DAYS

Toyota’s pullout was a surprise, given its legal commitment to F1 until 2012. However, its withdrawal was prompted by the need to cut costs. For the fiscal year ending March 2009, the car manufacturer posted its first annual loss in 59 years and expects another fiscal year in the red, although the loss could be less than half its earlier forecast.

Moreover, since its debut in 2002 – and despite 139 attempts and a hefty F1 budget – Toyota has never won a grand prix.

Not only is Toyota the world’s biggest carmaker, it is the third car manufacturer to abandon Formula One (F1) within 11 months; the other two departures announced earlier were Japanese rival Honda and German car giant BMW.

Additionally, Toyota’s exit came two days after Japanese tyre manufacturer, Bridgestone – and more critically, the sole supplier of tyres to all F1 teams – said it was also quitting, leaving the motor sport without Japanese corporate involvement for the first time since 1983.

All these withdrawals triggered some hyperventilating newspaper headlines suggesting the end of F1.

This outcome is unlikely to happen. Nevertheless, these exits raise a troubling issue: is F1 about cash for its governing body, the Federation of International Automobile Sport (FIA), flash for the drivers but offering little substantive value to corporate participants?

Critics include Ari Vatanen, the defeated presidential candidate for FIA, who said recently F1 is only known for conflict, crisis and court cases.

Writing in the Wall Street Journal, Norihiko Shirouzu says F1 has been suffering from declining attendance, internal power struggles and a poor environmental image.

Interestingly, Ferrari – owned by Italian car manufacturer, Fiat, and the only team that has raced in F1 every year since the world championship began in 1950 – disagreed these defections were caused by the economic crisis. Instead, Ferrari blamed the FIA for waging a war against major car manufacturers.

Toyota’s pullout leaves just three car manufacturers competing in F1 next year – Ferrari, Germany’s Mercedes-Benz and France’s Renault.

More worryingly, there are rumours yet another car manufacturer is considering quitting. Last Thursday, Renault’s board said it would announce by year-end its plans for next year.

Having lost Dutch bank, ING, as a sponsor, the French team may have difficulty finding a replacement because of the Crashgate scandal. Driver Nelson Piquet was asked by Renault bosses to deliberately crash his car to improve his teammate’s chances of winning in Singapore last year, a ploy that succeeded.

There is no denying F1 is the world’s most lucrative sporting event with annual revenues of about US$1 billion (RM3.4 billion) from television rights, trackside advertising and race fees, according to an article by Theo Leggett in BBC News. For this reason, there is no shortage of applicants eager to step onto the grid.

News reports suggest four new teams are due to join the series next year. These include US F1, Campos Grand Prix, Manor Grand Prix and Malaysian-owned Lotus F1.

Ironically, Toyota’s departure could create a vacancy that could be filled by Sauber’s new owners, Qadbak. BMW’s exit from F1 ended the existing BMW-Sauber team’s partnership with Malaysian oil company, Petronas. Several teams, including Lotus F1, are now vying for Petronas’ sponsorship next year.

The pullout by major car manufacturers suggests they believe F1 is no longer a viable platform to boost car sales. Car sales are declining in the US and Europe. Although car sales are booming in China and India, the best selling vehicles are affordable and fuel efficient. For these car owners, F1 may have little appeal.

Well aware of the danger of financial extravagance amid the worst economic crisis in 70 years, the FIA has moved swiftly to cut costs. This year, the Toyota team’s budget was US$330 million – a substantial reduction from its US$580 million budget (at today’s exchange rates) in 2006.

Even so, F1 will still remain an elite sporting event. Although the US and European economies are poised to recover, the upturn is likely to be weak and consumer spending could remain lacklustre. Would corporate sponsors be interested in F1 if television cameras show row upon row of empty seats at most events?

Whatever the outcome, this suggests continuing spills and thrills on and off the tracks of Formula One next year.