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Honda, BMW.. Toyota next to quit F1 as sales plummet?
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Honda, BMW.. Toyota next to quit F1 as sales plummet?
Posted By: James Allen  |  30 Sep 2009   |  2:56 pm GMT  |  42 comments

Toyota’s F1 team principal Tadashi Yamashima has issued a stark warning today that the involvement of the world’s biggest car maker in F1 could come to an end soon.

Toyota: Unclear on future (Photo Darren Heath)

Toyota: Unclear on future (Photo Darren Heath)


He described the situation as ‘unclear’, but warned that it depended on how the car business was doing.

“We will participate for now,” he said. “We have to consider a variety of things in relation to our core business. Our participation is unclear, depending on our financial results.”

It is quite a downbeat message on the eve of the company’s home race in Suzuka, especially coming off the back of a brilliant and high-profile second place in Singapore. So how is the company doing financially? Not very well is the answer.

Toyota are poised to cut production by almost 10% in order to try to minimise losses due to falling demand. It is pulling out of a joint venture business with GM in America. It is the first time that Toyota has planned to cut production to such an extent and it shows how badly it is faring in the current economic climate. Sales of Toyota in America have fallen by 34% this year. The luxury Lexus brand, which carries big profit margins, has been particularly badly hit.

In August Toyota forecast a net loss for 2009 of £3 billion, which is less than it feared but still unprecedented for the company.

Another threat to all the car companies is the end of Government sponsored car scrappage schemes in many key markets including the US, UK and Germany. These have prevented a total wash-out in the automotive sector during 2009, but are set to end in many countries in the coming months.

Although the company has signed up to the Concorde Agreement, it faces no financial penalty for walking away from F1. It has some obligations, but nothing significant enough to prevent a walk-out if the business case for it was clear.

The team has yet to set a budget for the 2010 season and will not do so until mid November, by which time many drivers will already have signed up for other teams. With Williams set to switch its engine supply deal to Renault (partly as a hedge against a Toyota pullout), the company has no customers for engines in the paddock.

It has already told both of its drivers that they are free to look for drives elsewhere.

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42 Comments
  1. ia says:

    well, while the loss of a company as big as Toyota is obviously a bad thing – i can see a positive aspect: more space on the grid for ‘pure’ race teams.

    While its great having ‘money no object’ manufacturer teams in F1, they are there purely as a marketing tool, to drive their car sales and as a corporate venture – maybe the rapid exodus of these teams marks a turning point in F1 back to the old days of teams that are on the grid because the love racing?
    Yes, i know that some new teams, like Lotus, are really just an old, respected name on a car backed by commitee, but you’ve got to think that someone like Mike Gascoigne with the name Lotus on his overalls is going to engender a certain vibe havent you?
    With the push for lower financial costs and frozen development, this could be a golden age for the smaller teams, and the grandee’s of old to take back the sport that the corporate beast has tried so hard to eat alive.

    1. John M says:

      The problem is, though, that even if all the manufacturers leave, there are still two 500-lb gorillas in the room. McLaren and Ferrari (and maybe Red Bull), while “pure” racing teams have way more money to spend than their smaller brethren. Small “pure” racing teams, like Williams for example, have a hard time competing on equal footing because they don’t have the money/resources. Adding more “pure” racing teams just means more spots on the grid; it doesn’t necessarily mean more competition for race wins. The days of small teams racing for the love of racing are largely gone and unlikely to return. The technology is just too expensive now. So, losing manufacturers is a double-edged sword.

      Most North American sports leagues have salary caps and it results in more parity year to year. Until the FIA (or FOTA) figures out a way to cap costs, the teams with the biggest budgets will most likely continue to win the most.

      1. ian (missed the n last time) says:

        thanks for the reply – i have to say, i agree with you about the two 500lb gorillas, although, as corporate as they are, at least McLaren were founded by a racer – and Ferrari? while i hate much of their actions over the last few years, you can’t call a team thats been there since the beginning anything other than racers (hell, they dont make road cars that arent fit for the track – apart from the odd lemon)
        i think the future of F1 is leaning more towards factory teams rather than big manufacturers (Ferrari may be a manufacturer, but in the grand scheme, theyre still small)
        whether these factory teams carry huge corporate sponors or not – they will still be racers, and thats what counts – as many posts have said, toyota have no F1 soul or pedigree, and seem to just turn up and go through the motions to be seen on the grid – they’ll be missed, but not by many, and not for long…

    2. Darren says:

      Have to say this is a well written reply and i to am looking forward to Toyota, BMW and Renault exit from the sport i love. Welcome back to the front Williams, but i believe the new Lotus is Lotus. and will be cheering like a lunatic in Australia next year.

