Does Racing Make Cents?

Mike Smitka
by Mike Smitka

Well, clearly racing does make money for someone, at least enough to be a mini-industry. Does it though make sense for the Fords and Hondas of the world? Two students staked out roughly opposite positions on racing’s value as a technology driver; I’ll leave my thoughts to the end.

Clearly there is a marketing angle. A century (or more) ago racing helped publicize this new-fangled thing, before most people had driven one. That was true in Europe, in the US, and in Japan. That need is long past. In the 21st century, how much is a good performing team worth in advertising? – does what wins on Sunday sell on Monday? Does racing disproportionately attract likely car purchasers? Is it attracting as many as in the past? And does the audience for racing in the EU or Brasil (to pick but two countries) resemble the US? Anyway, this post is not about racing as a sport.

Another minor angle that I won’t argue further is that, if you are going to race, then by all means use it to train engineers. Honda is famous for that; top management, at least on the engineering side, must cut their teeth in racing at Honda R&D. Similarly, Ford just opened a technical center in North Carolina devoted to motorsports, and talks of the value of racing to attract good engineers and give them program responsibility at a young age. Well and good, but that’s certainly not the only way to train future leaders, and it’s very expensive. (See more here.)

Our topic – two students and myself – is racing as a proving ground for new technologies? I’m not a racing historian to vouch for details, and I’m sure TTAC’s readers with an eye for detail will pick on us. We can learn from that. But at the same time step back, or rather pitch in: which side of the debate has the stronger case?

First, Joseph Kimbell claims that racing continues to be valuable as a breeding ground for technology. (See “ The Indianapolis 500 and Consumer Car Technology“, Econ 244 blog of May 12th, 2014). His family have made the trek to Indiapolis for a couple generations, as is clear below.

“Yesterday practice opened at the Indianapolis Motor Speedway for the 98th running of the Indianapolis 500. The race is an incredibly exhilarating event to take in on TV, but especially in person. I personally view the start of the Indy 500 as easily the greatest moment in sports. Watching eleven rows of three cars coming down the front stretch at speeds surpassing 200 miles per hour is unlike anything else. The speed and competition, however, is not the only benefit the Indy 500 has provided. Many of the technologies we take for granted today stem from developments made on IndyCars.

In the early days of the 500, teams would debut new technology to help gain an advantage. Today the cars are much more standardized, and advancements happen on a series-wide basis rather than team by team. The early teams, however, had much more leeway and took full advantage. Such technologies ranged from the simple to the sophisticated, but all made a contribution. In the inaugural running of the 500 mile race in 1911, the winner, Ray Harroun, outfitted his car with a rear-view mirror, eliminating the need for a spotter to ride along with him. This reduced weight and helped propel him to victory.

Later IndyCars were the first automobiles to use turbochargers, when Freddie Agabashian’s Cummins Diesel Special debuted them in 1952. They are now standard in diesel vehicles and commonplace in gasoline engines. At the time, the turbocharger was designed exclusively to increase speed, but today they are used to get the most out of small displacement engines, enabling down-sizing for fuel efficiency. Ford’s “EcoBoost” engines, for instance, get an incredible amount of horsepower out of a two liter engine. Similarly, Audi’s turbo diesel in the A3 delivers 236 pound-feet of torque while maintaining an EPA rating of 30 mpg city/42 mpg highway. Turbo’s clearly have a big place in consumer car technology.

Other innovations include seat belts, crash data recorders, ethanol fuel, front-wheel drive [ca. 1925, albeit with many precedents] and four-wheel hydraulic brakes. All of these are today standard on passenger vehicles. While IndyCar may no longer be the leader in technological development, F1 certainly has a great deal of technology to offer the passenger car market, including its KERS technology. The future is certainly bright for racing’s connection to the consumer car market.

In contrast, Tyler Kaelin argued that technologies now are more likely to move from road to race. He too loves racing, but prefers Formula 1 to Indy and Nascar.

