Formula None For Hyundai

by Cammy Corrigan

Published: October 19th, 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.

#CammyCorrigan #F1 #Hyundai #Korea

Cammy Corrigan

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4 of 21 comments

Kendahl on Oct 19, 2010

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.

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- Ronnie Schreiber on Oct 20, 2010
  
  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.
  
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Niky on Oct 20, 2010

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?

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- JJ on Oct 20, 2010
  
  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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