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The Shifting Manufacturer Paradigm in F1

Posted on June 13, 2022

Even if you’ve been living under a rock, you know economic times are bad. One of the economic areas taking a particular beating is the auto market. The question is how badly will this impact F1?

It goes without saying that manufacturers play a huge role in making F1 competitive. The costs involved in running a team run easily into the hundreds of millions of dollars. For this, the teams are able to develop cutting edge technology they can transfer to their road cars and they gain serious exposure before the huge crowds that watch the sport. While these benefits are clear, manufacturers always have to weigh the cost versus the benefit. This is particularly true these days as the auto market collapses and so do revenues.

The most obvious manifestation of this problem is Honda. The manufacturer pulled out of F1 this year. At first glance, many felt this decision was more of a case of a team that was simply terrible. Since the announcement, however, we’ve seen Honda seek financial help from the government – an indication of serious problems. So, are any other manufactures considering a similar move? Every manufacturer with the exception of Ferrari seems to be reconsidering their involvement.

Perhaps the most surprising team is McLaren Mercedes. McLaren sits at the top of the heap of Formula One competition battling tooth and nail with Ferrari year in and year out. Despite winning the Driver’s Championship in 2008, the future of the team has suddenly become muddled. While McLaren will always exists, the Board of Directors for Mercedes recently voted by a scant 3 to 2 margin to stay in the sport.

As to the other teams, the news isn’t much better if you look at it logically. BMW is highly reliant on the US market which is contracting at a 30 percent pace. F1 requires a lot of money and BMW may not have it fairly soon. Toyota faces a similar situation. Renault is impacted less by the US market, but the manufacturer has never seemed that strongly committed to F1 to begin with, so the decision to leave the sport would not be a surprise.

What can F1 do to prevent a season where Ferrari wins every race by a lap? Even Ferrari realizes this is not a good result, so the teams have voluntarily negotiated new standards that cut costs dramatically. The fact that Ferrari, McLaren and Renault could agree on the time of day, much less cost cutting moves, is akin to Hell freezing over. Will it be enough? Nobody is really sure, but all indications are the team is willing to cut even more if it is required.

Formula One has long been a place where money was spent hand over fist to live on the cutting edge of car design. Like most industries, that attitude has gone through a forced change. The name of the game is now survival and will be for the foreseeable future.

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