Why are BMW really quitting F1?

BMW's disastrous 2009 season will be their last for now

BMW's disastrous 2009 season will be their last for now

The announcement yesterday that BMW is to quit F1 was a shock – at least, until Michael Schumacher announced he was making a comeback.

BMW’s statement had much to say about their corporate strategy and implied reasons to do with environmentally-friendly technology were at the heart of their decision.

Is that really all there is to it? Or, as the FIA claims, is it all to do with costs?

BMW’s explanation

Norbert Reithofer’s explanation for BMW’s decision to leave F1 is predictably smothered in corporate jargon:

Everyone knows that the BMW brand embodies sportiness with sheer driving pleasure. Sportiness and fair competition are firmly encoded in our DNA. This is why we will remain loyal to motor sports. But we will do this in series that enable us to transfer technology more directly and to realise additional synergies, while strengthening our brand values. This is in our customers? best interest.
Norbert Reithofer

One clear message is that despite leaving F1 they are not leaving motor racing:

BMW will continue to be actively involved in other motor sports series.
BMW statement

Which other sports might these be?

BMW will appear on the starting grid in the touring car series and young driver promotion program in Formula BMW. This will be supplemented by BMW?s participation in ALMS, the American Le Mans Series, endurance races and close-to-production customer sports. Furthermore, BMW Motorrad Motorsport will continue its campaigns, with the super bike world championship leading the way.
BMW statement

Which sounds like pretty much everything besides Formula 1, including the World Touring Car Championship where it races its 3 Series, despite BMW’s many (legitimate) grievances with how badly the FIA has run the championship.

So why single out Formula 1?:

Premium [brands] will increasingly be defined in terms of sustainability and environmental compatibility. This is an area in which we want to remain in the lead. In line with our Strategy Number ONE, we are continually reviewing all projects and initiatives to check them for future viability and sustainability. Our Formula One campaign is thus less a key promoter for us.
Norbert Reithofer

The statement adds:

Resources freed up as a result are to be dedicated to the development of new drive technologies and projects in the field of sustainability.
BMW statement

In other words, F1 isn’t green enough. We shouldn’t be too quick to cynically dismiss the suggestion: BMW produces among the most efficient road cars in their classes and at the beginning of 2009 was the only remaining defender of KERS. Had the FIA’s scale of ambition for the system this year been greater, and had the other teams not decided to drop it for 2010, might things have been different?

Motorsport director Mario Theissen hints that dissatisfaction with the team’s performance in 2009 may also have played a role in the decision:

Of course, we, the employees in Hinwil and Munich, would all have liked to continue this ambitious campaign and show that this season was just a hiccup following three successful years. But I can understand why this decision was made from a corporate perspective.
Mario Theissen

Nowhere in BMW’s statement do they mention the question of costs, which has dogged F1 years, particularly in the months since Honda’s departure. But would they admit to being driven out of the sport by the expense even if that was the case?

Costs

The FIA clearly believes the reason is costs. In a statement today (with a distinctively Mosleyian air of self-satisfaction) it said:

This is why the FIA prepared regulations to reduce costs drastically. These measures were needed to alleviate the pressure on manufacturers following Honda’s withdrawal but also to make it possible for new teams to enter.

Had these regulations not been so strongly opposed by a number of team principals, the withdrawal of BMW and further such announcements in the future might have been avoided.

The statement judiciously avoids pointing out that one of the teas allied to FOTA in oppossing the budget cap rules was BMW itself. Therein lies the rub: the Max Mosley’s attempt to impose a budget cap F1 was a political failure which alienated the very people it was supposed to save.

Nor can we rule out the possibility that, following the Mosley ‘Nazi sadomasochism’ scandal last year and Bernie Ecclestone’s words in praise of Hitler this year, BMW didn’t want to be tainted by association.