Since the beginning of the automobile industry in the late 1800s, auto racing has been pivotal in the technological progression and proliferation of the modern motor vehicle. Developments often taken for granted in modern cars are attributable to innovations originally intended to shave seconds from a lap time. Advances in transmissions, engine efficiency and power, aerodynamics, suspensions, and safety technology are examples.

But has auto racing seen the end of its useful life? Has technology reached such a point that advances in racing technology are no longer likely to trickle down to our mundane road cars? Have racing cars distanced themselves so greatly (for safety, speed, and regulatory reasons) that they no longer contribute to a culture of people buying cars because they perceive their brand as a winner?

Take Formula One, the pinnacle of automotive performance. Formula One race teams spend enormous sums to develop their cars; Red Bull Racing has an annual budget somewhere north of US$296 million. Its cars are capable of speeds over 225 mph and 5 g’s of sustained cornering force (about 5 times what your road car can hope to achieve). One has to wonder if the cars have diverged so far from their road-going counterparts that their innovation and sales boosting potential have been diminished.

Some of this is in the name of sport. Pirelli, the official supplier of all Formula One tires, intentionally engineers its tires to fail rapidly and unpredictably to generate pit stops (which break the routine) and not coincidentally to highlight “tire strategy.” Such innovation does not benefit road cars.

NASCAR is another example of racing’s departure from pedestrian vehicles [pardon the image!]. Up until the mid- to late-1960’s NASCAR (National Association for Stock Car Auto Racing) involved stock cars, upgraded slightly for power and safety reasons. A Ford Mustang that you could buy off of the showroom floor was not all that different from what you saw the superstars of circuit race on the weekend. Today the cars employ non-stock chassis, engines, and bodies. Indeed, all NASCAR vehicles share a common body template so that a “Toyota Camry” has the exact dimensions as a “Ford Fusion”. The car in a dealership now nothing common with its NASCAR brethren. (As a result, does a “Fusion” sticker on the front of a NASCAR vehicle really lead to increased Fusion sales?) The key point though is the disconnect between road and race.

As an auto enthusiast and an avid racing fan (of the Lotus F1!) I want racing to continue as a source of innovation and inspiration. However, I fear racing has run its course. Shaving even one second from a lap time is becoming exponentially more expensive as more exotic and expensive materials and technologies are required.

ThatOne possible connection remains: weight reduction. Materials like carbon fiber and advanced aluminum alloys make cars both faster and more fuel efficient. Until recently such materials were too difficult to work with and too expensive to use. Economies of scale and technological developments today mean we do find aluminum, magnesium and carbon fiber in regular cars. However, that doesn’t mean that racing was key.

With the cost of fuel, consumers no longer need (need? does anyone “need”?) the 400+ horsepower gas-guzzling “muscle cars” of the 60’s and early 70’s. Maybe racing does still serve a role, but that role has changed.

Road cars have been a reflection of racing. No longer!

Now it’s the Prof’s turn.

As a judge for the Automotive News PACE supplier competition, which recognizes innovation, we used to see things coming out of racing into high end vehicles and then migrating towards mass market cars. Now PACE sees examples of the opposite. A caution: such examples are not data, and do not a trend prove.

There’s one more possibility: racing is adapting. They need the car companies, and have a strong incentive to lessen the technological disconnect. My claim: If you can’t bring the car companies to the race, you can bring the race to the car companies.

Mike Smitka
Mike Smitka

Mike Smitka is an economist at Washington and Lee University in Lexington, Virginia. He's been a judge of the Automotive News PACE supplier innovation awards since they began in 1994. His household's vehicles are a 2014 Chevy Cruze, a 2013 Honda CR-V and a 1988 Chevy pickup. Find his auto industry course at <a href="http://econ244.academic.wlu.edu/">Econ 244</a>; he also blogs with David Ruggles at <a href="http://autosandeconomics.blogspot.com">Autos and Economics</a>.

