Honda Quits Formula One to Cut Costs as Profit Falls

[Monseratto]

Honda is reeling from the financial crises. They may be not the last to call it quits from Formula One.

TENERIFE, Canary Islands – Honda will pull out of Formula One unless a new buyer can be found within three months, The Associated Press has learned.

The Japanese car manufacturer has the operating budget to keep the team running into early 2009, but escalating operational costs amid the worldwide financial crisis have the Brackley-based outfit in danger of shutting down if a new sponsor is not found quickly.

A formal announcement will be made from Japan on Friday, but a person familiar with the decision told The AP that team bosses Ross Brawn and Nick Fry informed the near 700-member team late Thursday.

"Their intention is to pull out entirely — as an engine supplier and sponsor," the Honda team member said on condition of anonymity because an official announcement had not been made yet. "It's a shock. I think this came as a total surprise to everyone. No one in the UK was aware of this decision before Thursday night."

Brawn and Fry had returned from a FOTA meeting in Geneva, Switzerland, where they informed the other F1 teams of the manufacturer's decision.

A pullout by one of the world's biggest car manufacturers will send shockwaves through F1, which could start the season with only 18 cars on the grid. Japanese team Super Aguri, which was backed by Honda, pulled out of F1 this year.

The season opens at the Australian Grand Prix on March 29.

Earlier Thursday, Honda announced it was cutting jobs in Britain and Japan because of plunging vehicle demand. It has already reduced its annual production of consumer cars by more than 140,000 worldwide.

The move leaves Jenson Button without a car seat for next season, while promising rookie Bruno Senna was trying out for the No. 2 seat at winter testing last month.

Honda, with an operational budget of around $294 million, finished ninth in the constructors' standings last season with Button 18th out of 20 drivers with three points. Rubens Barichello, who was dropped by the team going into 2009, was 14th with the remaining points.

Honda, which originally entered F1 as a constructor for a stint in the 1960s before returning as an engine supplier in the 1980s, bought out BAR Racing in 2005.

FIA president Max Mosley had described F1's combined $1.6 billion spending in 2008 as "unsustainable," saying the teams were relying too heavily on the goodwill of rich individuals and corporate sponsors. Mosley has vowed to push through cost-cutting measures by 2010 in a bid to make the sport more feasible.

The governing body has already reached a deal with F1 to cap the cost of engines supplied to smaller teams as part of a plan to save money during the global financial crisis.

Over recent months, the 10 teams have been meeting regularly with F1 boss Bernie Ecclestone to discuss reducing costs, including streamlining engines.

http://news.yahoo.com/s/ap/20081205/...onda_pullout_3

[tidus1203]

BAD NEWS INDEED! Honda has been a legendary name in F1 especially during the late 80's early 90's. Ano na mangyayari kay Jenson Button? Si Rubens mukang retirement na yan.

[tidus1203]

Statement by Takeo Fukui, President and CEO, Honda Motor Co., Ltd.


December 5, 2008 – We, Honda Motor Co., Ltd., have come to the conclusion that we will withdraw from all Formula One activities, making 2008 the last season of participation.

This difficult decision has been made in light of the quickly deteriorating operating environment facing the global auto industry, brought on by the sub-prime problem in the United States, the deepening credit crisis and the sudden contraction of the world economies.

Honda must protect its core business activities and secure the long term as widespread uncertainties in the economies around the globe continue to mount. A recovery is expected to take some time.

Under these circumstances, Honda has taken swift and flexible measures to counter this sudden and expansive weakening of the marketplace in all business areas. However, in recognition of the need to optimize the allocation of management resources, including investment regarding the future, we have decided to withdraw from Formula One participation. We will enter into consultation with the associates of Honda Racing F1 Team and its engine supplier Honda Racing Development regarding the future of the two companies. This will include offering the team for sale.

In its third era of Formula One activities, Honda has been participating in Formula One races from the 2000 season, initially with BAR, by adopting a new format of jointly developing racing machines. Subsequently, in a move to meet the changing environment surrounding Formula One, we switched to running a 100% Honda-owned team commencing with the 2006 season.

Surmounting many challenges, the Honda Team achieved a Grand Prix victory in 2006, enabling Honda to receive overwhelming support from Honda fans around the world that were looking forward to greater success. It, therefore, has been an extremely difficult decision for us to come to this conclusion without having been able to fully meet the expectations of our fans.

By making the best of what we have learned during these times of economic turmoil, coupled with the spirit of challenge gained through active participation in racing, we intend to continue with our commitment in meeting new challenges.

Finally, we would like to take this opportunity to sincerely thank our fans and all those who have supported Honda’s Formula One efforts, including everyone in the world of Formula One.

Thank you very much.

Takeo Fukui
President and CEO
Honda Motor Co., Ltd.

Here is the official statement from Takeo Fukui, CEO of Honda. Very sad.

[AG4]

By Naoko Fujimura and Dan Baynes

Dec. 5 (Bloomberg) -- Honda Motor Co. withdrew from Formula One racing, cutting at least 20 billion yen ($216 million) in costs after the carmaker slashed its earnings forecast, fired assembly workers and reduced production.

Japan's second-largest automaker may put the Brackley, England-based team up for sale, President Takeo Fukui said today at a news conference in Tokyo. Honda will also no longer supply engines to other teams.

