The Future Of Formula One Is All Tied To The Future Of The Auto-Industry

Osama AbulfatehCorrespondent IMay 16, 2009

When FIA announced the new regulations back in April, it brought to my thought that Max Mosley is preparing F1 for a big manufacturers pull-out period, in which it will be transformed into a series with all privateer teams that operate at low costs, this transition will happen in a slow way that takes about three years:

- Keep those manufacturer teams operating at their big budgets if they go for the first option (unlimited budgets with stricter regulations).

- Attract new privateer teams through the second option (limited budgets with less-strict regulations)

- When the new Concorde agreement ends in 2012, I assume that Mosley predicts that 4 out of 5 the currently involved manufacturers will not renew it.

- While the manufactures are pulling out, a parallel process of injecting new blood into the sport would go through (i.e. the entry of privateer teams)

- F1’s grid will not decrease in cars by this way, as for every manufacturer pulling out (and thus decreasing the number of teams operating at the first option), there will be a new privateer team to take over (with the second option)

- We will end up with a big grid of racing cars, and a single regulatory set, as all the remaining teams and the new entrants will be using the second option, which will be the only one by then.

Now this is happening because of the current transition period the auto-industry is going through, this is not just a temporary loss period; it is a cycle that happens to every industry once it matures and goes through a declining period, over the next 10 years; most of the car-manufacturers will either merge or disappear, and we will end up with few players, each the size of Toyota or VW, aggressive cost cuttings, and elimination of unrelated businesses are just the first stages of this transitional process, and F1 is absolutely NOT a necessity for any car manufacturer; in fact it’s more like a burden! Max Mosley spotted that early and worked on preventing F1 from collapsing on its weight in the near future.

One omen for this major pull-out from the sport can be seen in the timing between Ferrari’s threats to pull out and Fiat’s (Ferrari’s parent company) to decision to take-over what remained from the bankrupt Chrysler and GM’s European operations (Opel and Saab) as a mean to grow into a big auto-manufacturer to survive the current tide, Fiat’s Chief Executive Sergio Marchionne predicted back in December, 2008 that the auto-industry will end up with six car manufacturers: one American, one German, one French-Japanese, maybe with an extension in the US, one in Japan, one in China and one European.

Now, some would argue that Ferrari’s situation in F1 is completely different to those of other manufacturers such as Toyota. Ferrari, unlike any other manufacturer in the sport, was built, synergized, and marketed around the concept of F1, it only sells sports cars, it doesn’t spend much on advertisements or other marketing activities, as F1 is a perfect stage for its products’ marketing, that’s why it spends on almost half a billion every year on F1. Other manufacturers have almost no relationship between their core businesses (i.e. ordinary and luxury road cars) and F1, even when some have some “sport” or “performance” divisions; they are not as tied to F1 as Ferrari’s.

But, with the current unusual tide the auto industry is going through, anything is possible….