Today’s Financial Times has some shocking information about the state of the motor industry. And as F1 is seen as an extension of that industry because of it’s reliance on, and domination by, the car companies, you need to know about this.
One story says that for most manufacturers, sales of new cars in the United States are down between 40-50%. That includes Toyota who have taken a 40% hit.
A little lower down on the page there’s a story from Tokyo about how Toyota is seeking a $2 billion bail out from the Japanese government. The company is facing its first net loss in 60 years.
Meanwhile the number of cars exported from Germany has halved. The bosses of BMW and Mercedes are arguing against government intervention in the car industry because they believe that it will lead to irrational consequences and the wrong businesses being propped up. They are talking about the mass market producers like Renault, which recently received a share of a £6 billion hand out from the French government. The BMW boss said, ‘If we go much further then there is a danger that we will have only one or two independent manufacturers and the rest will be state or semi-state owned. If governments did not get involved we would have a much stronger selection process. Because then only companies with high liquidity and no cash-burn would survive. Both BMW and Mercedes are in this position..
From Geneva comes word that one of Renault’s most senior managers has said that the company wants F1 to cost less and demands a fairer share of the commercial revenues and that if this is not forthcoming ‘there really are no taboos’ – ie Renault would be quite prepared to quit. This comes a day ahead of the Formula One Teams Association press conference where these subjects will be addressed. FOTA is engaged in discussions with Bernie Ecclestone about the commercial revenues from 2013 onwards, not the short term.
But there is a glimmer of hope for car makers in another FT story. Apparently the German government has stepped up the scrapping of old cars with an incentive scheme whereby owners of cars nine years old or more get a £2,500 subsidy against a new model. And as a result new car registrations of small cars in Germany have risen steeply. As you can imagine this too has upset the bosses of BMW and Mercedes, who have not seen any gain from the policy.