Honda cut its profit forecast 13 percent in October as the recession in the U.S. cripples car demand. Max Mosley, president of F-1 ruling body the Federation Internationale de l'Automobile, has said the $1.6 billion teams spend annually on the racing series is "unsustainable.''

"Honda's withdrawal highlights just how awful the situation surrounding the auto industry is,'' Koji Endo, an analyst at Credit Suisse in Tokyo. "Other teams may follow, and the F-1 may not be held in the future.''

Honda's vehicle sales in the U.S., the company's most profitable market, plunged 32 percent in November, the most since 1981, as the economic slowdown and the weak consumer sentiment hurt demand for Civic models.

"This difficult decision has been made in the light of the quickly deteriorating operating environment facing the global auto industry,'' Fukui said. ``Honda must protect its core business activities.''

Development Emphasis

Honda needs to speed up development of diesel engines, hybrid and small cars, said Fukui. The 400 engineers who work on Formula One will be reassigned to those projects, he said. The company will review all of its businesses as economic conditions may remain poor, he added. Honda plans to continue racing in the MotoGP motorcycle series and U.S.-based IndyCar.

Operating the Formula One team cost about 20 billion yen annually, Fukui said. The figure does not include development costs for the engines and cars.

The company's stock has dropped 56 percent this year, set for the worst annual performance since at least 1975. The shares fell 1.9 percent to 1,650 yen at the close of trading in Tokyo.

Honda finished eighth and ninth the past two seasons after placing fourth in 2006 on its return as a constructor. Ross Brawn, the former Ferrari technical director who helped Michael Schumacher win five straight driving titles, was hired to run the team 13 months ago.

Honda was the sport's biggest spender in 2008, the U.K.'s Daily Telegraph reported. The team this week canceled an end-of- season media lunch at a Michelin starred-restaurant near Oxford, England, the newspaper added.

Nine Teams

Its withdrawal will leave the sport, dominated by carmakers including Fiat SpA, Renault SA and Toyota Motor Corp., with nine teams and 18 cars if a buyer can't be found. The 2009 season- opening Australian Grand Prix is scheduled March 29.

Toyota has no plans to withdraw from the sport, said spokesman Hideaki Homma.

The last team to quit Formula One was Honda-backed Super Aguri, which folded in May because of a lack of funding.

Honda's decision is the latest blow to hit the sport in the past 18 months.

Earlier this year, F-1 was rocked by the distribution of a *** video involving FIA President Mosley which led to some carmakers voting for his removal. In 2007, McLaren was kicked out of the constructors' championship and fined $100 million after its chief designer, Mike Coughlan, was found in possession of 780 pages of technical documents belonging to Ferrari.

Lower Earnings

Honda expects operating profit of 550 billion yen for the 12 months ending March, the lowest in eight years. The carmaker cut its forecast as the yen's 39 percent gain against the dollar squeezes its profit. Every 1 yen gain against the dollar cuts Honda's annual operating profit by 18 billion yen, according to the company.

The company yesterday said it plans to offer early retirement for workers at its U.K. factory and will cut 490 additional temporary jobs in Japan, as demand slumps in overseas markets.

Honda, led by founder Soichiro Honda, owned a Formula One team as early as 1964, even before it began making cars in 1967.

It returned to F-1 in the 1980s as an engine supplier, then in 2004 purchased a stake in the BAR team from British American Tobacco, which it bought out a year later to form the Honda team for the 2006 season.

Jenson Button and Rubens Barrichello are the team's current drivers and could be left without a seat for next year's championship.

To contact the reporters on this story: Dan Baynes in Sydney at dbaynes*bloomberg.net; Naoko Fujimura in Tokyo at nfujimura*bloomberg.net.

Last Updated: December 5, 2008 01:46 EST

-http://www.bloomberg.com/apps/news?pid=20601116&sid=a17TKcBUVtPg&refer=africa

[CVT]

I am saddened by this development.... This crisis is really unfolding right before our faces

I am not surprised if a few more are folding up their F1 teams....

7101:hooray:

[Monseratto]

I fear Williams-Toyota may not start or even finish the upcoming season. Most of their sponsors are in pretty bad shape... Now where will Jenson Button, Ross Brawn and Nick Fry end up?

Baka may masamang iba nangyayari sa Honda Motors. They may not be telling the whole story of their financial state.

[paolorenzo]

Sad news nga. Is Toyota far behind?

I think Jensen Button can come out of his slump, if he's picked up by a top-caliber team. Sobrang malas lang siya with Honda unreliability for the past few years.

[Taurus]

Sir AG4,

Existing thread: http://tsikot.yehey.com/forums/showt...01#post1161801

Duplicate.

[tidus1203]

What surprised me is the suddenness of the news! It was just two weeks ago they were testing their 2009 car and then biglaan na lang. I think may masama ngang nangyayari sa Honda baka super bilis ng bagsak ng sales di nila na-anticipate.

[FPJ]

Sad news nga. Is Toyota far behind?

I think Jensen Button can come out of his slump, if he's picked up by a top-caliber team. Sobrang malas lang siya with Honda unreliability for the past few years.

Malabo siguro ang Toyota mag back-out. Baka yung toro rosso or force india baka umayaw.