      Lotus will be the best of the new teams for 2010

      1. ian (missed the n last time) says:

        thanks!

        Lotus is backed by a big Middle-Eastern consortium – hardly the norfolk racers of old! but still, having the name and The Pitbull together on the grid should bring back some of the old racing spirit that F1 needs again

        not sure if Lotus or Manor will be the best of the rookie teams – but thats half the fun isnt it? watching to see what will happen (who wouldve predicted Brawns success??)

        Personally i’ll be cheering at the first race next year, and then at Australia too! ;)

  2. kaushal says:

    USF1 may not be competing in 2010 and now Toyota is “clear” about future prospectus,that means we are left with 12 teams for 2010.

  3. William McCone says:

    This is the same Toyota who were against the budget cap but now appear as if they will pull out for finacial reasons. Ahhh well, they won’t be overly missed anyway.

  4. Williams4Ever says:

    Pros – F1 Sans Constructors or F1 with Privateers and Constructors Role limited to Engine supply will ensure that only teams like Williams who exist for “Racing” will be in F1. Secure long term future of F1

    Cons – Bernie/Max(or his successor) can bend the privateers way they want to. e.g attempt to pry into books of teams under guise of “Budget Cap” will make F1 a private pasture of Bernie/FIA.

    More Privateers means more profits for Bernie/CVC.

    FOTA/constructors if they last on grid (and if they remain united) actually provides good balance of power and keeps check on dictatorial aspirations of Bernie/FIA.

  5. You have to ask if the Toyota management board see F1 as an expensive toy or do they get real return from their investment?
    Is F1 an investment or an expense?

    What do the big manufacturers get from F1 involvement? R&D? Marketing/Advertising? A massive never ending money sapping racing division?

    1. Jeb says:

      It’s not as though Toyota has a performance vehicle market anymore anyway. I always wondered what they got out of being in F1, other than splashing the name over cars that ran utterly at odds with their business model.

      1. rpaco says:

        It is good for a Japanese marque to be associated with the “best” in any field. They have a great appreciation of image.
        ” I always wondered what they got out of being in F1,”

        When I worked for a Japanese company in car audio we had a new brochure from Japan, the new image/tag line was “Flying party” a picture of some well off guys standing about with their private airplanes. My question as to what it had to do with car audio, was met with “It is the image which the customer aspires to”. “Well it may work in Japan but here they would just be puzzled” Thus confirming the view that we round eyes were al still savages at heart.

        So for Toyota or any Japanese company to be involved with F1 is a matter of associating themselves with the image of the best. In the words of Noel Coward in “The Italian Job” “It’s a matter of prestige”

        Of course the F1 image is now severely tarnished and I foresee it being damaged still further in the FIA election.

  6. Mattw says:

    If Toyota are not setting their budget untill November (this statement must have been released to set expectations, as this is no way to run an F1 team) – does this mean that development of the 2010 car is also ‘on hold’?

  7. It can’t help things that yesterday Toyota announced the largest vehicle recall in U.S. history…3.8 million cars. Does not sound cheap.

    1. Jeb says:

      Is that the “floormat recall”?

      1. Rudy Pyatt says:

        That’s it. They are done and gone.

  8. F1 Kitteh says:

    Is this the same Toyota that was so opposed to the budget cap 3 months ago?

  9. Meeklo says:

    James can you provide any details on what “obligations” the companies have if they decide to leave? Is it classified/unknown within the concord agreement?

    I’m wondering if the FIA/FOTA made a requirement that the race team MUST be transferred to new owners.

    Also is it safe to say that the subsidiary RaceTeam signed the concord agreement, and not the parent company? And that the RaceTeam has agreed to live up to the concord agreement, regardless of owner?

  10. Just A Bloke (Martin) says:

    I can’t help but think that the big car companies would be better off providing engines and letting the race teams race. Sticking a big three pointed star on the side of a Brawn counts just as much as the name on the entry list. Race teams need to be quick, responsive and nimble, all the things big corporations are not.

