By on October 19, 2010

This weekend sees the first ever South Korean Formula 1 Grand Prix. This is a push into new markets for Formula 1. This is why they are trying to push into North America and the Middle East. But it seems that it’s receiving a cool reception from the very people whom they are trying to woo. Namely, the car business.

Reuters reports that despite the inaugural South Korean Grand Prix, South Korean car businesses are staying away. Particular, Hyundai. Since the recession, Toyota and Honda upped their sticks from F1. F1 is trying to bring other car makers into the fold. Hyundai was a name they wanted to win, but according to an F1 official, it just isn’t going to happen. “The Grand Prix could be a gateway to becoming a premium car brand, but Hyundai is simply not interested in Formula 1,” said the anonymous F1 industry official, “It also requires long-term investment of several years at least and it’s doubtful whether Hyundai has that patience.” Now that’s interesting. Is Hyundai impatient? Is Hyundai trying to expand faster than they should? I hope not. Or maybe they really are committed to becoming the next Toyota?

No. Their reason is more logical than that. “The utmost priority is to boost brand image in Europe,” said Chung Eui-Sun, Vice chairman of Hyundai Motors, at the Paris Motors Show. And Hyundai wants to focus on that problem more. The lack of brand recognition. So spending money on motor racing, when it’s bigger, richer rivals, Toyota and Honda, failed, doesn’t strike as an appealing prospect. It is estimated that Toyota spent $300 million on F1 and Honda, even more than that. That kind of money can buy you a lot of TV and Radio airtime in Europe.

Nope, Hyundai just wants to concentrate on their products and get the message across that their cars aren’t junk any more. Also, F1 is a risky investment: If you win, you get a lot of not really free PR. If you lose, your money is gone. If the car goes up in flame or your racers die, you feel it in sales. Seems like a sensible marketing strategy on Hyundai’s part: Say no to drugs. Don’t get Ecclestoned.

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21 Comments on “Formula None For Hyundai...”


  • avatar
    ash78

    The margin between “great” and “terrible” in F1 is far thinner than it is in the consumer market.
     
    Maybe they’re just being smart, staying away from what could be a lot of downside potential for a huge investment. Because let’s face it, even if Hyundai does well in Europe, if they have a rash of newbie F1 losses/failures hanging over their brand, it’s not going to do much for their brand perception.

  • avatar
    faygo

    F1 is not “trying to push into North America”.  F1 has had poor luck getting a race which both organizers and Bernie can make money on, but has been in the US/Canada forever.
     
    Toyota and Honda spent waaaaaay more than $300M on F1.  I bet more like 10x that all told in the last 10+ years.
     
    Hyundai has zero racing background that anyone in the general public is aware of and their brand has nothing to do with performance (at this point) so dumping 100s of $mils into F1 is not going to do it any good.  this is not surprising to anyone.

  • avatar
    Syke

    Uh, this weekend see the first Korean Formula 1 Grand Prix . . . . . . . IF . . . . . . . . . the track is actually ready enough to have earned the certification they finally got.  Two weeks ago.  Which is about three months late from when they were supposed to have it.  Bernie bent lots of his own rules just to not look like an idiot.  As of three weeks ago, nobody was betting that the race was actually going to happen.
     
    And the track is still not finished.  Just the road surface, pits, and most of the bleachers.

  • avatar
    Lokki

    Avoiding F1 is a wise call for Hyundai.   They have nothing to gain by entering and, I believe, a lot to lose. 

    First, of course, money.  Toyota went F1 racing on an unlimited budget, exceeded that budget and only won one race.

    Second is image.  Hyundai’s new image is reliable transportation. However, the truth is that any new F1 team (even if you buy one and just change the name) is going to run at the back of the pack for a few years, losing races and blowing up engines (ala Lotus at the last race where the driver had to literally get out of the car and grab a fire extinguisher from the trackside).

    So:
    Choice A - spend a lot of money and remind people that your cars aren’t winners or even reliable?

     Choice B – spend less than half that money blanketing Europe with advertisements and giving discounts on cars?

    A no-brainer, IMHO.

    As for the race in Korea.   This is going to be a lot of fun to watch, if you’re an F1 fan simply because nobody has ever practiced there – Hell, no one has ever driven anything but paving equipment on that track.  It’s going to be a circus, and it’s going to separate the men from the boys I think.  Personally, I’d be setting the ride height up about 2 feet for what I’m sure is going to be a very bumpy disintergrating track.  Maybe to the extent you’d be better off spraypainting “Red Bull” on the side of a Jeep and entering that.

