The true impact of the global recession on Formula 1 became clear week as Honda suddenly axed its F1 team.
It’s not clear how deep and how prolonged the recession will be, but we can get an idea how it will affect F1 by looking back on what the 1989-1992 recession did to the sport.
Yesterday’s Daily Telegraph offered this comparison of the emerging global recession of today with the last major financial downturn:
“The last recession, between 1989 and 1992, had a five-year impact on the car industry,” says Professor Garel Rhys of Cardiff Business School. This year, around 2.2 million will have been sold in Britain, but Prof Rhys believes that will be 1.75 million next year, and as low as 1.6 million in 2010. “I’m not being alarmist about this,” he says. “I’m merely tracking the last recession – and this one’s worse.”
Recessions force companies like car manufacturers to make sudden, deep cuts in expenditure, which is exactly what Honda did to its F1 team last week.
So what happened to car manufacturer involvement in F1 during and after the last recession? Here’s a summary:
1989 – In: Renault (engines), Lamborghini (engines)
1991 – In: Porsche (engines; Out: Porsche (engines)
1992 – Out: Honda (engines)
1993 – Out: Lamborghini (engines)
1994 – In: Mercedes (engines), Peugeot (engines)
1997 – Out: Renault (engines)
2000 – In: Honda (engines), BMW (engines), Jaguar (team); Out: Peugeot (engines)
2002 – In: Renault (team), Toyota (team)
2004 – Out: Jaguar (team)
2006 – In: Honda (team), BMW (team)
2008 – Out: Honda (team)
There are two patterns here: first, car manufacturers have largely switched from just being engine suppliers to running entire operations.
Second, car manufacturers join F1 during general economic stability and prosperity, and leave when financial conditions worsen. Granted, some have left because they just can’t cut it at the top level: Peugeot in 2000 was an example.
And that’s what makes figuring out the Honda withdrawal difficult: did they go because they were struggling, or because of costs? As I explained yesterday, I’m leaning towards the second explanation, but the coming months will show us whether Honda was just the first in a series of manufacturer withdrawals.
Read more: Honda: a one-off or the first of many?