    If we move to a cheaper less corporate F1 where the cars are run by small race teams, then so be it. If F1 was to have four engine suppliers three or four chassis suppliers with teams free to do their own aero tweaks then would the majority of fans and sponsors actually notice !

    1. Werewolf says:

      I agree, Martin. Corporate management styles do not work well in F1 – and Toyota proves this better than most. It is arguably the best funded team on the grid yet only it and Force India (in its present guise) have never won a GP

      An F1 chassis and bodywork is so absurdly removed from a road car as to be a completely different species. The engine, however, is recognisable to Joe Public as being just a hi-tech, larger variation of what’s under his bonnet; and probably perceives his unit to have benefitted from the F1 developments.

      F1 needs to have bonafide race teams building their own chassis with engines available from major manufacturers; and the engine rules need to allow for significant challenge and advancement in areas significant to those manufacturers that can be passed onto their road cars, such as KERS.

      1. Rudy Pyatt says:

        Good points. But why should the “pure” teams be relieved of building the engine too? They’re budgeting for engines anyway.

        “Because it costs too much” is, in my view, an artificial excuse. Millions of dollars are, and will be, spent on aerodynamic work anyway. And the objection is easily met in any event, becuase engine costs, costs overall, would be slashed drastically through the simple expedient of banning pneumatic valve actuation and all the ancillaries throughout the car that go with it.

        Pneumatic valvetrains simply aren’t a necessary ingredient to fast and spectacular cars, and going down that path is a big part of why manufacturer’s deep pockets became necessary. No private developer without that kind of bankroll could afford to develop engines with these things. That’s ironic, given that pneumatic systems were, and are, irrelevant to road cars.

  11. ashley edwards says:

    We did know that it was going to happen one day. I feel sorry for staff there.

  12. Alistair Blevins says:

    To what extent do Toyota currently bankroll the team? I’m assuming almost entirely. How much revenue does a factory F1 team generate from sponsorship and participation revenue?

    Surely teams like Williams, Force India and Brawn etc must survive on these monies alone.

    I trust withdrawing from the sport would be more of a PR exercise whereas it could still be a manufacturer team and spend much less (Honda had next to no sponsorship last year, whereas Panasonic must spend millions subsidising the team).

    The company could lessen it’s budget and have the team become self sufficient (and have to ‘pay’ for it’s engine from Toyota) – it’s not a front running team and so it’ll not suffer a set back in standing.

    Still, I wouldn’t be entirely upset to see them go – they’re by far the most stale team on the grid. I get no sense of passion or excitement from them. F1 racing by numbers…

    Maybe I’m missing the point.

  13. Pay The Piper says:

    Hey, not wanting to make a big deal about it, but posting a line like ‘scrappage saved big-auto’ really is pushing it a bit far, no?

    Yes, it cannibalized future sales, and the utterly inevitable cliff-face fall-off is the reason the carmakers are now lobbying for extensions (and therefore mendaciously spinning the line that it was ‘beneficial’). Subsidy junkies begging for next fix, no surprise.

    Yes, it did massively skew and distort inventories, many firms didn’t have enough to sell or the right product mix for the dynamics of a scrappage market; but those that did was principally because of expensive ramps in production capability to catch an arbitrary and artificial window, which destroyed margins and makes the utterly inevitable fall-off and lay-offs even more expensive.

    Yes, scrapping perfectly servicable vehicles, gross consumption of unnecessary new resource, and a hammer-blow to the service/repair/parts industry … how’s that for sustainable. (It’s gonna take a lot of green-stripes on tyres and toxic Prius batteries to make up for that sorta environmental damage).

    Yes, billions of our, *our* dollars mainlined from Big Government to Big Auto, no doubt a wedge of which funneled back into lobbying. Interventionism, corporate welfare, and market distortion, hey let’s all party like it’s the 1970s.

    No, better idea, let’s all just keep our heads screwed on with this one, eh?

    Although dodging a bullet by getting out of bed with GM shows that Toyota haven’t totally lost it, still know something about the basic realities of the carmaking game. They’ll get by.

    Yeah, I’m done, back on-topic, carry on.