Mosley at least had one thing dead right: the decision to axe the F1 team is not taken by the motorsport men – the Mario Theissens. It comes from the board and, just as it was with Honda, the decision is is taken as quickly as the flicking of a light switch.

Why do you believe BMW is leaving F1?

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70 comments on Why are BMW really quitting F1?

  1. Robert McKay said on 30th July 2009, 11:18

    I think one of the problems is they really want to push the KERS/green/road-relevant technology but they can’t because even if they used it on their cars their rival Mercedes-Benz is winning with theirs. Puts them in a difficult position.

    They seem disappointed with the homologisation and standardisation of parts, which is odd given they were part of FOTA who decided that was the way to go, unless they were endlessly outvoted on it.

    Cost actually probably isn’t a major factor in it.

    But I hope its not, simply due to poor results this year, that would be very kneejerk indeed.

    There’s probably a bit of everything though…

  2. I get the feeling that they are sulking. Men in suits with little understanding of F1… Win the championship within 3 seasons??!! :|

    Shame to see them go but lets hope Sauber or someone takes over the team again.

  3. dwp said on 30th July 2009, 11:37

    I think it’s all about return on investment (ROI). The investment in F1 is huge. Factories come in thinking they will achieve a high level of success and find out they are one of ten teams and not everyone is going to be a winner. Recently Honda bailed out, now BMW, and likely Toyota will also.

  4. Jasmine Corbelle said on 30th July 2009, 12:00

    I do think BMW and Honda want to be seen as a more ‘green’ option than it’s competitors in the market place, so I think BMW are being genuine about that. Had they of been in serious contention for the constructors championship next season, then maybe their principles would have been put on hold, just a little longer! (Well who wouldn’t)

  5. The statement judiciously avoids pointing out that one of the teas allied to FOTA in oppossing the budget cap rules was BMW itself

    Those teas hey who do they think they are.

    Who cares Schumacher is back.

    Oh sorry I mean damn BMW are quitting. I imagine they’re largely sick of the BS plus they’re loosing like a fat kid at sports day, would they quit if they were in the position of Brawn GP? Probably not I’d guess. Anyway Schumacher is back.

  6. R W Miller said on 30th July 2009, 12:46

    So if they are withdrawing due to the financial pressures of F1 and the rejected budget caps it seems that they have more money to toss into the sea with BWMOracle Racing and the joke that once was the America’s Cup. The dollars spent in development and redevelopment of the “Dogzilla” and the court costs involved must be staggering… but of course sailing is “Green” and the rumor mill has engines in the sailboats now to operate machinery.

    It is a shame to loose them, and Peter Sauber’s legacy in F1… maybe one of the other rejected teams can buy them up and become another Brawn.

  7. JHunt said on 30th July 2009, 12:56

    Some people might say its the political bickering, the governance in F1, the performance this year..etc etc. Remember occam’s razor, the simple fact is BMW is in the business of making money by selling cars. If they can make a F1 car that generates 100mm in sponsorship revenues and costs 50mm to do so, why would they NOT do it? On the other hand, if it costs them 300mm or whatever to generate 100mm in revenues, then of course they would not do so. BMW should hang their head in shame for what they have done with FOTA and potentially causing harm to the sport.

    • I agree that they haven’t helped FOTA’s cause – but who is the member of FOTA? BMW or BMW-Sauber & Mario Theissen? Bit of a difference there. I’m sure Theissen remembers his obligations to FOTA, but sadly, he doesn’t have the final say. He is as much a victim of economic rationalisation as the rest of the BMW-Sauber team.

      Personally, I think that if there were still races in the USA or Canada, we wouldn’t be having this discussion.

      Blame Canada !

  8. PJA said on 30th July 2009, 13:03

    I think it is a combination of all the reasons mentioned in the article.

    I think it is probably safe to say that if they were challenging for the championship now they wouldn’t be leaving, having said that I wouldn’t have been surprised that if BMW had met their target of winning the championship this year then maybe after another year or two they would say they had achieved what they set out to achieve in F1 and were quitting.

