacturer to be involved in at these times, providing costs are sensible, and that success is not a pre-requisite for their involvement to continue.

Had the FIA imposed greater cost cuts sooner things might have been different. But, although Max Mosley has been pushing for cost cuts for some time, they have not gone nearly far enough. The car manufacturers take some of the blame for not pushing for greater cuts, but the FIA is also accountable.

This season past was supposed to be the first year of legal customer cars, allowing independent teams to compete more cost-effectively in a manner which was commonplace in F1 in the past. But the FIA failed to get the rules sorted, and so the putative Prodrive team (which planned to use ex-McLaren chassis) was put on hold. Then the FIA dallied with the fantasy of budget capping and restricting the amount of time teams could run their wind tunnels for, which came to nothing.

The FIA either couldn’t decide how to cut costs or lacked the will to do it properly. When Mosley found his back against the wall in April he had no trouble finding the backing to keep himself in a job. Might that political capital have been better spent on guaranteeing the long-term survival of Formula 1?

Mosley’s offer of cut-price standard engines may be too little, too late. It may even signify that he has given up on the idea that the manufacturers will remain in the sport and it laying the ground to usher a new era of independent teams into the sport. It is only a matter of time before more teams announce their withdrawal. F1 in 2008 is in the same position the British Touring Car Championship was one decade earlier.

What do you think

I’m not sure which side of this debate I fall on just yet. But the shocking speed with which the axe fell at Honda makes me paranoid that more will follow.

So I’m leaning towards the ‘first of many’ side of the debate. And, like many of you, my suspicion falls on Honda’s Japanese rivals Toyota as the next most likely domino to topple.

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32 comments on Honda: a one-off or the first of many?

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  1. Sgt. Basecamper said on 7th December 2008, 11:51

    My first guess is Renault. It costs a lot of money and honestly I can’t see what they benefit from F1 on the consumer market at the moment. Also, the future of F1 with maybe standard engines and no French GP must be taken into account.

    My second guess is BMW. Although they have more to gain from F1 on the consumer market, they have absolutely nothing to gain if F1 is going standard spec.

    My third guess is Force India or Williams. The reason is just the general financial crises and sponsors leaving F1.

    My fourth guess is Toyota, The competition against Honda is essential for them, so this could be a perfect time to withdraw after seven years without a victory.

  2. Rabi Sultan said on 7th December 2008, 12:05

    I fear it is also the first of many and the ones that come to the top of my mind first are teams such as Renault, BMW and Toyota.

    The only way I see things changing is if someone buys Honda out quickly that may be the only thing that may calm things. But for another manufacturer to buy Honda at this time would not be sensible. Besides which car manufacturer would firstly be in a position to do it and secondly who would want to do it?

    I can’t think of anyone other than Tata (and that is a very big longshot) using the Jaguar brand. They could potentially do it as the company not only manufactures cars but all forms of vehicles and they may decide to compete against Mallya’s Force India.

  3. imagine if renault do fold before the start of the season. what will alosno do then?

  4. Seedy001 said on 7th December 2008, 12:30

    I don’t think anyone else will drop out before Melbourne because they’ll all be even more focused on securing F1’s future in the wake of this.

    But once we’re a 3rd of the way through the season and the reality of their new cars pace kicks in… if someone, a manufacturer, found themselves constantly occupying the last 2 rows of the grid then I’d get slightly worried.

    Still, I’ll side with one-off argument because Honda didn’t exactly help themselves by failing to plaster a handful of sponsors’ logos on their cars like everyone else does. Oh and because they wasted millions on setting up a team for Sato just to save face in Japan!

  5. Well I do not buy that story about Fukui-san looking at November sales figures and deciding to pull the plug on F1. It does not make any sense. After all those hundreds of millions spent on this team since they fully focused on BAR in 2003 and after all that work on their 2009 car one does not make a decision like that because on November sales … But who knows, Honda put motorbike guy in charge of F1 aero so nothing would surprise me here …

  6. Robert McKay said on 7th December 2008, 12:52

    I think there’s more to come in terms of teams dropping, although not necessarily manufacturers and not necessarily before Melbourne or even before 2009.

    I think Toyota are at some point going to merge with Williams and they’ll work together – that will keep Williams afloat for a bit longer, keep Toyota present in the sport but with less expenditure, and benefit them both.

    I think Mateschitz will cut STR loose at some point.

    I fear Mallya might get bored with his experiment too if there’s another expensive year at the back.

    Keith –

    Mosley’s offer of cut-price standard engines may be too little, too late. It may even signify that he has given up on the idea that the manufacturers will remain in the sport and is laying the ground to usher a new era of independent teams into the sport.

    I totally agree.

    When the FIA announced the process of inviting new teams to join (2007?) there was a mammoth response. None of them really, truly wanted to be full manufacturer teams, but if there was a Formula with a standard engine and that engine was the benchmark that even the remaining manuacturers were tied to, and the budget to run a team was ÂŁ30-40 million and not ÂŁ130-140 million, and even if you did have that much money it wasn’t automatically going to mean you had no chance of competing, then teams would more than likely be falling over themselves to be in the sport.

    Now, that series is not necessarily going to look all that much like Formula 1 is at the moment. Maybe it will be closer to GP1. But you can still have teams designing their own chassis and doing some development, maybe just not as much as at the moment.

    Like I said in another thread lets try to get back to teams wanting to go racing for racings sake, and not with the agenda of being there to market their brand to the world.

