JULY 26, 2000

Peugeot, AMT and Arrows

THE confirmation that Peugeot has sold its Formula 1 operation to an Asian consortium called Asia Motor Technologies brings to an end Peugeot's disastrous involvement in the sport with no wins in seven years of competition.

THE confirmation that Peugeot has sold its Formula 1 operation to an Asian consortium called Asia Motor Technologies brings to an end Peugeot's disastrous involvement in the sport with no wins in seven years of competition. It also brings to an end attempts by the French company to salvage the program - and save face - with a joint venture with the Vivendi company.

Asia Motor Technologies has no obvious motor racing pedigree. The only name involved which is known to F1 people is that of Enrique Scalabroni, who has not been actively involved in Grand Prix racing for nearly 10 years. He was briefly linked to the abortive Ikuzawa International F1 team in 1994 but this failed to get off the ground.

AMT will be headed by Hideo Morita, the eldest son of the late Akio Morita who, with Masaru Ibuka, built the vast Sony Corporation after they met during the latter stages of World War II while working on the development of a heat-seeking missile for the Imperial Japanese navy. Morita died last October leaving Hideo as head of the family holding company Raykay Inc. which, along with the Morita Foundation controls a 10 percent share of Sony, which is worth an estimated $5bn. The family has no representation on the modern Sony board of directors.

The Morita Family have a long tradition of successful mercantile businesses, dating back to the early 17th century when the family made its first fortune from a sake business. This helped to fund the establishment of Sony which then boomed with transistor radios, tape recorders, video machines, televisions and ultimately the Sony Walkman.

Morita is involved in the leisure business, owning a purpose-built ski resort at Arai, near Nagano and a $4.5m floating hotel called the King Pacific Lodge, which is currently being operated in the coastal waterways of British Columbia.

AMT says that it is totally independent of the Sony empire and any associated companies and consists of a group of "financial backers" from a variety of Asian companies. The press release suggested that this will include Korea, Taiwan, Singapore, Malaysia, Thailand and others but it did not say that they were already committed to the project.

AMT has struck a two-year deal with Tom Walkinshaw's Arrows team and the team says that the AMT V10 will be a modified version of the current Peugeot engine but, in the finest traditions of Walkinshaw, the situation appears to be confused because Tom has been talking about it being the first time that the team has had "the full factory support from an engine supplier". The suggestion in this is that there is more to AMT than meets the eye because at the moment the company has only announced vague plans to develop Asian technology in such sectors as electronics, advanced materials, semi-conductors, telecommunications, computer, aerospace and precision-tooling industries.

It would be logical to assume that such a program would not be attempted without the backing of a car manufacturer as it is virtually impossible these days to compete in F1 without such support but there is no evidence that one is involved. The only suggestion of that came when the AMT rumors first emerged and Scalabroni was spotted around the F1 paddock in the company of Mitsubishi personnel.

Mitsubishi has a strong history in competition, notably on the rally raids with the Pajero model, and in the World Rally Championship with the Lancer, with which Tommi Makinen won the 1997, 1998 and 1999 titles. The company did look at F1 in 1990 and built a prototype V12 F1 engine in league with Hiroyuki Hasagawa's HKS company. This was tested in the back of a Lola Formula 3000 car in 1992 by Kazuo Mogi. Mitsubishi is currently being restructured following a virtual takeover of the firm by DaimlerChrysler earlier this year. Mitsubishi is heavily in debt but owns a 16 percent shareholding in Malaysia's Proton car company, which is controlled by Petronas.

The other confusing aspect of the deal is that the announcement specifically stated that AMT had not bought any shares in the Arrows team and yet at the same time named Enrique Scalabroni as "Group Technical Director" to oversee coordination between Arrows and Peugeot Sport. In addition John Gano was named Group Financial Director to coordinate "financial and sponsorship activities". The implication of this is that Arrows is somehow part of the AMT group as well.

Trying to discover if AMT has bought into the team is a difficult business in the short term because of the complicated nature of the Arrows company structure. The original racing team set up in 1977 traded as the Arrows Racing Organisation. This company is now 100% owned by Arrows Grand Prix International Ltd. which was established in 1993 but this company is itself owned by Arrows Autosport Ltd. which was created last year.

It is worth noting that in the course of the last few weeks two new companies called Asia Motor Technologies (UK) Ltd. and Arrows Consulting Ltd. have been registered in Britain but there are currently no details about what these may be and how they are related to the other firms involved.

AMT said it will make a full announcement at the end of the current World Championship.

The biggest question for AMT is likely to be whether or not they will be able to keep the staff at Peugeot Sport. A lot of the employees are Peugeot company men and have been with the firm for their entire careers. Many would prefer to stay with Peugeot and work on the World Rally Championship program while others are likely to be offered jobs at nearby Renault Sport as that company is now recruiting for its push into F1 in 2002.