    Although BMW wouldn’t mention cost as a reason after everything that has happened this season it would have played a part, it would be easier for the board to justify an F1 team having a bad year if it wasn’t costing them much.

    The reasons for Manufacturers to participate in any form of motorsport are for promotional reasons and R&D. If F1 no longer has any races in some of BMW’s key markets they would have to re-evaluate their involvement. Also the I think the image of F1 as a whole has been damaged in the past year or so with Mosley’s sex scandal, Ecclestone’s Nazi comments and of course the FIA/FOTA row, so this wouldn’t have helped when looking at reasons to stay in F1.

    As far as R&D goes I could easily believe that BMW decided the best motorsport series to come up with road relevant and green technology wasn’t F1.

  9. Tim said on 30th July 2009, 13:11

    BMW is not a very wealthy company. It is one of the largest Independant automanufacturers left. It is not part of a conglomerate so I do not believe they could afford to continue in F1 with a major title sponsor like Credite Suisse,ho left at the end of last year.

    They have been F1 cash strapped since the beginning of the year and their siding with FOTA on the budget cap issue was more a matter of share price than common sense. Not very good for BMW’s share price is they are perceived to want to spend less on F1 motorsport. In all other coategories hey sell the race car to the competitor. In F1 they have to pay for it themselves.

    There is probably a lot of truth in their corporate speakl reasons to quit too. Only Mercedes is a direct competitor in the luxury car marketand even then they appeal to different people so they dont compete directly either. Audi is their main opposition and they have been making marketing inroads wrt to BMW’s position as a luxurysports car, especially in America.

    I also believe that F1 has no direct beaing on road cars save for KERS. So for BMW quitting now is quite logical. Why spend more without guarantee of ROI?

    Kudo’s to them for quitting. F1 is a farce anyway. the only real way for F1 to survive would have been under Max Mosley’s rules for budget capping

  10. DGR-F1 said on 30th July 2009, 13:14

    BMW in ALMS? That could be interesting, and good that they will continue supporting Formula BMW and the Touring Cars too.
    Although I can see that the recent lack of wins would have speeded any management decisions about staying in F1, the sheer stupidy and pig-headedness coming from FIA and FOM recently would be enough to make any team think twice before continuing in the sport.

  11. GQsm said on 30th July 2009, 13:21

    The first thing is it is not money related, quite the opposite, now is the time to get into F1 for monetary reasons.

    With the new Concorde agreement the revenue allocation has been changed and along with the team spending agreement all the F1 teams will be profitable by 2011 if they don’t want to blow all their revenue on motor homes and expensive consultants.

    I think the exit is a combination of three things.
    A) The embarrassment that is the way the Max and Bernie show is run, Max especially. The politics and governance of F1 has been farcical plus BMW are German, the Nazi scandals are there, whether proven or not and it’s very distasteful by association. Someone mentioned Mercedes have stuck it out, yes but that doesn’t mean pressure hasn’t come from certain board members for Mercedes to pull out. It is just that Mercedes have more to lose and more reasons to stay (Respected engine supplier, longer F1 history, better results, Mclaren argueably the most prestigous global team/brand after Ferrari), the pros and cons are more balanced for them.

    B) Commitment, it’s either get out now or the next chance is 2012. I don’t think they would be pulling out now if they could choose to exit for whatever reason when they felt like it. Any more scandal or embarassment in the next 3 years and they can’t leave even if they want.

    C) Results, the icing on the cake. This year they are terrible, it would certainly be embarrassing if BMW were to be back markers for the next 3 years behind every other manufacturer on the grid. I don’t think the faith is there. 2009 was a hyped year for BMW. They were expected to be the “strongest” KERS team pre season and they started their 2009 car before Ferrari and McLaren. This was meant to be the year they arose at the top.

    I think overall they see being locked into F1 for the next 3 years as being a potential PR and brand disaster and after all that has gone on this year, it’s a risk they don’t want to take.

