Honda's Formula 1 comeback

Just before Christmas 1995 a Honda official in Tokyo told a Dow Jones reporter that Honda would probably start "a discussion over getting back into F1 racing" in the course of 1996. Sure enough, at the San Marino Grand Prix, Yoshinobu Noguchi, project leader of the Honda Motor Sport Department, arrived in the F1 paddock. Noguchi is no stranger to Grand Prix racing having been integrally involved in the McLaren-Honda programme in the late 1980s.

Just before Christmas 1995 a Honda official in Tokyo told a Dow Jones reporter that Honda would probably start "a discussion over getting back into F1 racing" in the course of 1996. Sure enough, at the San Marino Grand Prix, Yoshinobu Noguchi, project leader of the Honda Motor Sport Department, arrived in the F1 paddock. Noguchi is no stranger to Grand Prix racing having been integrally involved in the McLaren-Honda programme in the late 1980s.

Other sources inside racing say that there is no question that Honda is shopping to find a new partner in F1 for 1998 and beyond. A return to F1 in 1998 would be logical as it would mark the 50th anniversary of the founding of the Honda Motor Company.

If this is the case Honda will have been out of F1 for five years - and there are some who believe that there was an agreement between McLaren and Honda in 1992 that Honda would not return to F1 for a five-year period.

When the decision to pull out was made Honda was in a situation in which it had dominated Formula 1 racing, winning six consecutive Constructors' Championships and taking its drivers Nelson Piquet, Ayrton Senna and Alain Prost to five consecutive titles between 1987 and 1991. The McLaren-Honda relationship (between 1988 and 1992) resulted in 41 victories in 74 races with a record-breaking 15 wins in 16 races in 1988. The domination had reached such a point that victory was expected and the headlines stopped reading "Honda wins again" and Honda was only mentioned when it lost. The negative publicity - similar to what Renault is currently facing - meant that there was suddenly very little to be gained by Honda staying in F1.

This coincided with the economic recession had hit the automobile industry and Honda decided it had to axe the F1 programme, which was rumoured to be costing US$80 million a year. And although no-one involved will say so publicly there is no doubt that there was friction between Honda and McLaren, because the British team was planning to build its own road car - which would be in direct competition with the Honda NSX supercar.

Honda turned its attention to the much less expensive - and less competitive - world of Indycar racing. This was done to support Honda's push into North America through American Honda Motor and Acura.

Despite this many F1 people reckoned that it would not be very long before the company returned. Honda would spend a few years winning in America and then come back to F1.

But why would the company risk such a move? To understand the logic one needs to understand the company's corporate culture. In the 1930s company founder Soichiro Honda was a racer himself and what he learned on the race tracks was built into the company philosophy. Soon after Honda began building motorcycles Mr Honda announced the intention to compete in the Isle of Man Tourist Trophy race, the most important motorcycling event in those days. When Honda began to become involved in building cars, Honda instigated an F1 programme under Yoshio Nakamura. Current Honda president and chief executive Nobuhiko Kawamoto was part of that team, having joined Honda in 1963. In 1966 he worked as a design engineer on the Formula 2 engine under Tadashi Kume. The water-cooled four-cylinder 1000cc engine dominated the formula with 11 straight victories.

In the 1980s it was Kawamoto who pushed along the nascent F1 programme as head of Honda R&D under the then Honda president Kiyoshi Kawashima, who had been involved in the Honda Isle of Man TT programmes in the early days.

The Honda company has always been run by racers and Kawamoto remains convinced that motor racing is good for training engineers, for nurturing innovation and for motivating the company. It is also, of course, a useful way of advertising one's products. In the perfect world there is little doubt that Honda would build its own cars as well as engines but such a move is currently prohibitively expensive - and only Ferrari attempts such things today.

The bottom line on all Honda sporting decisions, however, is that the company exists to sell cars. It was this that led Honda bosses to decide to switch from to Indycar racing. Honda's push into North America - which has been very successful - continues with recently announced plans for big expansion in production and research & development capabilities.