    I can’t wait!

  • avatar
    JJ

    The estimated YEARLY budget of Toyoda was $300+MM. This was also the case when the $ was actually worth something. Some of that was provided by sponsors (Panasonic) but you can safely assume the majority of the bill was footed by Toyoda. It didn’t work out for them mainly because they were too conservative. In F1, to win you pretty much need to cheat without breaking the rules (think flexwings, mass damper, double diffuser, double petrol tanks, F-duct, 3rd pedal etc etc). This is what makes F1 awesome and bleeding edge technologically but Toyoda was never prepared to really play that game in F1, although they did steal some Ferrari blueprints at some point and did it before in WRC, leading to pretty much their only real autosport success. The project was also marred by bad management. Ove Andersson was good but then they had too many changes and people without any knowledge of racing like Howett in charge, who would blame and sack the drivers for the lack of performance while most of the time, the car just wasn’t consistently quick enough. They also paid Mike Gascoyne too much money to design average cars on the basis of his previous succes at Ren0 that he has never been able to come close to replicating and his frustration clearly showed in his conduct.
     
    Then the regulators made a big mistake; the ban on engine development and the way this was implemented. Before the ban, manufacturers with a great history and tradition in building engines like BMW and Honda generally made the best engines. This was an important competitive advantage for them since the chassis the teams they supplied used weren’t the best. Toyoda had also managed to develop a powerful unit. Mercedes on the other hand had their engines developed by Ilmor (they had already bought them out though) and after the success of 98 and 99 they hadn’t been able to keep up with the others on power, resulting in terribly unreliable engines that would break about 40% of the time, especially in the hands of their favoured child Raikkonen (just search raikkonen, engine on utube).
    Next, a couple of things happened, first of all, one year before the ‘engine freeze’ new 2,4L V8s had to be developed, which meant everyone had to start from scratch. The engines would then be ‘frozen’ at the end of the year for the years to come (till 2013 I think) and all use the same ECU. Second, the FIA in all their wisdom commissioned the development of the ECU to a full subsidiary of McLaren (driving with Merc engines). Sure enough, the year after the previously hopeless Merc was suddenly the engine to beat and was pretty much guaranteed to remain as such until 2013 because of the freeze (except for some tiny changes if the manufacturers could manage to succesfully lobby with the FIA). Obviously, although manufactureres like Honda and BMW never openly beeyatched about this it must have been tough to see one of their traditional advantages disappear like snow in summer and not by competition, but by FIA politics. They pretty much had nothing to gain for years to come, except if they would come up with a killer chassis which was never their strength.
     
    For new entrants, it’s a blessing and a curse. A blessing, cause if they previously weren’t financially or technically capable of keeping up with the relentless development they now no longer have to and it’s relatively easy for them to build an engine that comes closer to par than they probably would have been able to achieve before. A curse, because manufacturers can no longer use and show off their superior engine building prowess. It means that all the competition that goes on now is aero and mechanical grip and that barely translates to normal road cars, neither in terms of ‘the hearts and minds’ of potential buyers (unlike engines) nor in terms of trickling down that awesome double diffuser to your Hyundai Tucson.
     
     

  • avatar
    JJ

    Some epic F1 footage for the ones who appreciate it:
    Senna, Donington 1993 (including not so graceful mention of Michael Andretti)

     
    And Villeneuve VS Pironi (Imola 1982)
     

     
    The last one is kind of sad to watch though, considering what happened next. Most of you will already know but the summary: Villeneuve felt Pironi screwed him over this race and tried to doggedly better Pironi’s provisional pole at Zolder qualy one race later. In the pouring rain he hit Jochen Mass and died. Later that year, Pironi had a similar crash while leading the WDC, crushing his legs so badly he could never race again (though he tried). He was killed 5 years later in a power boat race. Pironi’s gf was pregnant at the time and happened to give birth to twin boys who were called Gilles and Didier.
     

  • avatar
    James2

    IF Hyundai was stupid enough to enter F1 (and I’m a F1 fan) now is the time to do it. That supreme idiot Max Mosley has gutted everything that used to define F1 and, above all, imposed a spending cap. This means Hyundai wouldn’t blow as much money as Toyota infamously did. Rather than buy a backmarker team –aka rolling chicane– Hyundai should come in as a partner to a team like Williams. They know how to make a good car, they just don’t have that extra something to take it to the next level during the season.

