ID :
34187
Sat, 12/06/2008 - 14:51
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https://oananews.org//node/34187
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Honda to withdraw from F1 due to global economic downturn
TOKYO, Dec. 5 Kyodo - Honda Motor Co. said Friday it will withdraw from all Formula One activities, making 2008 its last season in F1 motor racing, because its business conditions have rapidly deteriorated amid the worldwide economic downturn.
Honda President Takeo Fukui told a packed press conference in Tokyo that the
second-largest Japanese automaker can no longer bear the operating costs for F1
as it needs to spare more resources to develop environmentally friendly cars
and other new technologies.
Honda will consult with its associates at Honda Racing F1 Team and its engine
supplier Honda Racing Development regarding their future, including the sale of
the team, he said.
''It was a very difficult decision,'' Fukui said.
''Near-term uncertainty surrounding the global economy continues to grow and we
expect recovery to take some time,'' Fukui said, blaming the U.S. subprime
mortgage problem and the deepening credit crisis.
Tokyo-based Honda also made the decision to exit F1 because of the lack of a
positive advertising impact from participation due to the team's recent slack
performance, sources close to the matter said.
Some of Honda's shareholders had been urging the firm to pull out of F1, which
is estimated to cost Honda more than 50 billion yen a year, amid slumping auto
sales, they said.
Industry watchers warn that Honda's move indicates the fallout from the global
economic downturn has begun to ripple into sporting businesses, and may
possibly spread to other non-core operations such as cultural activities.
Toyota Motor Corp., which entered the F1 business in 2002 and is also facing
tough business conditions, denied speculation it may follow suit and leave F1.
Honda, originally strong in motorbikes, entered F1 in 1964 before it fully
began its car business with the N360 minicar launched in 1967.
After participating in three races in 1964 with a team of around 20 members,
Honda enjoyed its heyday in F1 in the 1980s.
Honda was absent from F1 races twice in the period 1969-1982 and 1993-1999, but
came back to the motor sport in 2000.
Fukui said Honda has no plans to return to F1 in the future as of now, and it
will not participate as an engine supplier either.
The move comes as the automaker expects gloomier earnings going forward due to
falling vehicle demand worldwide.
In October, Honda slashed its sales outlook for the current business year
ending next March to 11.6 trillion yen from the 12.13 trillion yen it projected
in July.
For the ongoing business year, Honda is expecting its net profit to drop 19.2
percent from a year earlier to 485 billion yen.
Earlier this week, Honda announced it was cutting jobs in Japan and Britain. It
plans to reduce the number of temporary employees at factories in Japan by
around 760 by the end of January from about 4,300 in November as it reduces
production.
Honda also said it began offering voluntary retirement to about 4,800 workers
at its British plant in Swindon, 130 kilometers west of London, starting from
this month.
Honda's decision to exit from F1 has shocked not only motor sport fans but also
political circles and the city of Suzuka, Mie Prefecture, where the
Honda-affiliated Suzuka circuit is located.
Toshihiro Nikai, economy, trade and industry minister, said, ''We see that the
automotive sector, which acts as a leader of Japan's industry, has been driven
into a more-than-expected difficult situation.''
Chief Cabinet Secretary Takeo Kawamura said, ''It is a pity,'' while Suzuka
Mayor Mitsuo Kawagishi said, ''It was unexpected and I am very surprised.''
''Honda has been the pride of citizens here and we are very disappointed,''
said Yoshiteru Otani, head of the Suzuka Tokimeki Fan Club, a group supporting
the city's development.
Honda said the withdrawal decision will not affect a plan to hold the Japanese
Grand Prix at Honda's Suzuka circuit next year, after the event was held in
2007 and 2008 at Toyota's Fuji Speedway in Shizuoka Prefecture.
Fukui said the withdrawal decision was reached for business reasons, and that
he feels sorry for motor sport fans as well as Honda's F1 team and engineers.
''Not only in North America but also other areas across the globe, the auto
market deteriorated sharply in November to a level much worse than we had
expected earlier,'' Fukui said. ''In the current situation, we cannot foresee
the future.''
Fukui said the auto industry is on the verge of entering a ''new era'' where
automakers will be required to develop new technologies to cope with higher
fuel and other material prices, because once the economy recovers, the prices
of those commodities should rise again due to the growth of emerging economies.
He said Honda will allocate personnel and other resources it used to spare for
F1 to prepare for this new era and to develop new technologies for hybrid cars,
or a car that is smaller than the Fit compact model and requires less material
to make and has better fuel efficiency.
