Former ATS Formula 1 team owner Gunther Schmid returned to Grand Prix racing in 1988 having been forced to sit out the turbocharged years after BMW refused to supply him engines for 1985. The German sold his interest in ATS Wheels and bought a rival company called Rial.

When it was announced that F1 would be returning to normally-aspirated cars, Schmid approached his old ATS designer Gustav Brunner - who was then working at Ferrari - and convinced him to leave Maranello. The team was based in Fussgonheim, near Ludwishafen, in Germany and Brunner produced the neat Rial-Cosworth ARC1. This was known as "The Little Blue Ferrari" because of its resemblance to the 1987 car from Maranello. Andrea de Cesaris was hired to drive and ran as high as sixth in the first race in Brazil - largely due to the fact that the car did not have a large enough fuel tank to go the distance. Brunner left early in the year to join Zakspeed but de Cesaris was able to finish fourth in Detroit, which gave the team ninth in the Constructors' Championship.

The original car was reworked that winter by Bob Bell and Stefan Fober and the team expanded to two cars, but neither Christian Danner nor Volker Weidler could do much with the car. Danner finished fourth in Phoenix that year, a lap behind the winner, but otherwise had a difficult time. Weidler kept trying to qualify until August when he was replaced by Pierre-Henri Raphanel but he did no better, while Danner was fired after the Portuguese GP and the car was tried by Gregor Foitek in Spain and by Bertrand Gachot in Japan and Australia. Neither qualified.

The team closed down at the end of the year although Schmid still comes to Grands Prix from time to time.