Delhi recently hosted the first international formula 1 championships in India. In the middle of the hype and excitement, I was wondering if there was any benefit to the Industry and society from such an expensive sport.
It’s not cheap to be in formula One Race. A good example is that the ‘Budh’ International circuit built in greater Noida cost roughly $450 Million. That is almost the yearly revenue of a mid-sized IT firm. Also not to forget the hospitals and schools that can be built with that money. So why does the Auto Industry participate in such an expensive sport?
I have realized that there are three important reasons why auto industry is involved in formula One.
Auto Engineering is most important factor. Many brands invest in formula one to come up with innovative advances in auto engineering that can be one day put into commercial production.
British, German, American and Japanese auto companies themselves all invest heavily in racing of all kinds for both technology and marketing reasons according to Martin Thomas a partner in an advisory firm.
Branding is perhaps the second important factor. A few notable examples are Toyota, Honda and PETRONAS that have got into the sport to improve their brand Perception. Recently Toyota and Honda have pulled out but I believe they have achieved their branding objective.
Martin Thomas recalls how Volvo used Touring Car Racing in UK and Germany as a major tool in changing perceptions of the brand from staid, family oriented safety obsessed to a more dynamic perception for. Also Skoda used racing to move into the premium segment. In formula 1 Ferrari has been positioning itself as a race leader in order to keep their aura of a premium sports brand intact.
Technology & Product Development
Finally new technology and product development is the third factor. Shell for example has been associated with the Ferrari team for a long time and uses its experience from the tracks to engineer better grades of automotive fuels. Similarly a Carbon fiber was first introduced in the race tracks as a light flexible material which is now.
According to Professor Ted Leithart, Formula 1 and aerospace are two fields where new technologies are tested. For example, Hercules he says in the late 1970s introduced a new material called carbon fiber? In his first job after graduating in Mechanical Engineering carbon molds were used in manufacturing ceramics and later used in house applications. In the late 80’s when Prof Leithart was with GE aircraft engines, Carbon fiber engine air intakes and fan blades were used. Now we have Ferraris and other road cars using carbon fiber as the basis of their frame he concludes.
Though it is an expensive sport, there is a lot of advantages in engaging in it. Whether India already dealing with many social and health issues needs to spend that kind of money on formula 1 is a debate which can have many conclusions. I would leave that question for the readers – Let us know what you think!