Mosley fears Honda domino effect if costs not cut

Honda could trigger a domino effect of manufacturers toppling out of Formula One unless costs are slashed dramatically, International Automobile Federation (FIA) president Max Mosley said on Friday.

”I have to say it was not entirely unexpected,” the Briton told reporters after Honda announced they were pulling out amid slumping car sales and factory closures in the global economic downturn.

”I’ve been expecting one of the major manufacturers to stop for some time because even before the current situation, the costs were completely out of control.

”And now I think its difficult to imagine how any manufacturer could stay in unless we make really substantial reductions in cost,” he added in a conference call.

Major car manufacturers own, either wholly or in part, six of the 10 teams that ended the season in November. They also supply the rest with engines.

A recent Formula Money report put Honda’s annual budget at $350-million, with Japan’s second-largest carmaker pumping an estimated $1,5-billion into the sport over the last five years.

Toyota, BMW, Mercedes, Renault and Fiat (Ferrari) also burned through well in excess of $200-million a year. Toyota entered the sport in 2002 and have yet to win a race.

”Unless we can demonstrate to the directors of these big companies that the costs are coming right down, I don’t doubt that they will start to discuss the possibility [of withdrawing],” Mosley said.

Real urgency
The Formula One Teams Association met on Thursday and agreed significant cuts, and the FIA said on Friday they were in exclusive negotiations with Cosworth, Xtrac and Ricardo Transmissions (XR) for a low-cost powertrain (engine and gearbox) package from 2010.

”They [the teams] are certainly making an effort,” said Mosley.

”The question in my mind is whether they are attacking this in a sufficiently root-and-branch way. I’m hoping to have a meeting with the teams in the next few days and we will discuss that.

”I don’t think there’s any doubt now that there’s a real sense of urgency,” he added.

Mosley recognised that Formula One, already down to 20 cars following the departure of Super Aguri in April, would struggle if numbers on the starting grid declined further.

However, he said that while 2009 looked tough, he was optimistic about the medium to long-term future — providing the sport could become effectively self-financing without subsidy from car makers and billionaire private individuals.

To do that would require reducing annual budgets down to about the £30-million bracket, allowing teams to be competitive without requiring more funds than provided by television revenues and limited sponsorship.

”Much more needs to be done for 2010,” said Mosley. ”We’ve got to get the costs down, not by 10% or 20% but down to 10% or 20% of what they are now.

”Without that, I don’t really see where the money’s coming from.

”Provided there is a powertrain available…I think it quite likely that some of the old style F1 entrepreneurs would buy the remnants of one of these teams provided that they can do so on reasonable terms,” said Mosley.

”We may get a shift in ownership of one or two teams but I don’t think we will actually lose the team.” — Reuters

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