Honda website
Honda website

OCTOBER 20, 2006

The red car rule

There has long been a joke in F1 circles that Ferrari can get away with whatever it pleases because of a mythical FIA regulation which is called "The Red Car Rule". Read any F1 forum and you will see endless references to the fact that the FIA and Ferrari are seen to be too close.

The announcement that Ferrari will be allowed to supply two teams with engines in 2008 is not going to help this perception. Article 43 of the 2008 FIA Sporting Regulations states that "a major car manufacturer may not directly or indirectly supply engines for more than two teams of two cars each without the consent of the FIA". The rule goes on to define a major car manufacturer as "a company whose shares are quoted on a recognised stock exchange or the subsidiary of such a company". The FIA has now ruled that "Ferrari's request to supply two teams with engines in the 2008 championship has been accepted". This presumably means that Ferrari will supply itself and two customers and thus will have engines in six cars.

Shares in Ferrari are not quoted on a major stock exchange - the plan for that was aborted in June - but its parent company, at least according to the FIAT website, is FIAT and the Italian giant says it is listed "on the Italian Stock Exchange (Borsa Italiana), and on the New York Stock Exchange (NYSE) through American Depositary Receipts". Thus Ferrari qualifies as a major manufacturer. One can perhaps argue that there are holding companies involved but as FIAT itself admits that it owns Ferrari, then they should not be allowed to gain an advantage when most of the time they are only too keen to claim ownership of the team.

Having established this, one has to ask why Ferrari should be allowed to supply more teams than others as it will mean a material benefit given that there is now a testing restriction which means that a team running six cars will get more information than a team running four engines. This is the problem that has developed in recent years in NASCAR where the big teams gain an advantage by doing more tests and thus drive the smaller operations out of business.

It is also a disastrous announcement for Cosworth because it means that there is now almost no chance of an engine deal in the future. The aim of the rule changes was to protect the smaller companies in F1 - at least that was one of the stated aims - but the reality is that Cosworth is being driven out of the sport because it cannot subsidise its engines as the other teams do. Ferrari, on the other hand, is being allowed to subsidise its engines by selling more to others.

Worst of all, however, is the fact that the new ruling means that the perception of the FIA being too close to Ferrari is strengthened rather than weakened. And that is no good for anyone in the sport.