Honda website
Honda website

JULY 18, 2000

More F1 money coming from Germany

GERMAN companies have become increasingly important in Formula 1 in recent years with DaimlerChrysler, West, BMW, Alliaz, Deutsche Post, Becks, Warsteiner and others all keen to be part of the boom in interest in F1 since Michael Schumacher became the top name in the sport in 1994. This process is likely to accelerate in the years ahead not least because of an important new law which was agreed last week by the German

parliament. In 2001 corporate taxes will be cut from 40% to 25%, which will mean more money will be available for investment but more importantly in January 2002 companies will no longer have to pay capital gains tax on the sale of shares in other firms. One of Germany's major problems in recent years has been the structure of its industry as most of the big combines have come under the control of banks which took shares rather than cash on loans made in 1945 when Germany was being rebuilt after World War II. Many of the banks have wanted to sell their shareholdings but capital gains taxation has made this uneconomical and so they have not been able to invest in higher-yield industries.

Perhaps more significantly for Formula 1, the reforms are expected to cause a vast restructuring in German industry with companies such as BMW likely to become easier targets for takeover. There has been considerable speculation in recent months that Volkswagen is waiting for the the new law to make a bid for BMW, a move which would give VW a direct involvement in Grand Prix racing.