Renault Not Long For F1?
The economic crisis is doing a number on a wide variety of industries and Formula One certainly isn’t getting a pass. For example, one has to wonder if Renault is not long for F1.
Renault is the dominant French auto maker. As the economic troubles have spread from America throughout the world, Renault has taken an absolute beating. The manufacturer is reporting massive financial losses and is operating heavily in the red. All the while, the Formula One team prepares for the 2009 season.
How bad are things at the home office of Renault? Bad. The French government faced a situation not unlike what President Obama is facing with American manufacturers – do you let huge chunks of your auto industry fail? The answer for both governments has so far been “no.” Given this position, the French government has loaned the car division of Renault $3 billion dollars and another $1 billion to the finance arm. That is some serious change.
Renault has always been a bit light in its commitment to Formula One. The manufacturer always seems to be moving in and out of the sport as either a full team, engine supplier or some other role. Indeed, the lack of commitment was one of the reasons Fernando Alonso made his ill fated move to McLaren Mercedes. Now faced with financial problems, it seems unlikely that Renault can stay in the sport. Ah, but when it rains, it pours.
This past week, ING announced that it will end its sponsorship with Renault after the end of this coming 2009 season. Yikes! ING is the primary sponsor for the team – paying between $65 and $120 million dollars a year. That is a huge figure to lose from a budget. It is difficult to see how Renault will find another sponsor to replace ING for a similar figure. Most banks are out of the sponsorship game. Tobacco companies are barred. All and all, it is looking fairly grim.
So, what happens with Renault? All indications are the team will make it through 2009. After that? All bets are off. My personal opinion is we will see Renault follow Honda out of the sport. The economic picture will simply be too tough to deal with. Even if economies start turning around, companies like Renault will need to make solid profits for years to recover from this period of devastation.
Lemmy