Honda has to make the withdrawal be seen as a ''good decision'' in the future,
Fukui said.
As to other motor sports, Fukui said Honda plans to continue racing in the
MotoGP motorcycle series and the IndyCar series.
==Kyodo
Honda President Takeo Fukui told a packed press conference in Tokyo that the
second-largest Japanese automaker can no longer bear the operating costs for F1
as it needs to spare more resources to develop environmentally friendly cars
and other new technologies.
Honda will consult with its associates at Honda Racing F1 Team and its engine
supplier Honda Racing Development regarding their future, including the sale of
the team, he said.
''It was a very difficult decision,'' Fukui said.
''Near-term uncertainty surrounding the global economy continues to grow and we
expect recovery to take some time,'' Fukui said, blaming the U.S. subprime
mortgage problem and the deepening credit crisis.
Tokyo-based Honda also made the decision to exit F1 because of the lack of a
positive advertising impact from participation due to the team's recent slack
performance, sources close to the matter said.
Some of Honda's shareholders had been urging the firm to pull out of F1, which
is estimated to cost Honda more than 50 billion yen a year, amid slumping auto
sales, they said.
Industry watchers warn that Honda's move indicates the fallout from the global
economic downturn has begun to ripple into sporting businesses, and may
possibly spread to other non-core operations such as cultural activities.
Toyota Motor Corp., which entered the F1 business in 2002 and is also facing
tough business conditions, denied speculation it may follow suit and leave F1.
Honda, originally strong in motorbikes, entered F1 in 1964 before it fully
began its car business with the N360 minicar launched in 1967.
After participating in three races in 1964 with a team of around 20 members,
Honda enjoyed its heyday in F1 in the 1980s.
Honda was absent from F1 races twice in the period 1969-1982 and 1993-1999, but
came back to the motor sport in 2000.
Fukui said Honda has no plans to return to F1 in the future as of now, and it
will not participate as an engine supplier either.
The move comes as the automaker expects gloomier earnings going forward due to
falling vehicle demand worldwide.
In October, Honda slashed its sales outlook for the current business year
ending next March to 11.6 trillion yen from the 12.13 trillion yen it projected
in July.
For the ongoing business year, Honda is expecting its net profit to drop 19.2
percent from a year earlier to 485 billion yen.
Earlier this week, Honda announced it was cutting jobs in Japan and Britain. It
plans to reduce the number of temporary employees at factories in Japan by
around 760 by the end of January from about 4,300 in November as it reduces
production.
Honda also said it began offering voluntary retirement to about 4,800 workers
at its British plant in Swindon, 130 kilometers west of London, starting from
this month.
Honda's decision to exit from F1 has shocked not only motor sport fans but also
political circles and the city of Suzuka, Mie Prefecture, where the
Honda-affiliated Suzuka circuit is located.
Toshihiro Nikai, economy, trade and industry minister, said, ''We see that the
automotive sector, which acts as a leader of Japan's industry, has been driven
into a more-than-expected difficult situation.''
Chief Cabinet Secretary Takeo Kawamura said, ''It is a pity,'' while Suzuka
Mayor Mitsuo Kawagishi said, ''It was unexpected and I am very surprised.''
''Honda has been the pride of citizens here and we are very disappointed,''
said Yoshiteru Otani, head of the Suzuka Tokimeki Fan Club, a group supporting
the city's development.
Honda said the withdrawal decision will not affect a plan to hold the Japanese
Grand Prix at Honda's Suzuka circuit next year, after the event was held in
2007 and 2008 at Toyota's Fuji Speedway in Shizuoka Prefecture.
Fukui said the withdrawal decision was reached for business reasons, and that
he feels sorry for motor sport fans as well as Honda's F1 team and engineers.
''Not only in North America but also other areas across the globe, the auto
market deteriorated sharply in November to a level much worse than we had
expected earlier,'' Fukui said. ''In the current situation, we cannot foresee
the future.''
Fukui said the auto industry is on the verge of entering a ''new era'' where
automakers will be required to develop new technologies to cope with higher
fuel and other material prices, because once the economy recovers, the prices
of those commodities should rise again due to the growth of emerging economies.
He said Honda will allocate personnel and other resources it used to spare for
F1 to prepare for this new era and to develop new technologies for hybrid cars,
or a car that is smaller than the Fit compact model and requires less material
to make and has better fuel efficiency.
Honda has to make the withdrawal be seen as a ''good decision'' in the future,
Fukui said.
As to other motor sports, Fukui said Honda plans to continue racing in the
MotoGP motorcycle series and the IndyCar series.
==Kyodo