Honda continues to climb up the list of the world's biggest automotive companies despite falling car sales, stiff competition and a strong yen. The company has been reorganized with expansion in efficient manufacturing facilities in the United States and is expanding fast with plans for larger R&D facilities and new factories.

The American car market, however, is very competitive and so even giants such as Ford, General Motors and Chrysler are looking at the global markets to stay competitive.

Honda is no different. The company manufactures products in 40 countries but its sales are heavily biased to the United States from where 42% of the company's income now comes. Japan accounts for 34% but Europe (12%) and the rest of the world (12%) are lagging far behind.

Honda's motorcycle sales - which today constitute only 15% of the company's income - are particularly strong in China and Honda management knows that the Chinese motorcycle-buyer of today is a car-owner of tomorrow.

Honda's sporting adventures in America are also being frustrated at the moment by the political in-fighting going on between CART and IRL. Honda's ultimate aim in the US is to win the Indianapolis 500. That nearly happened last year with Scott Goodyear but this year - despite the Honda engine being dominant in CART events - there were no Honda engines at Indianapolis. The US 500 race may have had a better field than the Indy 500 - but it is not the Indy 500.Indycar racing may offer sales benefits in South America, but it is useless as a marketing tool in the rest of the world. F1 is not much use in North America but it is a very strong marketing tool in the Far East and Latin America - the emerging markets of the automobile world.

From a commercial point of view, therefore, F1 is a logical choice for Honda in the years ahead. It is also the logical move to make once the company has been successful in Indycar racing - which is happening this year. The expansion of Honda North America will - within a year or two - enable the Indycar programmes to bee run independently from Honda Japan, which means that Honda R&D engineers at Wako will be looking for new challenges.

Although everyone denies a direct Honda involvement in the Mugen F1 programme - there are a lot of Honda R&D men to be seen at races wearing Mugen shirts. This has been a clever way for Honda to keep an idea of the developing technologies in F1.

Kawamoto has had some his R&D men quietly working on a Honda F1 chassis. This was tested by Satoru Nakajima and for a while it was thought that Honda would probably return to F1 with a Honda-Honda. A few weeks later there were whispers that Honda top management had already decided to abandon any idea of building a Honda-Honda because it was too expensive an option and was considering with which team to forge an alliance. There was not a lot of choice. Ferrari is not an option; McLaren is tied to Mercedes-Benz for a long-term period; and both Williams and Benetton are contracted to Renault until the end of 1997. Even if Renault pulls out of F1 - which is a possibility - there are problems for Honda with both the Renault teams.

Williams is not likely to work with Honda again given the fact that in 1987 Honda dropped Frank Williams to forge a new relationship with McLaren. It was a crushing blow for the Williams team at the time - Frank Williams was out of action having been paralysed in a road accident near the Paul Ricard in March 1986 and the team was struggling. The loss of Honda forced Frank to use Judd engines in 1988 before he started his relationship with Renault.

The relationship between Benetton and Honda is also rather difficult since Benetton team boss Flavio Briatore caused Mugen Honda a great deal of public embarrassment in 1995. Briatore had convinced Mugen Honda to forget a contract it had signed with Minardi for 1995 and supply Ligier - which Briatore owned - instead. In order to achieve this Briatore had given Mugen Honda a written undertaking that he would settle any legal claims against them from Minardi. He did not and when Minardi took legal action, the revelations caused very bad publicity for both Briatore and Mugen Honda. Honda management will have taken note of this behavior.

What all this means is that if Honda wants to have a strong team ready to race in 1998 season - and is not willing to go it alone - it must form an alliance with a strong midfield F1 team. The choices are limited. Jordan has a contract with Peugeot and is still a very small team with little industrial infrastructure; Sauber has excellent facilities but it is based in Switzerland and does not yet seem to have grasped the concept of how to be competitive in F1; Tyrrell is with Yamaha.

