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Posts Tagged ‘Costs’

Fernando Alonso in Renault R29 at Algarve

It was announced yesterday that ING will end it’s participation with Formula 1 when the 2009 season draws to a close. The Dutch financial giants are the title sponsors for both Renault and the Australian, Hungarian and Belgian Grands Prix, but after being hit hard by the global financial crisis, and receiving 10 billion euros from the Dutch government, the group have been forced out of their involvement with the sport.

A statement released by ING yesterday said: “ING’s participation in Formula One was the company’s first global sponsorship project aimed at delivering revenue and raising the global brand awareness. Over the past two years, ING has successfully achieved its objectives for the F1 sponsorship, raising its overall global brand awareness by 16%. F1 remains a powerful business driver even in a difficult economic climate. Whilst ING has cut the F1 sponsorship costs by 40% in the final year, revenue generating opportunities will be a continuing focus through 2009. ING has enjoyed the relationship with Renault F1 and will continue to work closely with the team during the final year of the partnership.”

Regardless of this announcement, the Renault F1 team were already the subject of heavy speculation about their future, as the French manufacturer struggles to cope with the slump in the car market. Team boss Flavio Briatore remains confident, however, that with cost-cutting measures coming into force, Renault have a secure future in the sport. “Drastic cost reductions have been on FOTA’s agenda as one of the first priorities and with the ongoing programme of measures we are confident we can guarantee a solid future for our team and for Formula One,” said Briatore.

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Jarno Trulli in Toyota TF108 at Bahrain

Japanese car manufacturer Toyota is expecting to record it’s first ever loss at the end of the financial year in March. Following on from the initial prediction of a $6.7 billion profit, the corporation is now forecasting a loss of $1.7 billion in the wake of the global financial crisis which has hit the car market badly.

Despite this, Toyota’s F1 team have re-confirmed they are committed to the sport and will not be pulling out. This comes under three weeks since they last had to issue a statement confirming they would not pull out, following their Japanese rival Honda’s withdrawal from the sport. President of Toyota, Katsuaki Watanabe, said earlier today: “The change in the world economy is of a magnitude that comes once every hundred years. We are facing an unprecedented emergency.” But despite the strong words, he also said: “We continue F1 and other motorsport activities while cutting costs.” Toyota F1 president John Howett repeated the views of other F1 teams, saying he is more concerned about the 2009 regulations than the financial issues.

It may come as a surprise to many however, that despite Honda having a richer heritage in motor racing than Toyota, they feel the need end F1 participation to be seen taking action against the financial meltdown, which may weaken Toyota’s image outside the sport.

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Honda Logo from 2008

Honda ended hours of frantic speculation last night, by confirming that they will pull the Honda Racing F1 Team out of Formula 1 with immediate effect. The major shock announcement was made by the president and CEO of Honda, Takeo Fukui, who blamed the pull out on the global financial crisis.

The decision was made with little warning to anyone, with the only indication that the team may be in trouble coming last week after the cancellation of a dinner party. The Japanese manufacturer has been affected by the slump in the car market, and a reduction of sales has forced to the company to save money for 2009 by sacrificing their F1 team, which are predicted to have the fourth largest budget in the sport. The announcement comes at the worst possible time for team, who have been building their 2009 car since former Ferrari technical director, Ross Brawn, joined the team in November 2007.

The Brackley based team remain confident that the 700 jobs at risk will be saved, however. Team Principle Ross Brawn and CEO Nick Fry are looking for buyers and appear to have at least three serious offers from investors to save the first F1 victim of the credit crunch. It is also rumoured that Brawn will use his connections in Italy to secure a Ferrari engine for the team, now that the Scuderia will not supply engines to Force India.

The sudden nature of this announcement has shaken Formula 1, and leaves the sport in a worrying position, especially if the team cannot find a buyer. It is a stark reminder that F1 must see a drastic reduction in costs very soon to avoid a collapse of the sport. It is also a devastating blow for the supporters and everyone who works at Honda, with such high expectations and a promising 2009 season cut short before it even began.

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Ferrari have threatened to pull out of Formula 1 if the plan to standardise engines after 2009 goes ahead. They are the second team to make such a threat after Toyota warned the standard engines would leave the manufacturers with little interest in the sport.

A statement released by Ferrari said “The Ferrari Board of Directors expressed strong concerns regarding plans to standardise engines as it felt that such a move would detract from the entire raison of a sport with which Ferrari has been involved continuously since 1950 … The Board of Directors expressed the opinion that should these key elements be diminished, it would have to re-evaluate, with its partners the viability of continuing its presence in the sport.”

Despite this, FIA president, Max Mosley, appears to be going ahead with the engine homogenization, inviting any intrested parties to submit a tender to supply engines and/or transmission by November 7th. FOTA have confirmed none of the six manufactuers currently taking part in F1 (Toyota, Ferrari, Honda, Renault, Mercedes and BMW) will submit a tender.

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Mosley heads cost-cutting talks

FIA president, Max Mosley, will meet with the Formula One Teams’ Association in the days following this years Chinese Grand Prix to discuss urgent cost-cutting measures to secure the future of Formula One after 2009.

In an interview with the BBC on Tuesday, Mosley expressed serious concerns over the not-too-distant future of the sport, saying “If we don’t get it [cost-cutting measures] done before 2010, we will be in serious difficulty.” Mosley met with FOTA on Wednesday in what was later described as a ‘constructive’ and ‘positive’ discussion, agreeing to meet again after the Chinese round, in just over two weeks time, where they will begin talks on “the strategic decisions which are now urgently required, having regard to current world-wide economic problems.”

This follows the news on Tuesday that Mosley would negotiate with the newly-formed FOTA group towards significantly reducing the cost of the sport.

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