JUNE 21, 1999
Peugeot decision this week...
PEUGEOT is to decide this week whether or not it will continue its Formula 1 adventure with Alain Prost when the current contract ends at the end of next year. The company has been in F1 since the start of 1994 without success and looked very closely at pulling out of F1 at the end of 1997. Alain Prost's proposal convinced the company to stay on for three more years in an effort to use the sport to give Peugeot a high-technology image.
Unfortunately the Prost-Peugeot AP01 of last year was not a success and this year's results have not been as good as had been hoped. The Peugeot V10 is amongst the most powerful in F1 but it is always large and heavy. In an effort to overcome these problems Peugeot has announced that it will have an all-new V10 engine for next year - which will be 20% lighter than the current engine. This is due to start testing in September. It does not make much sense to go ahead with the engine if the program is to be cancelled after just a year. Logic would therefore suggest that Peugeot will extend its involvement for two or three more years to give the team the chance to use the new engine.
The problem is that Peugeot needs to sell more cars and success in the FIA World Rally Championship in the early 1980s worked wonders for Peugeot's sales. Automobiles Peugeot boss Frederic Saint-Geours has pointed this out on several occasions in the past while insisting that the company is in F1 with Prost to win races.
In the end the decision will be taken by Peugeot Citroen boss Jean-Martin Folz. He is unusual in the automotive world in that he has decided that Peugeot-Citroen can survive without merging with another car company, his argument being that cost-cutting and expansion into new markets will enable Peugeot Citroen to stay out of trouble. Rallying is a very powerful marketing tool in Asia - one of Peugeot's targets - while Formula 1 is big in eastern Europe and in Latin America. All three zones are currently going through economic difficulties and sales have slumped and recent sales figures in Europe show that Peugeot has only increased its sales by 6.4% while overall car sales have risen by 7.1%.
Peugeot is already committed to a full FIA World Rally Championship program with the 206 WRC model next year and there are suggestions that Citroen Sport - which has a separate budget from Peugeot Sport - may follow its sister company into the World Rally Championship, following the recent successes of the Xsara Kit-Car in the hands of Philippe Bugalski.
At the time that the Prost-Peugeot deal was originally negotiated there were suggestions that Peugeot was convinced to stay in F1 by the government offering to postpone tax increases on diesel for three years. The same government is still in power and has been quietly helping Prost Grand Prix so it is possible that a similar deal could be struck once again.
Prost says that if Peugeot does not continue with him, he has other options. Peugeot knows that one of these would be its rival Renault, which might be convinced to splash out on a new F1 program if Prost were involved. Peugeot must also weigh up he danger of quitting F1 as such a move could break up the engineering team at Peugeot Sport. Toyota has been quietly trying to hire Peugeot men in recent weeks and this would accelerate if Peugeot decided not to continue in F1.