    • 0 avatar
      JJ

      Meh…Williams have built some amazing cars in the past, particularly in the 90s, but those days have long gone past. They couldn’t really deliver in the early part of this decade despite having the most powerful engine in the BMW V10 either.
       
      The only way you can be sure to buy success in F1 it seems is to hire Adrian Newey. Even Ross Brawn is overrated.

  • avatar
    don1967

    What could Hyundai possibly gain from F1 experience, other than a smaller bank account?   The company is already putting comfortable, reliable cars with world-leading powertrain technology into driveways everywhere, at prices that kill the competition.
     
    As for image, let Honda spend millions on F1 so it can peddle bloated Accords and video-arcade Civics.  That is last-century marketing.

  • avatar
    Toad

    In 2010 I think most people have figured out that F1 has absolutely nothing to do with how their Accord, Camry, or Sonata performs.  NASCAR and Indy fans seem to figuring this out too.  Really, what relationship does the track have to the average passenger car or truck anymore?
     
    Most of these sponsorships are just excuses for auto and advertising executives to run up their expense accounts and get VIP treatment at the track on the stockholders dime.
     
    By avoiding race sponsorships entirely Hyundai can focus on making good cars at great prices.  Smart.

  • avatar
    Lokki

    “The only way you can be sure to buy success in F1 it seems is to hire Adrian Newey.”

    What was the old saying?  “Who needs a Schuey when you’ve go a Newey”

  • avatar
    MBella

    What I find funny about the Honda and Toyota thing was that their cars were the most competitive when they pulled out. Honda had the best car by a substantial margin for ’09 as can be proven by Brawn’s dominance of last season, and last years Toyota was probably pretty good as well if not driven by awful drivers. When Glock injured himself and Kobayashi filled in for him, Kobayashi was in the top ten in his first race and first weekend ever behind the wheel of an F1 car, and he scored points in his second race. He also made that second race very uncomfortable for championship winner Jensen Button. The Toyota car would have given better results with a top driver.

  • avatar
    Kendahl

    Formula 1 is the automotive equivalent of seeing how many angels you can get to dance on the head of a pin. The best way to develop a reputation for designing and building high quality, reliable cars is to design and build high quality, reliable cars. With a $300 million budget, Hyundai’s engineers could make the Genesis drive like a BMW or Porsche and be as cheap to maintain as a Honda or Toyota.

    • 0 avatar

      Actually, $300 million is only about a third of the cost of developing a new car. I remember when Ford congratulated themselves on only spending $700 million on a new Mustang. I think it costs about a billion to make a completely new car, two billion if there are new engines and transmissions involved.
       
      To give you an idea, $300 million was what GM budgeted for marketing the current Malibu when it launched.
       
      $300 million can buy a lot of development but I’m not sure that it would turn a Hyundai into a BMW.

  • avatar
    niky

    Kobayashi was good in that Toyota because he’s good. Vettel also had some good runs in the Scuderia Toro Rosso before he was transferred to the “main” Red Bull Racing team.

    -

    It may no longer be as painful to enter F1 as before, what with customer engines and a relatively stable set of rules, but there’s no profit in it for a manufacturer thanks to the engine freeze.

    For big-time advertisers like Red Bull, there’s a lot of good reasons to be in F1. For any manufacturer that’s not Ferrari, there isn’t. I pity Renault… the engine freeze has hit them hard. But I guess the best revenge is that a Renault-powered car is likely (as long as nobody messes up big-time in Korea) to win the championship this year. The only question is: which one?

    • 0 avatar
      JJ

      I agree. I think Renault though might have found an acceptable balance of what they pay and what they get out of it. The team is now 75% owned by Genii capital, so that decreases the bill a bit, yet it’s still called Renault F1. I also wouldn’t be surprised if Bernie himself made sure Renault stayed after BMW and Toyoda left last year by giving them a cash infusion. That actually happens quite a lot with struggling teams, Bernie keeps them afloat with his own money for a while to prevent the embarassment of the team having to pull out resulting in less than 20 cars on the grid. If Renault would have left there would only be the FOM subsidized Ferrari unit, FIA powered Merc and the FIA commissioned Cosworth left.  But anyway, this Ren0 construction wouldn’t be available or helpful for new entrants, so your point still stands.


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