Mugen Honda's current partner is Ligier. The team has good facilities - although they are in France rather than motor racing's heartland - England. Despite Olivier Panis's victory at Monaco there is a great deal of confusion surrounding the team as there are signs that the French government wants to oust current owner Briatore and make Ligier a French team once again.

This leaves Arrows and Minardi or the new Dome team.

Arrows is the best bet although it would not have been on Honda's shopping list at all until a few months ago when Tom Walkinshaw bought a controlling interest in the team from previous owners Jackie Oliver and Alan Rees. Walkinshaw was previously involved with Ligier - so he knows the Mugen Honda personnel very well - but he quit the French team when it became clear that he was not going to be able to gain full control.

Walkinshaw has made no secret of the fact that his aim to own a winning F1 team. He has proved that he understands what it takes to win in F1.The ownership of Arrows has been somewhat confused since the team was bought from founders Oliver and Rees by businessman Wataru Ohashi in November 1989. Ohashi was the boss of the Footwork Group, a Japanese transport and services empire which wanted to use F1 to spread its fame internationally. When Ohashi bought Arrows the team seemed to have all the makings of a successful F1 operation. Work had just been completed on a $10m Technical Centre at Milton Keynes. Ohashi poured more money into the team: hiring designer Alan Jenkins and concluding an expensive engine deal with Porsche for a supply of V12 engines. Ohashi also funded the construction of a state-of-the-art 40% rolling road windtunnel in the old Arrows factory next door to the Technical Centre.

But the Footwork-Porsche adventure was a disaster and in 1992 the team switched to Mugen Honda V10 power. Eighteen months later Ohashi was forced to pull Footwork out of F1 because of Japan's economic problems. Mugen Honda did a deal with Lotus.

In 1995 Oliver and Rees regained ownership of the team but they struggled for money all last year and when Walkinshaw arrived offering money they decided to cut their losses.

Walkinshaw's move was well-timed. In a stroke he acquired a fully-operational F1 team with around 100 experienced people. Arrows was lacking design engineers following the defection of Jenkins to Stewart Grand Prix, but Walkinshaw had access to his team of engineers who had been working at Ligier.

The deal also brings Verstappen back into Walkinshaw's camp, Tom having played an important role in hiring the talented Dutchman for Benetton at the end of 1993. A really quick driver is an essential part of any good F1 package and Verstappen is certainly quick.

In addition to all this, Walkinshaw has a new F1 factory at Leafield - only 35 miles from Arrows - which was to be used for Ligier if Tom had been able to take over the French team. It is now going to be used for Arrows and at the end of this season Tom plans to transfer staff and equipment from Arrows. He will then use the Arrows facilities - notably the windtunnel - as a research & development centre for TWR.

He has, in effect, created the perfect vehicle for Honda to use as its factory team in 1998 and beyond.

As a further incentive to Honda, Tom has already agreed a deal to run with Bridgestone tyres next year. Bridgestone and Honda have often allied in the past to gain motor racing success, notably in the European Formula 2 series in the early 1980s and more recently in Indycars, where Honda entered in 1994 with Rahal/Hogan and Bridgestone-Firestone joined the series last year. That link clearly remains strong and at Imola Honda's Noguchi and Bridgestone's motorsport manager Hiroshi Yasukawa were spotted lunching together under the Ligier team awning.

Minardi is not really an option as the team is small and lacking money and infrastructure.

Dome is a possibility in the longer-term and there are some who believe that Honda may wait until Dome is an established F1 team before sliding in to take over, thus avoiding the possibility of failing with a Honda-Honda. There is some logic in this theory.

Officially nothing is certain at the moment, except that Honda is having talks with teams. The options available are very limited as Honda will not want to come into F1 without a good chance of winning right away. This would continue Honda's remarkable record of success in motorsport - and what better way would there be to celebrate Honda's 50th birthday than with Grand Prix victories.