  14. Paige Michael-Shetley says:

    I don’t think Toyota really belongs in F1. They just don’t have the profile of a manufacturer in the series. They don’t have any high-profile performance cars like Ferrari and Mercedes have, and they don’t have a deep history of success in the sport like Honda, Renault, and BMW have. They’re just a giant consumer car manufacturer who enters motorsports series thinking that they can spend the competition into oblivion, be it NASCAR and open-wheel racing in America or F1.

    I really hope new manufacturers join soon. F1 could really use the likes of Honda, Volkswagen (via Audi, perhaps), Ford, and Peugeot.

    1. F1 Kitteh says:

      They don’t even sell any car that has less than 4 doors on it !

      1. William McCone says:

        Toyota Celica?

      2. rpaco says:

        Yeah, well remember that Maserati once made a quatroporte. So doors ain’t everything! Pretty sure Ferrari did one too.

        As I said above, its a matter of prestige.

  15. Bye bye Toyota
    It was nice while you were here…

  16. tom chiverton says:

    The UK scrapage scheme has been extended

  17. The Phantom Menance says:

    I’m sorry to sound negative but will they really be missed? Surely the most unexciting and undynamic team in the pitlane?

    Zero charisma and no racing provenance whatsoever…..and these were the guys arguing a few months ago for no budget caps! Looks like they were influenced by Flavio’s bravado…….a bad judgement call surely?

  18. Silas Denyer says:

    Well, much as many will hate me to say it, but dear old Max Mosley was right. But then we always knew that, really.

    Manufacturer-owned teams are a liability. They are a liability for their staff and drivers – jobs gone at a whim and, being subsidiaries, no guarantee of redeployment or a large pay-off. They are a liability for their sponsors, whose long-term plans may be scuppered on a whim. They are a liability for the sport, for their presence is not in any meaningful way guaranteed.

    Sponsors should be just that – sponsors. It takes a huge amount of time to build up a decent F1 racing team. Those teams need stability, and the freedom to find a new sponsor if an old one pulls out.

    The manufacturers are just sponsors with an ownership fetish. They should be put in their place.

    1. john g says:

      max mosely sought to bring the manufacturers in, in the first place! it was his regulations that made costs spiral out of control. the manufacturers saw the way F1 was going and didn’t like it, and max then performed a u-turn, saying that manufacturers were not needed in F1 and changed the regs in such ways that there was really no point in them being there. some clung on for as long as they could, but in this environment, and under this governance, it’s not surprising manufacturers have had to leave F1. it’s all very well max saying manufacturers are a liability and they will stay in F1 only as long as it suits them, but he actively made it a place where they weren’t welcome. i’m sure he feels vindicated with that statement, but the fact is that he was and is the root cause of so much that is wrong with F1. if the sport was healthy, they would not find it so easy to leave.

      1. Rudy Pyatt says:

        Thank you john g! I was wondering if I had gone off the wall saying this over and over. Glad to see I wasn’t. Max and Bernie CAUSED ALL OF THIS IN THE FIRST PLACE by pulling in the manufacturers. Every other FIA “world championship” has disappeared or greatly atrophied under their F1-centric rule.

        Every other discipline is actually relevant to the manufacturers from both engineering and marketing perspectives, in the classic “race on Sunday, sell on Monday” dynamic. F1 isn’t like the premier motorcycle categories, MotoGP or World Superbike. Very little F1 tech transfers directly to road cars. Beyond “prestige”, it doesn’t give much back to the car manufacturers.

        The “we train our engineers to act quickly using F1″ rationale was only lip service marketing bilge. Multinational public companies cannot and should not act the way an F1 team can and does. There are too many other considerations when you have to deal with building and selling millions of cars with 100K service intervals driven by families in all manner of road and weather conditions — versus maybe a half dozen cars per year for exclusive use in two hour bursts by one man on a manicured race track.

        Bottom line: Once you cease approaching it as a sport, F1 is worthless except as a dubious, hideously expensive marketing exercise. Max and Bernie have obscured that. Getting the manufacturers to invest in F1 to the exclusion of other disciplines, I’ve always felt, was (another) way to eliminate competition for F1, this time by methods that escaped notice of the EU anti-monopoly authorities.

  19. Gord says:

    I bet some firm will buy that team, if Toyota leave of course.

  20. Rudy Pyatt says:

    I put this in with the Alonso to Ferrari bit — one of the worst kept secrets in the paddock. Unfortunately, I have no doubt that this is the underlying reason for the USF1 no-show rumors.

