A business case for VW in F1

There has been lot of talk over many years of the Volkswagen Group, Europe’s biggest car company, getting involved in Formula 1. The firm has stayed away on the basis that it is too expensive and does not make any business sense. Porsche, which is now (slowly) becoming part of the VW empire, has dallied with F1 on several occasions, notably in the early 1980s when money from TAG paid for Porsche engineers to produce turbo engines of undoubted class, which set new records of success in the sport – at that time.

In recent days the weekly German business magazine WirtschaftsWoche has quoted the group’s motorsport chief Wolfgang Dürheimer saying that he is going to propose that the Volkswagen group enter Formula 1 in 2018. He did not give any further details, although there was speculation that the plan would probably be to become an engine supplier first and then, perhaps, take over a team. The speculation has yet to hit on the idea that Volkswagen owns the rights to the AutoUnion brand and that Mercedes-Benz and AutoUnion battling for success would be a replay of the famous era in the 1930s with their Silver Arrows. That could happen, but in the modern age of marketing it is more likely that a specific brand would be used, be that Audi, Volkswagen itself, Bugatti, Bentley, Lamborghini or Porsche. The thing that is interesting about Durheimer’s suggestion is that it is the first time that a leading VW figure has come up with a business case for F1. He did not even mention the value of the technology that might be developed creating one of the next generation F1 turbo engines, but rather concentrated his thinking on sales, arguing that based on the group’s sales targets in Americas, Asia and the Middle East, “we are not sufficiently represented in motorsport in these regions.” He went on to explain that F1 is really the only serious option when one is looking for global market penetration.

The Volkswagen group sold 8.2 million vehicles in 2011, it is likely to be named the second biggest car company by sales, after GM but ahead of Toyota later this year. Of these, 3.1 million cars were sold in western Europe, while 2.5 million were in Asia (of which China was responsible for about 2.26 million), but sales in India were only 110,000. Sales in Eastern Europe amounted to only 557,000, while the company sold 950,000 in Latin America, and a further 670,000 in the US and Canada. The remaining 325,000 were sold in other places, including the Middle East and Africa, although the Middle East accounted for only 11,000 Volkswagens.

Given that F1 is strong in Asia, Eastern Europe, Latin America and the Middle East, it is fair to say that Dürheimer is bang on in his assessment.