    The green credentials of F1 are just a small extra reason in my opinion and they would remain in F1 regardless if they were leading either of the two titles. We know F1 will get greener, they could influence this more if they were within F1.

    I just hope the team is sold and kept running a la Brawn.

  12. Carl said on 30th July 2009, 15:12

    I think something that’s overlooked here is that “sustainability” does not necessarily mean “environmentally-friendly”. However, green technologies are really at the forefront of automotive development, and “green washing” is a very real phenomenon in the push to drive sales.

    That said, the expenditures into F1 are not “sustainable” in as much as the tech development there is not going to help their bottom line to sell more environmentally-friendly automobiles. KERS was the fine thread connecting the two, but now it’s frankly unjustifiable. Therefore, the benefits of BMW running in F1 cannot “sustain” its continued involvement.

    • DomPrez said on 30th July 2009, 15:58

      this is deffinatly on the right track. i may add that costs is not the issue as the FIA is stressing, but rather developmental restrictions. If BMW had a program in F1 that could in some way trickle down into their road cars, they would undouptably INVEST MORE in F1 to better production/sales for future products! its pretty much a fundemental idea behind F1. Also, i think its important to note that their was a line-up of companies and individuals tring to enter the sport this year, which I’d say is a damn good sign that costs are at a more than reasonable level. I find it difficult to believe they are finding funding to run a F1 team but a major ‘sport’ automaker is strugleing with already reduced budgets.

      bring back the technical freedom and u bring back the manufactures…reduce cost and freedoms and u welcome in the Campos, Manor, and USF1′s, of the world.

  13. Jim N said on 30th July 2009, 15:51

    People have short memories. The reason BMW are leaving is simply boardroom politics. Think back 4 years, when Marrio Thyssen was moaning about Williams poor performance and that he wanted an all BMW team. He managed to persuade a very reluctant BMW board to try it. Norbert Reithofer was always anti it, but in the end agreed to let Thyssen try it and gave him a deadline of 3 years to achieve success…. there was much talk at the time of giving Thyssen enough rope! It’s 3 years on, no real success, so Reithofer has just done what he always wanted…. it’s got nothing to do with costs, FIA/FOTA politics, green issues, that’s just spin….. the current situation has just made it easy, Reithofer was always going to kill it if he could.

    • DomPrez said on 30th July 2009, 16:05

      interesting, i didnt know reithofer had thyssen on lease. that would make ur argument quite valid and almost end all discussion. however, as much of a ‘spin’ as it may be, they are real issues ANY manufacture would face in BMW’s position and Honda may have been caught out by the same reasoning.

      Toyota and Renault will be the yard stick, if they can hang around for even a few seasons more, we will know this was an internal BMW issue.

    • HounslowBusGarage said on 30th July 2009, 21:47

      Good memory/research Jim N. Is there any possibility that Reithofer would allow BMW to revert to their previous position of engine supplier, or is he totally anti-F1?
      And will Thyssen survive the boardroom punch-up?

  14. Dennis said on 30th July 2009, 16:48

    BMW’s departure is really a pity. If expectations had not been so high this season, they (BMW bosses) would not have pulled the plug so early. The greater the expecation, the greater the disappointment. Even if they are not fighting for the championship (as EVERYONE including the team themselves have predicted@overestimated), one or two race wins in 2009 would probably have saved them from leaving the sport so desperately. Hundreds of millions may well be saved and spent on more important things, say, car warranties rather than a few miserable championship points? 8-) My point is: the big bosses may have expected something huge as what the team promises for 2009, unfortunately they failed to deliver. In the real corporate world, you get the axe when you fail to deliver what you PROMISED. I think it works the same way for BMW Sauber F1 team. If only BMW had Red Bull-like performances this year, things will definitely change, yeah, if only. To Heidfeld and Kubica, start sending your job applications NOW!

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