The future of BMW in F1

BMW has called a press conference for today in Munich and it says that it wants to discuss “current developments in motor sport”. There is no doubt that this will be an important announcement of some kind as the event will involve BMW’s motorsport director Dr Mario Theissen, the company’s head of R&D, Dr Klaus Draeger and the overall boss of the company Dr Norbert Reithofer. There has been speculation that this might be a withdrawal from Formula 1, although the timing would be very odd if that was the case. It would make more sense if BMW was going to withdraw from the World Touring Car Championship, as an announcement to that effect prior to the signing of the Concorde Agreement in F1 might have been interpreted as a political manoeuvre and thus it would be best to stay quiet about the WTCC until the F1 situation was sorted out.

BMW has been a major player in the Formula One Teams’ Association and withdrawing from F1 would be a strange move at the moment when the settlement finally arrives. The Concorde Agreement ties the team into F1 until 2012 although there is already en existing commitment to stay, which was signed back in 2006. However, this affects only the F1 team and if BMW chose to hand the whole operation back to Peter Sauber, it would certainly reduce the costs involved for Munich. Pulling out without doing that would lead to legal action from Formula One Administration.

Thus the best option if Munich wants to reduce its involvement, would be to continue as an engine supplier and hand the team back to its original owner Peter Sauber. The signing of Concorde will release a sum of $250m to the teams and this money would help to pay for the team in the future, along with the existing sponsorship deals.

BMW was previously an engine supplier and could revert to that position, although it did not win the World Championship with Williams and therefore decided that it needed to run its operations in F1 and so acquired Sauber. There was heavy investment in the team and until this year the team had been on an upward trajectory. If BMW quits now, it will be a major reversal of fortunes. The economic situation has been difficult for all the manuacturers but BMW has done better than most. Sales in the important US market are now much improved, although still around 18% down on last year and it seems that the firm is doing better in the US than its major rivals, notably Audi, Mercedes-Benz and Lexus.