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  1. #1
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    Honda Quits Formula One

    Honda Quits Formula One to Cut Costs as Profit Falls (Update1)
    By Naoko Fujimura and Dan Baynes

    Dec. 5 (Bloomberg) -- Honda Motor Co. withdrew from Formula One racing to cut costs after the carmaker slashed its earnings forecast, fired assembly workers and reduced production.

    Japan's second-largest automaker may put the Brackley, England-based team up for sale, President Takeo Fukui said today at a news conference in Tokyo.

    Honda cut its profit forecast 13 percent in October as the recession in the U.S. cripples car demand. Max Mosley, president of F-1 ruling body the Federation Internationale de l'Automobile, has said the $1.6 billion teams spend annually on the racing series is ``unsustainable.''

    ``Honda's withdrawal highlights just how awful the situation surrounding the auto industry is,'' Koji Endo, an analyst at Credit Suisse in Tokyo. ``Other teams may follow, and the F-1 may not be held in the future.''

    Honda's vehicle sales in the U.S., the company's most profitable market, plunged 32 percent in November, the most since 1981, as the economic slowdown and the weak consumer sentiment hurt demand for Civic models.

    ``This difficult decision has been made in the light of the quickly deteriorating operating environment facing the global auto industry,'' Fukui said. ``Honda must protect its core business activities.''

    The company's stock has dropped 56 percent this year, set for the worst annual performance since at least 1975. The shares fell 1.5 percent to 1,659 yen as of 2 p.m. in Tokyo.

    Cost Savings

    Abandoning F-1 will save Honda at least 10 billion yen ($108 million) a year, according to Endo. Honda finished eighth and ninth the past two seasons after placing fourth in 2006 on its return as a constructor. Ross Brawn, the former Ferrari technical director who helped Michael Schumacher win five straight driving titles, was hired to run the team 13 months ago.

    Its withdrawal will leave the sport, dominated by carmakers including Fiat SpA, Renault SA and Toyota Motor Corp., with nine teams and 18 cars if a buyer can't be found. The 2009 season- opening Australian Grand Prix is scheduled March 29.

    Toyota has no plans to withdraw from the sport, said spokesman Hideaki Homma.

    The last team to quit Formula One was Honda-backed Super Aguri, which folded in May because of a lack of funding.

    Honda's decision is the latest blow to hit the sport in the past 18 months.

    Earlier this year, F-1 was rocked by the distribution of a sex video involving FIA President Mosley which led to some carmakers voting for his removal. In 2007, McLaren was kicked out of the constructors' championship and fined $100 million after its chief designer, Mike Coughlan, was found in possession of 780 pages of technical documents belonging to Ferrari.

    Lower Earnings

    Honda expects operating profit of 550 billion yen for the 12 months ending March, the lowest in eight years. The carmaker cut its forecast as the yen's 39 percent gain against the dollar squeezes its profit. Every 1 yen gain against the dollar cuts Honda's annual operating profit by 18 billion yen, according to the company.

    The company yesterday said it plans to offer early retirement for workers at its U.K. factory and will cut 490 additional temporary jobs in Japan, as demand slumps in overseas markets.

    Honda, led by founder Soichiro Honda, owned a Formula One team as early as 1964, even before it began making cars in 1967.

    It returned to F-1 in the 1980s as an engine supplier, then in 2004 purchased a stake in the BAR team from British American Tobacco, which it bought out a year later to form the Honda team for the 2006 season.

    Jenson Button and Rubens Barrichello are the team's current drivers and could be left without a seat for next year's championship.

    bloomberg.com

  2. #2
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    Deck Ape's Avatar
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    That ain't good.

  3. #3
    Thailand Expat AntRobertson's Avatar
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    Max Mosley, president of F-1 ruling body the Federation Internationale de l'Automobile, has said the $1.6 billion teams spend annually on the racing series is ``unsustainable.''
    It's more than simply unsustainable, it's obscene.

  4. #4
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    I bet they would't be withdrawing if they were getting podiums......

  5. #5
    Days Work Done! Norton's Avatar
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    Quote Originally Posted by Bung
    I bet they would't be withdrawing if they were getting podiums......
    Prolly right. Toyota has a few but I believe they will be next to go. Renault too.

  6. #6
    Days Work Done! Norton's Avatar
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    Quote Originally Posted by AntRobertson
    It's more than simply unsustainable, it's obscene.
    Yeah but some sponsors must think the cost vs marketing payback is there or they wouldn't be doing it. With the auto industry and others in deep recession, F! will take a big hit. Nobody is immune.

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