Formula One: Cost Reduction Statement – FIA

Austin

FIA Statement 

The FIA has studied cost reduction measures for teams participating in the FIA Formula 1 World Championship which were not conclusive, including:

– a global cost ceiling,

– a reduction in costs via technical and sporting regulations,

– an increased standardisation for parts.

The FIA, in agreement with FOM, suggested the principle of setting a maximum price for engine and gear box for client teams at the last Strategy Group meeting.

These measures were put to the vote and adopted with a large majority.

However, Ferrari SpA decided to go against this and exercise the right of veto long recognised under agreements governing F1.

In the interest of the Championship, the FIA has decided not to legally challenge Ferrari SpA’s use of its right of veto.

Therefore the FIA will initiate a consultation with all stakeholders regarding the possible introduction of a client engine, which will be available as of 2017. Following this consultation a call for tenders for this client engine, the cost of which would be much lower than the current power unit, could be undertaken.

Supported by FOM, the FIA will continue in its efforts to ensure the sustained long-term development of the Championship and look for solutions enabling it to achieve this. It asks all of the teams to make a positive contribution to the success of this approach through proposals and initiatives in the interest of the Championship and its continuation over the long term.

Opinion : Public declaration of plans from the FIA to launch a tender for a client engine (independent) package is a bold approach from the FIA, no doubt in conjunction with FOM, made ever greater through holding Ferrari’s veto rights to account for the decision. This move could be seen as part of an extended chess game encouraging Ferrari to renege on their earlier stated position, or a way in which the FIA could quietly move away from the current engine Formula. 

Details of the engine specification under which tender proposals are to be made have not been made clear, but it should be seen as unlikely that the current specification would be maintained given the development costs. In order for an engine to be attractive to teams it must have the capability to compete with all teams as well as being cost effective. The likely customers for such an engine still have an ambition to win, accepting an uncompetitive engine simply to allow them to be on the grid would be short sighted and not commercially attractive to sponsors.

Should two specifications of engine be available in Formula One, which one requiring substantially less investment surely all manufacturers would develop engines to the lower cost base.  Nullifying the current Formula. 

I personally do not envisage Formula One getting to this point. Ferrari will bow under the pressure of this threat from the FIA and agree to cost caps. 

However, if I’m wrong. Why would Renault still seek to buy a team in F1, why not focus on a customer engine package? Other likely Independent submissions would come from Ilmor or Cosworth, but both would require assurances around customer base and commitment in order to ensure profitability of any engine programme. Renault on the other hand could off set engine costs as commercial or marketing expenses. 

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