    Maybe it’s more important to manage the decline sensibly, fall back to a level where we can at least have full grids (maybe we could actually have a stage where teams/cars don’t make it through quali…?) and stop the rot. Then the sport can begin a growth again.

    We don’t want the situation analogous to that of the BTCC as Keith points out, where the series died a slow painful death at the end of the Super Touring era, and even after the rules were rewritten it still took a good few years to get a recovery.

  7. Sgt. Basecamper said on 7th December 2008, 13:00

    This is weird, but somehow I wouldn’t mind if more teams withdraw, and F1, FIA, Mosely and Ecclestone went downhill from here and totally disintegrated the next year. That could be a start of something new… Were the teams have more to say… Where spec doesn’t changes every year, costing the teams millions… With promotion of everyday green technology… With tracks that promote good old-fashioned racing… With a close relationship to the fans… With races (maybe like Moto GP with three classes) that gives excitement the whole weekend and not just for the first few corners on Sunday 2 PM…

  8. beneboy said on 7th December 2008, 13:08

    Seedy001, I’m afraid I would not be surprised if we see one or two more manufacturers leave the sport in the coming months.

    For Honda the big difference between F1 and MotoGP, and motorbike racing in general is that the fans can actually buy the bikes we see race on a weekend. The last Superbike race I went to one of my friends ordered a new bike while we were there and he was one of many people to do so that day.

    F1 just doesn’t have this connection to production cars these days so the only benefit to the manufacturer comes when they win something and although Honda were expected to do a lot better this coming season they have been too long without success so it’s easy for the money men to add up the figures and decide to pull the plug.

    Sgt. Basecamper – I’ve been thinking that lately too.

  9. Pitpass and Crash are reporting that Red Bull & Toro Rosso could be on the way out next:

    http://www.pitpass.com/fes_php/pitpass_news_item.php?fes_art_id=36700
    http://www.crash.net/motorsport/f1/news/172493-0/red_bull_next_to_quit_f1_in_%27desperate%27_times?.html

    This to me reads like complete and utter speculation. I can understand off-loading Toro Rosso, but both operations? *If* Mateschitz does decide to leave F1 I would say it’s not down to economic-issues but more how F1 is perceived in the future.

  10. Keith Collantine (@keithcollantine) said on 7th December 2008, 15:11

    Seedy – Good point about the sponsors.

    Robert –

    When the FIA announced the process of inviting new teams to join (2007?) there was a mammoth response.

    I hope Mosley’s still got their phone numbers.

    Dank – Perhaps, the story’s from AFP originally, but I don’t think it’s beyond the realm of possibility that Red Bull might want to slim down to at least one team.

  11. we basically need more manufactuers to pull the plug, leaving the teams they have built for grabs for a dollar or so and allow people with racing in mind to return to the sport.

    manufacturers taking over F1 was always dangerous scenario. when they were involved primarily as engine suppliers and some pulled out, what happened ? nothing … the teams found other engines and show went on

  12. _Ben_ said on 7th December 2008, 17:14

    This is weird, but somehow I wouldn’t mind if more teams withdraw, and F1, FIA, Mosely and Ecclestone went downhill from here and totally disintegrated the next year. That could be a start of something new… Were the teams have more to say… Where spec doesn’t changes every year, costing the teams millions… With promotion of everyday green technology… With tracks that promote good old-fashioned racing… With a close relationship to the fans… With races (maybe like Moto GP with three classes) that gives excitement the whole weekend and not just for the first few corners on Sunday 2 PM…

    I have been strangely wanting this to happen since I heard about Honda…A more fan friendly and modest F1 about raw racing other than expensive car launches and pretty girls.

  13. Do not panic.
    After all it is not such a bad idea to come back to the days of the f1 constractors. “Asamblatory”, like enzo ferrari use to call them.
    If prodrive buys the team for 1 dollar, and all the other teams stay, the honda is going to have to come back in five years, if they do not want to be seen like the biggest losers, in the motorsports world. And they put the money to finance the prodrive f1 team. What a bad deal for the japanese, what a good one for richards, and for the fans.
    Be like bernie, and enjoy your holidays.
    i will.

  14. John Spencer said on 7th December 2008, 18:57

    I think Keith’s price per point article said it all: Successful teams spent about $2-$3 million per point. Midfield teams spent $5 or $6 million per point. Toyota spent $8M.

    By contrast Honda wasted more than $28 million per point – big spending under-achievers. Honda also has very little sponsorship income and as a car manufacturer has a much smaller turnover than Toyota, Renault, BMW, Fiat or Mercedes. It’s clear why they were the first to go.

    From what we have heard it seems like it was a sudden and unexpected decision by Honda high-ups. All this gives credence to the theory that only Honda will go. It also suggests that Moseley is rather over-playing his hand. With competitive budgets in the $200 – $400 million range, the cost cutting he is touting with his engine deal isn’t going to make the difference between survival and sudden death for any team. Especially as all the rule changes for next year (especially KERS) require huge additional expenditure.

    In fact, Moseley has proved himself entirely incapable of cutting F1 costs.

    I’ll still guess that no other team will pull out. But I’ll concede that there are no good reasons for manufacturers to stick around if they’re not winning. And there’s no good reason for billionaires like Mateschitz or Mallya to stick around if they get bored.

  15. Jon Nicholls said on 7th December 2008, 19:11

    Yet another great piece Keith! I for one hope the whole Honda news is a one off and well I read this report on the Honda situatuon which brought and it brought a smile to me: http://www.f1badger.com/2008/12/terarrrrr-hondaaaa/

    Would be excellent to have David Richards back on the F1 Grid.

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