MAY 24, 1999
Honda takes the plunge
Honda's change of mind highlights a split in the company's board of directors which has occurred since the retirement of Honda president Nobuhiko Kawamoto last summer. This split has resulted in an uncharacteristic lack of direction at the top of the company which has been graphically illustrated by Honda's policy in Grand Prix racing. The company set off down one path - giving commitments to the FIA and F1 boss Bernie Ecclestone - and has since changed its mind. This is particularly embarrassing for Kawamoto's replacement Hiroyuki Yoshino who announced in December that Honda would field its own F1 team, building both the chassis and the engines in England. Since then Yoshino has had to give way to pressure from the board of directors to give up the idea and accept a compromise solution. This will save Honda an estimated $500m of investment in F1 but will mean that the company will not be in full control of the F1 program.
The compromise has been provided by British American Racing which is under pressure from British American Tobacco to be more competitive. In order to ensure better results the team argued that it needs a better engine deal. The Supertec V10s are not competitive and there is little sign of Renault being able to return to F1. BAT is being asked to pay $150m to Honda for a three year engine supply deal. It is a deal which the Honda management could not turn down and as a face-saving exercise for Yoshino, it was announced that engineers from Honda's Research and Development company will be involved in the design of the BAR chassis.
The deal is a great coup for BAR. The new Honda V10 engine is rumored to be well ahead of the current designs in terms of technology which should mean that the team will be highly-competitive next year. The danger is that BAR is too new a team to use the engines effectively and opportunities will be wasted.
Even the BAR bosses admit that the operation is not yet a team and that it will take a couple more years to forge that kind of understanding between team members. For the last couple of years Stewart Grand Prix has been suffering similar problems because the team was not ready to be competitive against the big F1 operations.
It seems that there is currently no end to the amount of money BAT is willing to invest in F1 to be successful. The new team has spent vast amounts of money to buy Tyrrell, hire top engineers and Jacques Villeneuve and build a new factory. Huge sums have been spent on the media to promote the team. In addition the team now has to pay something in the region of $10m in compensation for breaking its contract for 2000 with Supertec.
There are rumors that BAR is around $20m in debt at the moment but it seems that BAT is happy to go on paying, although BAR Commercial Director (a BAT man) Tom Moser did say in Monaco that the team does need to find additional backing.
Honda says that it is still looking at what to do with HRD. Having made legal commitments to Bernie Ecclestone and the FIA, Honda will no doubt have to settle with both organizations and it is widely expected that as part of the settlement HRD will be passed on to Ecclestone. The team can then convert the existing cars to use Supertec engines and would be ready to run next season. The team could then be sold as a going concern.
It is now a question of waiting to see if the Honda gamble pays off. The change of direction has caused bad feeling throughout F1 and the company is going to have to work hard to rebuild the reputation it had when it left the sport at the end of 1992.