GP Racing - UK (2020-04)

PRO^04 Business

MERCEDES’

F1 BUSINESS

MODEL

EXPLAINED

WORDSMARK GALLAGHER

PICTURES

Until recently it was received wisdomthat Formula 1

teams owned by car manufacturers tend to be unsuccessful.

Ask anyone who worked for -aguar, 7oyota, +onda and

BMW back in the noughties.

Big company systems and structures do not sitwell in F1.

Agility, preparedness to take risks and the relentless pursuit

of high performance don’t come naturally. 7hey also lack

patience, which is why allfour of the above mentioned were

here today, gone tomorrow.

Interesting that two of the teams, when freedfrom their

corporate shackles, proceeded to win world championships.

It took Red Bull five years, but Brawn GP did it in one

season post-+onda. Which brings us neatly to Mercedes-

Benz, the company which acquired Brawn a decade ago,

and is now Formula 1’s dominant team.

7he on-track success is there, of course – witness the

six consecutive double world championship titles, the 

wins and 1 poles. <et invariably question arise about

Mercedes’ commitment to the category at a time when the

teams and F1’s owner LibertyMedia are yetto finalise new

commercial agreements.

Furthermore, the global car industry is facing headwinds

thanks to the combinedeffects of ‘dieselgate’ and climate

change, rapidly investing in a costly but necessary

clean energy future.

Every car manufacturer is pursuing strategies to cope with

this intense period of change. 5enault, for example, has been

rethinking its entire global business. Faced with the trials

and tribulations of former CEO Carlos Ghosn, whostands

accused of financial misconduct and has escaped custody in

Japan and fled to Lebanon, the French firmis enduringa

difficult period, with interim CEO Clotilde Delbos admitting

that F1 was included in its businessreview.

A new Renault CEO takes office in July. Fifty-two-year-

old Italian Luca de Meo must like a challenge, not least in

plottingthe fu ture of a 5enault Nissan alliance which has

been deeplywoun ded by the Ghosn affair. For Renault

F1, the future remains hopeful but no more than that. 7he

team operates to a more traditional manufacturer model

dependent on the parent, working hard to find third party

funding, but so far lacking the success necessary to achieve

top-tier prize money and sponsorship.

+onda, too, faces battles for its Formula 1 future, for

having returned tothe world championship as an engine

supplier only, it can never share in the financial success

of a championship-winning programme you needto own

a team todo that. As one former +onda executivesaid,

“7he in-out-in-out strategy seldomworks in motorsport,

particularly in F1 where you have high set-up costs. <ou

lose momentum, and you lose knowledge, as we sawwith

the early engine debacle atMcLaren.”

Given Honda’s track record, its commitment to Red

Bull’s teams until the end of 221 seems alim ited horizon.

Formula1hasa

longhistoryof

boomandbust

manufacturer

entries,but

Mercedesis

showinghowan

entrepreneurial

business

approachcan

shielditsgrand

prixteamfrom

automotive

industryturmoil

36 GP RACING APRIL 2020

Toto Wolff (right) with the owner

of Ineos, Sir Jim Ratcliffe, when the

chemicals giant was revealed as

Mercedes’ ‘principal sponsor’

PRO^04 Business

MERCEDES’

F1 BUSINESS

MODEL

EXPLAINED

WORDSMARK GALLAGHER

PICTURES

Until recently it was received wisdomthat Formula 1

teams owned by car manufacturers tend to be unsuccessful.

Ask anyone who worked for Jaguar, Toyota, Honda and

BMW back in the noughties.

Big company systems and structures do not sitwell in F1.

Agility, preparedness to take risks and the relentless pursuit

of high performance don’t come naturally. They also lack

patience, which is why allfour of the above mentioned were

here today, gone tomorrow.

Interesting that two of the teams, when freedfrom their

corporate shackles, proceeded to win world championships.

It took Red Bull five years, but Brawn GP did it in one

season post-Honda. Which brings us neatly to Mercedes-

Benz, the company which acquired Brawn a decade ago,

and is now Formula 1’s dominant team.

The on-track success is there, of course – witness the

six consecutive double world championship titles, the 93

wins and 103 poles. Yet invariably question arise about

Mercedes’ commitment to the category at a time when the

teams and F1’s owner LibertyMedia are yetto finalise new

commercial agreements.

Furthermore, the global car industry is facing headwinds

thanks to the combinedeffects of ‘dieselgate’ and climate

change, rapidly investing in a costly but necessary

clean energy future.

Every car manufacturer is pursuing strategies to cope with

this intense period of change. Renault, for example, has been

rethinking its entire global business. Faced with the trials

and tribulations of former CEO Carlos Ghosn, whostands

accused of financial misconduct and has escaped custody in

Japan and fled to Lebanon, the French firmis enduringa

difficult period, with interim CEO Clotilde Delbos admitting

that F1 was included in its businessreview.

A new Renault CEO takes office in July. Fifty-two-year-

old Italian Luca de Meo must like a challenge, not least in

plottingthe fu ture of a Renault Nissan alliance which has

been deeplywoun ded by the Ghosn affair. For Renault

F1, the future remains hopeful but no more than that. The

team operates to a more traditional manufacturer model;

dependent on the parent, working hard to find third party

funding, but so far lacking the success necessary to achieve

top-tier prize money and sponsorship.

Honda, too, faces battles for its Formula 1 future, for

having returned tothe world championship as an engine

supplier only, it can never share in the financial success

of a championship-winning programme; you needto own

a team todo that. As one former Honda executivesaid,

“The in-out-in-out strategy seldomworks in motorsport,

particularly in F1 where you have high set-up costs. You

lose momentum, and you lose knowledge, as we sawwith

the early engine debacle atMcLaren.”

Given Honda’s track record, its commitment to Red

Bull’s teams until the end of 2021 seems alim ited horizon.

Formula1hasa

longhistoryof

boomandbust

manufacturer

entries,but

Mercedesis

showinghowan

entrepreneurial

business

approachcan

shielditsgrand

prixteamfrom

automotive

industryturmoil

36 GP RACING APRIL 2020

Toto Wolff (right) with the owner

of Ineos, Sir Jim Ratcliffe, when the

chemicals giant was revealed as

Mercedes’ ‘principal sponsor’