    Too much to hope for, but I would really like it if this blows up the engine formula and we get variety again. DO IT NOW, DO IT NOW. (Won’t happen) but bring on the V12s, Straight 8s, turbos, diesels, two-strokes. Give me a 1.5 litre unblown to 800cc blown formula. Heck, give me the old 4 litre unblown v. 1.5 litre blown formula — or F5000 stuff v. the current 2.4 V8s.

  21. James H. says:

    When the huge money is gone from F1, maybe drivers and innovators can regain control. Formula One needs to become a sport again, in which talent and ingenuity are more important than a $$$ Paddock Pass. I would love to see someone like Jackie Stewart assume a formal role in fashioning a new F1. Naive you say!

  22. john g says:

    can’t say i’m surprised, i thought they were always more likely to pull out than BMW who at least (at the time anyway) had some sporting intentions in their road cars. i never understood how f1 benefitted toyota, and i guess this confirms that it doesn’t. also, with their kaizen and corporate structure, they were never going to really acheive much in F1.

    still, with these two manufacturer teams pulling out (i think it’s pretty safe to assume that toyota will fall), i wonder what would have happened had the manufacturers breakaway actually happened…. i think that BMW and toyota would still be there.

  23. Ian Blackwell says:

    As others have rightly pointed out, one wonders why Toyota are in F1 to begin with. They have no history in motor sport to speak of. They make a lineup of thoroughly boring though reliable cars with no sporting pretensions whatsoever which has actually gotten more and more vapid as time has gone on and they dropped relatively interesting models like the Supra and the Celica. Even then the best fit brand in there portfolio (it is still a poor one) is Lexus which has one or two sporty models and a supercar in the works. Toyota expecting a F1 venture to give its cars a halo with its average customer makes about as much sense as Ferrari making its own smart car to make its Arab royal/Russian oligarch customer base feel better about their carbon footprints.

    That said one has always wondered how a manufacturer calculates a rate of return on its f1 investment. While one can obviously quantify tangibles like the money it would get from the FIA and sponsors, and merchandise sales, how does the average manufacturer calculate its return on investment in terms of effect on brand etc? Somehow, I seriously doubt that it is a profitable proposition even for someone like Ferrari. Porsche haven’t been in F1 for years but sell more cars than Maranello does. The lack of a F1 program at Audi has not prevented one from having to wait 14 months for a new R8 in the mad scramble to get one.

  24. Formula says:

    Once again, you are wrong. It might help to do further research than just listening to paddock gossip.

    Toyota is NOT leaving F1 this year. Toyota just announced a new sponsorship deal with ZF Sachs for 2010 and beyond. A team leaving the sport does not do that.

    Also Toyota is trying hard to get Kubica and Raikkonen for 2010.

    The team principal’s comments were misinterpreted.

    I find it funny that there is so much hate against the Toyota team. Many of you will most definitely change your tune once they start winning races.

    As for BMW and Honda having a “deep history of success”, what a load of rubbish. BMW and Honda had success in F1 *as engine makers*, NOT as full constructors.

    Toyota when they entered the sport was the first team in a LONG time to start from scratch, and make their own car and engine. All the other manufacturers in the past 20 years in F1 simply bought or took over other teams.

    When Honda took over BAR, they had very little success, and only now is Brawn (ex-Honda) successful thanks to Ross Brawn. Since BMW took over Sauber, they had some success(not much) and now this year with bad results BMW leaves the sport as a knee-jerk reaction.

    Despite all the excuses Honda and BMW made for leaving, Toyota is STAYING in the sport. I find it a disgrace that BMW and Honda, both companies which have “sporty” reputation stopped participating in F1 at the first sign of trouble, meanwhile Toyota is committed it seems long-term. Kudos to Toyota for at least having a racing spirit to stay in the sport, despite the mother company’s financial issues.

    1. James Allen says:

      Calm down. First of all, I didn’t say they were leaving, I quoted the team principal saying the future was unclear. Second I know quite a few people at Toyota. Third, there is no hate for Toyota in the F1 paddock. Fourth, there is no way that either Kubica or Raikkonen is going there. Fifth, by any objective measure Toyota has not got much to show results-wise for its extensive and expensive spell in F1. I look forward to them winning races and I will be pleased for them.

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