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  • Wmba Wmba on Aug 28, 2014

    "The EU and Brasil (to pick but two countries)" Right, the EU is a country. 27 countries in fact. Good lord. Whether racing is applicable to street cars has been debated for decades, since the 1960s. You get the hopeless writers who should be writing advertorials repeating the trickle down theories. However, single- seat racing with mid engines isn't mainstream, although recent F1 turbo engines and hybrid systems seem more likely to have relevance than anything in years. And at least Keith Duckworth invented the four-valve narrow valve angle combustion chamber that any reasonably modern engine features back in the 1966 DFV. I rely on LJK Setright, the only thinking automotive writer besides Kevin Cameron (but he does bikes), who wrote on this years ago. The answer is no - racing does not improve the breed. It's too specialized to apply any knowledge gained to the street car. The McLaren 650 street car has a sort of modern version of active suspension from '90s F1, and is extremely clever. That could eventually become mainstream, but no race car is so fitted. It's banned. So much for inventiveness in racing. As someone mentioned above, suppliers seem to be on the leading edge of new ideas for road vehicles. Racing seems essentially irrelevant in that regard. Let's put it this way - did Citroen use racing experience to design the 1955 DS, still more advanced than what even Mercedes calls ABC body control? No.

  • Ccode81 Ccode81 on Aug 29, 2014

    It would be a balance with the production offering. Ferrari is always fine. Audi's Le Man program seems to be working good, Subaru's dominance in WRC went well for WRX to be legend. On other side BMW and Jaguar in F1 was disappointment when production offering was so nice. Honda during the Mclarren era had nothing sportier than prelude, and situation similar to today's Renault, losing many potential buyers. IMO lancia's success in muddy rally spoiled it's luxury image, and alfa 155 DTM was too cool compare to it's production sedan. But one thing sure is that without racing heritage, it would be hard to obtain any true respect to the marque. Talking about Hyundai.

  • ED I don't know what GM is thinking.I have a 2020 one nice vehicle.Got rid of Camaro and was going to buy one.Probably won't buy another GM product.Get rid of all the head honchos at GM.This company is a bunch of cheapskates building junk that no one wants.
  • Lostjr Sedans have been made less practical, with low rooflines and steeply raked A pillars. It makes them harder to get in and out of. Probably harder to put a kid in a child seat. Sedans used to be more family oriented.
  • Bob Funny how Oldsmobile was offering a GPS system to help if you were lost, yet GM as a company was very lost. Not really sure that they are not still lost. They make hideous looking trucks, Cadillac is a crappy Chevy pretending to be fancy. To be honest, I would never step in a GM show room now or ever. Boring, cheap ugly and bad resale why bother. I get enough of GM when i rent on trips from airports. I have to say, does anybody at GM ever drive what everyone else drives? Do they ever then look at what crap they put out in style fit and finish? Come on, for real, do they? Cadillac updated slogan should be " sub standard of the 3rd world", or " almost as good as Tata motors". Enough said.
  • Sam Jacobs I want a sedan. When a buy a car or even rent one, I don’t want to ride up high. I don’t want a 5-door. I want a trunk to keep my stuff out of sight. It’s quieter, cars handle better, I don’t need to be at the same height as a truck. I have a 2022 Subaru Legacy Touring XT, best car ever, equipped as a luxury sedan, so quick and quiet. I don’t understand automakers’ decisions to take away sedans or simply stop updating them — giving up the competition. The Camry and Accord should not be our only choices. Impala and Fusion were beautiful when they were axed.
  • Spamvw I think you need to remember WHY the big 2 and 1/2 got out of the car business. Without going political, the CAFE standards signed into law meant unless you had a higher gas mileage fleet, you couldn't meet the standards.The Irony is that, the law made sedans so small with low roof lines, that normal people migrated to SUV's and Trucks. Now we get worse mileage than before.
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