MARCH 25, 1996

BMW delays F1 decision

GERMAN car-maker BMW will not be entering F1 in 1998 as had been rumored.

GERMAN car-maker BMW will not be entering F1 in 1998 as had been rumored. We understand that the Munich-based manufacturer has decided that it needs to concentrate its investment in other areas, and will take another look at GrandÊPrix racing, for the year 2000 and beyond, in a couple of years.

BMW had wanted to launch an F1 assault against Mercedes-Benz as part of its commercial strategy to win market share from its rival company. Mercedes is struggling to be competitive in what is now its third full season in F1 (although their actual financial involvement in the sport - through Sauber - can be traced back five years).

BMW has been extremely successful against Mercedes-Benz in recent years in terms of sales, but this success is part of the reason that BMW cannot now afford an F1 program. Investment is needed elsewhere with the company's new factory at Spartanburg, South Carolina, now nearing full production and attention now being focused on updating the facilities and product range of the Rover Group in Britain, which it bought in 1995 from British Aerospace and Honda. In addition, BMW's profits have been hit by the strength of the Deutsch Mark against other currencies in Europe.

The BMW Board of Management has recently decided that a full-scale F1 program would be too expensive - costing as much as $100m - despite the possible benefits which F1 could provide, and despite the enthusiasm of chief executive BerndÊPischetsrieder and his young team of engineers at the motorsport department in Munich. BMW will now concentrate all its efforts to beat the opposition in touring car racing.

The news from Munich means that Frank Williams will have to look elsewhere for an engine supply in 1998. Williams has had lengthy talks with BMW in recent months, in addition to other engine manufacturers including Honda.

Frank may not be very happy with having to share his Renault engine supply with Benetton, but may conclude that in the longer-term it is better to stay with Renault for 1998 and 1999.

There is, however, no guarantee that Renault will offer Williams a new contract as there is likely to be considerable pressure from the French government - the major shareholder in Renault - for Renault to supply Ligier. As Benetton and Ligier are both run by the same man - Flavio Briatore - logic dictates that Renault would be better off supplying the pair rather than splitting the deal with Williams.

The fast-expanding commercial links between Renault and Benetton - notably the Benetton Twingo model - would also suggest that Benetton is a better choice for Renault - even if, at the moment, the team is not as competitive as Williams.

Whatever the case, the decisions are likely to be made by mid-season of this year. Renault Sport will not want to be seen to dump Williams after the years of success they have enjoyed together - and may be hoping that Frank will find a deal elsewhere.