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BMW throws in the towel on 2010 Formula One

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BMW throws in the towel on 2010 Formula One

BMW Sauber has thrown in the towel on Formula One. Speaking Wednesday at a news conference in Munich, Germany, where the car manufacturer is headquartered, Norbert Reithofer, chief executive and chairman of the board of management of BMW AG,...

BMW Sauber has thrown in the towel on Formula One. Speaking Wednesday at a news conference in Munich, Germany, where the car manufacturer is headquartered, Norbert Reithofer, chief executive and chairman of the board of management of BMW AG, said the company will end its F1 campaign after the current season.

Dr. Mario Theissen (BMW Sauber F1 Team, BMW Motorsport Director).
Photo by xpb.cc.

Based in Munich and Hinwil, Switzerland, BMW Sauber finished second in the International Automobile Federation (FIA) World Constructors' Championship in 2007 after McLaren Mercedes was thrown out of the contest in a spy scandal. The German-Swiss team was third-best constructor last year. Expected to vie for constructors and drivers titles this season, the team instead have scored eight points from 10 races. Robert Kubica, the first Polish driver in the sport, gave the team its first victory, in Canada in 2008. German Nick Heidfeld has scored six points this season to Kubica's two.

"Of course, this was a difficult decision for us," Reithofer said. "But it's a resolute step in view of our company's strategic realignment."

The decision was taken Tuesday at a meeting of the firm's board of management. Reithofer said the company determined its focus should be "sustainability and environmental compatibility." Funds freed up by dropping the F1 team, he said, would be put toward developing new drive technologies and other "sustainable" projects. Part of the team spend included millions on a kinetic energy recovery system intended to mark the greening of F1. The system was introduced to regulations as optional this season. Its use by BMW Sauber was abandoned by midseason.

"We will remain loyal to motor sports, but we will do this in series that enable us to transfer technology more directly and to realize additional synergies," Reithofer said.

BMW will continue its programs in touring cars and its young driver promotion program in Formula BMW, as well as the American Le Mans Series endurance races and close-to-production customer sports. BMW Motorrad Motorsport will continue its campaigns. The super bike world championship is foremost in that category.

Klaus Draeger, the board member responsible for development, said: "It only took us three years to establish ourselves as a top team with the BMW Sauber F1 Team. Unfortunately, we were unable to meet expectations in the current season. Nevertheless, our 10 years of Formula One experience have had a major impact on our development engineers. We have racing to thank for numerous technological innovations as well as the competitive spirit that drives us to develop mass-produced cars."

As engine supplier, BMW won 19 Grands Prix and took 33 pole positions. The company supplied engines to Brabham from 1982 through 1985, winning a driving championship in 1983 with Nelson Piquet, father of Renault's current No. 2 driver, Nelson A. Piquet. Benetton won with the turbo-charged BMW engine in 1986. Partnership with Williams F1 from 2000 to 2005 produced 10 victories. Thereafter, the car company opted for running a team on its own and bought out the private Swiss team run by Peter Sauber, debuting in 2006. Sauber started F1 in 1993 with Mercedes engines. BMW Sauber kept Sauber's name and the team's Swiss base, where 430 employees work to design and build the cars' chassis. Reithofer and Draeger gave no details on how many people will lose jobs as a result of the board's decision.

No mention was made Wednesday of a global economic downturn that has hit car sales especially hard. Japan's second-largest of nine carmakers, Honda, abandoned its F1 team in early December, citing sales losses. Reithofer told BMW's annual earnings news conference in March that the company lost $1 billion in the fourth quarter of 2008 with vehicle sales down 30 percent and revenues down 18 percent. Full-year profits were off 90 percent from 2007 for the first annual drop since 1993. Reithofer said at the time that 2009 would be "a transitional year."

"The main reason for this decision was not our current performance or the general economic situation," Draeger said.

The decision affects suppliers, including U.S. chipmaker Intel, which powers the team's supercomputer. According to SportsProMedia.com, Intel and Malaysian oil and gas company Petronas contributed $82 million to the team's nearly $387 million 2009 budget. BMW put up $220 million of that budget, SportsPro reported. The publication six weeks ago valued BMW Sauber at $240 million and rated the team the 130th most valuable sports property in the world.

The decision comes two days after publication of a study reporting Formula One has bucked the economic downturn and retains fan support and sponsor attraction. Indiana marketing agency Just Marketing International said the sport continues to produce "solid commercial returns."

Mario Theissen, BMW Motorsport director and team principal of BMW Sauber, said, "Of course, we, the employees in Hinwil and Munich, would all have liked to continue this ambitious campaign and show that this season was just a hiccup following three successful years. But I can understand why this decision was made from a corporate perspective. We will now focus sharply on the remaining races and demonstrate our fighting spirit and put in a good result as we bid farewell to Formula One racing."

Peter Sauber.
Photo by Hazrin Yeob Men Shah.

Sauber, 65, a 20-percent shareholder in the team, told German news agency DPA he feared BMW's decision is the end.

"I respect and accept the decision but am still finding it hard to digest," Sauber said.

The Swiss deflected suggestions he would return to running the team as a privateer. "The position we are in now makes that very difficult," he said.

BMW's decision, coming in a week that included speculation that Renault would be the next manufacturer to pull out of F1, bears out a prediction by outgoing FIA president Max Mosley. Mosley, never a full-faith backer of carmakers in F1, has continued to say that one or two other carmaker teams could join Honda on the sidelines by the end of the year.The four-term FIA president began a vigorous campaign a year ago to lower spending in the sport. A statement from the FIA on Wednesday said the sport's sanctioning body "regrets the announcement of BMW's intended withdrawal from Formula One but is not surprised by it."

The FIA had sought adoption of annual per-team budgets of 30 million pounds sterling (currently $49 million) by next season. It later amended that to 40 million ($65 million). Teams refused to go along, saying they could not reach that figure in such short order. Questions of how to monitor team budgets also came into play. A dispute raged among teams and the sanctioning body through spring and into summer. Only a threat by eight of 10 teams to start a new tour brought compromise in the form of a three-year window for reducing costs. BMW's pullout comes within a week of an expected signing of a new commercial agreement among teams, a pact that would tie teams to the sport through 2012.

The teams organization Formula One Teams Association said current teams pledge support to BMW Sauber through the remainder of the season. Simone Perillo, secretary general of FOTA, did not define "support" in a statement. Ferrari, a subsidiary of FIAT, Mercedes, which co-owns McLaren Mercedes and supplies engines to two other teams, Renault and Toyota will be the only carmakers remaining in the sport by year's end. Three private teams are scheduled to enter the sport next season, which will expand the sport despite BMW's departure.

In a we-told-you-so tone, the FIA's statement said BMW's withdrawal might have been avoided had teams not resisted so strongly the sanctioning body's wishes.

"Nevertheless, as a result of a sustained cost-cutting campaign by the FIA, new measures are in the process of being agreed which should make it easier for new teams to enter and enable existing ones to participate on much reduced budgets," the statement read.

The next race, the Grand Prix of Europe, is scheduled for Aug. 23 in Valencia, Spain.

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