Honda quits Formula One amid major financial woes

Hürriyet Daily News with wires

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Honda's exit leaves the multi-billion sport facing a depleted grid of just 18 cars if no buyer can be found in the extremely tight time-frame available

Honda pulled out of Formula One with immediate effect on Friday, feeling the bite of the global recession in a major blow to a sport itself looking to cut costs to survive.

Amid slumping car sales triggered by the worldwide economic crisis Honda were no longer willing to bankroll the Formula One team and its estimated annual budget of $500 million. Honda Motor Co. chief executive Takeo Fukui told a news conference a return to the sport could take time, adding that there were no plans to continue as an engine supplier.

"This difficult decision was taken recently and was made in light of the quickly deteriorating operating environment facing the global auto industry," Fukui told reporters. "Honda must protect its core business activities and secure the long term as widespread uncertainties in the economics around the globe continue to mount. We will enter into consultation with associates of Honda Racing F1 and its engine supplier Honda Racing Development regarding the future of the two companies. This will include offering the team for sale."

However, Fukui added: "At this stage we have no plans to return to F1. We have no plans to supply engines to other teams. We do not want to be half in and half out of the sport."

Honda would in any case have little time to find a buyer with the 2009 season starting in Australia on March 29. However, the chief executive of Honda's Formula One team says he is hopeful the team will find a new buyer and be on the starting grid in 2009.

Honda CEO Nick Fry says "one or two global players" have already expressed interest in buying the team following the Japanese car manufacturer's decision to pull out of F1 amid the global financial crisis.

Fry said in a Sky Television interview Friday: "It's going to be tough, but there is good reason for hope in the future."

Serious implications
With Formula One's power-brokers desperately seeking cost-cutting measures to ensure its own survival, Honda's departure will have serious implications for the glamour sport.

Formula One boss Bernie Ecclestone says Honda's withdrawal from the sport provides a "wake-up call" to overspending teams.

Ecclestone, who has spent much of the year campaigning with FIA president Max Mosley to get teams to reduce their costs, told Sky News television on Friday: "This is a wake-up call. Max and myself have been campaigning for quite a long time to reduce the vast amount of money spent to be competitive."

Ecclestone says fans don't care how many cylinders the car has or the capacity of the engine - they just want entertainment on the track. FIA president Max Mosley has called for a "radical revision" of Formula One costs as well.

Mosley said in a conference call on Friday that "much more needed to be done" to cut spiraling costs and that he wasn't surprised by the pullout of one of the world's biggest car manufacturers from the sport.

He said he couldn't "imagine how any manufacturer could come in unless we make really significant reductions."

Formula One's governing body vowed to ensure the sport was financially sustainable.

"The announcement of Honda's intended withdrawal from Formula One has confirmed the FIA's longstanding concern that the cost of competing in the world championship is unsustainable," the International Automobile Federation said in a statement. "In the FIA's view, the global economic downturn has only exacerbated an already critical situation. As the guardians of the sport, the FIA is committed to working with the commercial rights holder and the remaining members of FOTA (the Formula One Teams' Association) to ensure that Formula One becomes financially sustainable."

Honda’s decision to pull out also leaves Britain's Jenson Button without a drive for 2009, although some teams have yet to confirm their lineups.

Brazilian Bruno Senna, the 25-year-old nephew of the late triple world champion Ayrton, had also been tipped to take the place of compatriot Rubens Barrichello at Honda next season. Honda's exit leaves the multi-billion sport facing a depleted grid of just 18 cars if no buyer can be found in the extremely tight time-frame available.

It will also prompt fears that other major manufacturers, with their factory production suspended and thousands of staff laid off, could follow Honda's example.

Despite its huge resources, Honda had a dismal 2008 season and was pinning its hopes on next year's new rules leveling the playing field.

Button, a winner for Honda in Hungary in 2006, scored just three points and Barrichello took 11. The team finished ninth overall.

Honda's best finish in the constructors' championship was fourth, in 1967 and 2006, although they powered McLaren and Williams to a string of titles in the 1980s and 1990s.

The last team to leave Formula One was Honda-backed Super Aguri, the tail-enders who folded for financial reasons in April.