December 8, 2008 - Honda Motors, Tokyo Japan

Tough times sway Honda to take surprising step - F1 Story

It was only a few weeks ago that the big poobahs of Formula One motor racing were saying that the future of this most glamorous and expensive of sports lies in Asia, not Europe or the Americas.

But that judgement by Bernie Ecclestone, the billionaire owner of Formula One's commercial rights, and the Williams team boss, Sir Frank Williams, slid into the crash barrier last week when Honda announced it is pulling its team out of the 2009 season.

Honda Motor Co. Ltd. chief executive Takeo Fukui said in Tokyo the company has decided to sell or shut down the team "in the light of the quickly deteriorating environment facing the global auto industry."

Honda must protect its core business, he said. That means saving the $300 million a year it currently spends on Formula One to allocate to its automobile and motorcycle manufacturing industries.

Honda has recently cut road vehicle production and laid off several hundred temporary employees with more slated to go in January. Last month sales in the key United States market were down 30 per cent over the previous month.

In truth, Honda has always had a more fickle relationship with Formula One than it has with IndyCar and motorcycle racing, where it is especially dominant.

But this latest retreat from Formula One comes at a time when the sport was poised to follow Ecclestone's road map and expand massively in Asia. Six of the 18 Formula One races this year were in Asia. An innovative night street race in Singapore joined established races in Australia, Bahrain, China, Japan and Malaysia. But Ecclestone has done deals to bring in Abu Dhabi in 2009, South Korea in 2010 and India in 2011.

Honda's decision need not affect those plans but it does underline that no expensive activities are sacred in these times of recession. It also adds weight to recent warnings by Max Mosley, president of the world motorsport governing body, the International Automobile Federation (FIA), that the expense of running Formula One teams has got entirely out of hand.

Although it was one of the least successful teams in modern Formula One racing, Honda was one of the best financed, employing nearly 700 people at Brackley, England, near the famous Silverstone circuit where most of the sport's teams have their development and construction facilities. This was only a part of Honda's huge investment in all forms of motor racing.

A few years ago I was involved in a project with a senior Honda official whose main responsibility was the company's motor racing activities. The total budget was $1 billion, of which half, $500 million, went to motorcycle racing and the remainder was divided between IndyCar and Formula One. There is no suggestion so far that Honda is thinking of pulling out of its other motor racing involvements, but one has to imagine they are not sacrosanct these days.

The main reason for this massive investment was maintaining these facilities at the very sharpest point on the cutting edge of research and development to attract the brightest and best of new engineers coming on to the market.

In statements of the last few days there has been no hint that Honda no longer sees a link between research for the outlandishly extreme machines of Formula One and the family sedans of the future. Though it would not be surprising if that conclusion had been made.

But in looking at Honda's Formula One history it has usually under-performed and not delivered the company a reasonable bang for its buck.

This last season was especially disappointing despite Honda having hired as team principal the legendary Ross Brawn, the former Ferrari technical director who masterminded Michael Schumacher's seven world titles. Honda ended the 2008 season ninth in the 10 constructors' standings. And out of the 20 Formula One drivers Honda's Ruben Barrichello finished 14th in the championship and Jenson Button was 18th.

Honda entered Formula One in 1963, just three years after producing its first road car, and became a significant force in motor racing through the 1960s. But the company decided to sit out the 1970s and didn't return to Formula One until 1983 when its only involvement was as an engine supplier to teams like Lotus, McLaren and Williams. But Honda's engines were top-notch and powered six construction champions and five driver champions. No doubt encouraged by this success in 2004 Honda bought a 45 per cent stake in the British American Racing team from British American Tobacco (BAT).

In 2005 declining acceptance of cigarette advertising on Formula One cars prompted BAT to peddle its goods elsewhere. Honda took total control and renamed the team Honda Racing F1 Team. But the wheels never got traction and the last time Honda won a race was in 2006 when Button won the Hungarian Grand Prix run.

Original Story - Vancouver Sun