For Volkswagen, Formula 1 Is No Longer a Waste of Money

Feb. 08, 2012 2:19 AM ET by Yaacov Zalel Motorsport / 54 Comments

F1 global exposure combined with eco-friendly technical regulations makes it a brilliant proposition for Volkswagen.

In the last few years, car manufacturers have deserted Formula 1 in droves. Toyota, Honda, BMW, Renault, Ford, and Jaguar are among the marques that once took the F1 business seriously only to vanish when the business climate has changed. That is not a new phenomenon in motorsport in general and in F1 in particular. However, when the climate changes, people also tend to change their minds and find the incontestable aspects of F1 participation.

And there are rumors that Volkswagen, the second largest automaker in terms of sales in the world, is showing a renewed interest in entering the sport. However, word is this won't be done through Audi, but with the bread and butter Volkswagen brand. According to a report in the German magazine Wirtschaft Woche, Bentley Boss Wolfgang Durheimer, who also now heads the group's motorsport strategy, will put in front the board of directors a proposal to enter Formula 1 with the VW brand. When he submits the proposal Durheimer should be aware of one person's opinion of F1 in particular, group Chairman Ferdinand Piech.

About a decade ago, when rumors about Audi's possible entry into Formula 1 were flying through the air, Piech, then CEO, said: "Formula 1? It's a waste of money." However, both Formula 1 and Volkswagen were in different eras and different phases of development. Now, as Volkswagen became the most formidable automotive group in the world and plans to become the world's largest automaker by 2018, F1 makes sense for the VW brand, both technically and promotionally. For starters, the F1 World Championship series has become a global media event with huge exposure in Asia and South America, both emerging markets that are crucial to the success for VW's goals.

Formula 1 even returns to the US this year and starting next year, two races are planned for the US. VW has huge ambitions for the US and just last year inaugurated its first plant in Chattanooga, Tennessee. Sales have since jumped by more than 25 percent and are expected to rise in the next few years. North America also hosts the Canadian Grand Prix and there are rumors that Mexico is lining up in front of Bernie Ecclestone's office in order to get its own race. Four races in North America cannot be ignored as a potential marketing tool.

Even the extravagant F1 engines that suited Ferrari and were a hindrance for VW are now only a distant memory. The current F1 engine is a 2.4-liter V8 and from 2014 it will be a turbocharged 1.6-liter V6. Even Ferrari's objection, supported by Ecclestone, couldn't prevent the transition to use of a more eco-friendly engine. That engine configuration will suit VW perfectly well. Although the majority of VW engines are 4-cylinder units, a few times they have used a V6 in compact models such as the Golf. Furthermore, the application of turbo technology in small gasoline engines is now on the rise, due to engine efficiency and ecology demands.

This should also facilitate for VW a global promotional platform for its cars, as more become equipped with turbocharged small engines. The price of entering Formula 1, once an exorbitant investment, is much smaller nowadays as teams implemented the budget cap program. Even the FIA has cancelled the $48 million guarantee each new team had to deposit. It doesn't mean that F1 is cheap, though it is more affordable and attractive due to its global exposure accompanied by a more compatible technological environment that's even popular to automakers like Volkswagen.

So if Durheimer reads this piece and uses our arguments as to why VW and F1 are a perfect fit, then Mr. Piech might take notice. Hopefully he won't throw Durheimer right out of the window, shouting after him: "Formula 1? It's a waste of money."

For Volkswagen, Formula 1 Is No Longer a Waste of Money

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