Honda F1 in trouble, and withdraw from F1

[xpensive]

This is why we might see other manufacturers leaving within very soon, besides, end of the year is usually a politically-wise clever timing fore these kind of actions.

[axle]

Honda want out of F1 for PR reasons. They will execute some very painfull cuts and prior to this exercise they will pull up their rear guard so that nobody can point to waste of money when the hammer falls. Speed of execution is important to the plan if they want to claim reaction to exceptional circumstances. You have to understand that restructuring plans are very rigid in the way they are shown in a balance sheet and in the way losses can be tax deductable. To do anything but a full pull out could be risky for the board.

Then selling the powertrain rights to Mugen makes the most sense...

[Henning]

Honda want out of F1 for PR reasons.

I disagree. I just don't think they can justify £200m a year on a non-essential part of their business when they are having to close manufacturing plants like Swindon for two months in February and March. (http://news.bbc.co.uk/1/hi/business/7741269.stm)

[Metar]

Exactly what WhiteBlue said (or at least, that's what I interpreted): They want out of F1 for PR reasons, to show that they're cutting back on what's not necessary.

[Ciro Pabón]

Local news: Group FIAT declared today that their profit in 2009 has been revaluated to around 510 million. Wow, that's in the same order as their investment in F1. Apparently, they want to merge with somebody.

[tarzoon]

Local news: Group FIAT declared today that their profit in 2009 has been revaluated to around 510 million. Wow, that's in the same order as their investment in F1. Apparently, they want to merge with somebody.

it's not as if they had gigantic profits over the last 10 years.

Honda is a japanese team, and as far as I understand from japanese culture, they won't allow cost-cutting and staff reduction while they spend unnecessarily $350 m.

[timbo]

Local news: Group FIAT declared today that their profit in 2009 has been revaluated to around 510 million. Wow, that's in the same order as their investment in F1. Apparently, they want to merge with somebody.

Yes, but FIAT/Ferrari is in unique position. For example Ferrari do not spend a penny on advertising except for running F1 team, but they earn a lot at merchandising etc. Also, we do not know what the fraction of Ferrari/Maseratti profit in total figure, or is it even included. Over last 10 years luxury car manufacturers enjoyed very good sales/profits. Look at Porsche - they own VW now!

[yzfr7]

They tried a partnership with GM which ended two years ago. Very badly for GM by the way, as they had to pay FIAT 4B to get out of the deal.

But one thing that I did not expect was this:

http://www.leftlanenews.com/ferrari-fac ... risis.html

Not sure about the source/numbers though, just made me think what if...

[axle]

lol - if Ferrari didn't race, who the hell would the FIA change the rules for in future?!

[WhiteBlue]

Local news: Group FIAT declared today that their profit in 2009 has been revaluated to around 510 million. Wow, that's in the same order as their investment in F1. Apparently, they want to merge with somebody.

I'm fairly confident that you will find zero net invest by FIAT into Ferrari. Ferrari earn all their subsidies of F1 with their road car business, merchandising and sponsorships.

[Carlos]

A straight ahead fiscal company decision. The purpose of business - is business. As others have commented. When you shutting down factories on layoff, some workers might resent a short paycheck considering the hundreds of millions spent on F1 the last few years, shareholder might also question the investment considering economic erosion of world markets.

Part of the statement by Takeo Fukui, President and CEO, Honda Motor Co., Ltd.
"This difficult decision has been made in light of the quickly deteriorating operating environment facing the global auto industry, brought on by the sub-prime problem in the United States, the deepening credit crisis and the sudden contraction of the world economies.
Honda must protect its core business activities and secure the long term as widespread uncertainties in the economies around the globe continue to mount. A recovery is expected to take some time.
Under these circumstances, Honda has taken swift and flexible measures to counter this sudden and expansive weakening of the marketplace in all business areas. However, in recognition of the need to optimize the allocation of management resources, including investment regarding the future, we have decided to withdraw from Formula One participation."

[donskar]

A straight ahead fiscal company decision. The purpose of business - is business. As others have commented. When you shutting down factories on layoff, some workers might resent a short paycheck considering the hundreds of millions spent on F1 the last few years, shareholder might also question the investment considering economic erosion of world markets.

I agree with Carlos: this is a business decision, as opposed to a PR move. For example, Honda is reducing its advertising spend - but NOT eliminating it. That is because they see a positive return on investment from traditional advertising. they did not see the same from their participation in F1.

[Metar]

I'm fairly confident that you will find zero net invest by FIAT into Ferrari. Ferrari earn all their subsidies of F1 with their road car business, merchandising and sponsorships.

I recall a Ferrari executive said that FIAT doesn't fund them at all, and that Ferrari, with the F1 team, is an autonomous unit (that occasionally gives it's engines to Maserati)?

[tarzoon]

lol - if Ferrari didn't race, who the hell would the FIA change the rules for in future?!

Ferrari is not the aim of this thread. Especially since they are very solid in F1.

But continuing in other teams, and if I remember well, Carlos Ghosn was the one saying that Renault F1 programme would continue as long as it showed to be profitable...

[Metar]

But later on, he committed the team until 2012 minimum - though that was pre-crisis.

On the other hand, even with ING and Renault, the Enstone team seems safe. Both sponsors got government money, and with Alonso's massive success at the end of last season (more points than anyone else since Belgium), it appears pretty "profitable" as far as PR is concerned...