Continental shift, F1's race into emerging markets

LONDON, England (CNN) -- Not long after Lewis Hamilton enjoyed his second grand prix victory, at Indianapolis, it was announced that Formula One was ending its relationship with the circuit. There will be no United States grand prix in the 2008 season.

The sport that relies so heavily on corporate sponsorship had signed itself out of the world's most significant market. Yet F1 supremo Bernie Ecclestone seemed unconcerned by this, saying that there were "bigger markets for us to be in in other parts of the world".

Formula 1 and the United States have had an uneasy relationship for many years. It isn't a significant sport in the US, where IndyCar, Champ Car and Nascar dominate the motor racing arena. In the last 25 years there have only been 13 United States Grands prix (including one held on a temporary track in the parking lot of Caesars Palace, Las Vegas). F1 in the USA has been a sideshow. Of all the companies who sponsor F1 teams, it is AT&T -- headline sponsors of Williams -- that has the most to lose from the loss of a US grand prix, because it is the company's most significant market.

F1 is heading East and towards the emerging markets: next year will see the debut race in Singapore, Malaysia will hold its tenth Grand Prix and China its fifth. South Korea will start hosting a Grand Prix from 2010.

It used to be said that the car that wins on a Sunday drives out of the showroom on a Monday. In truth the relationship between F1 involvement and automobile sales is a complex web of brand association -- no new-car buyer genuinely believes that there is significant shared technology between, say, a Renault F1 car and a Renault Megane hatchback. But F1 involvement influences the way buyers perceive the brand. And the latest battlegrounds for motor manufacturers are the emerging markets in the far east in general, and China and India in specific.

India has crept into F1 quietly and quickly. Narain Karthikeyan became India's first Formula 1 driver when he drove for Jordan in the 2005 season. He brought with him Tata sponsorship. Tata is India's largest automobile manufacturer. Today Karthikeyan is a test driver at Williams and the Tata sponsorship has transferred with him.

This year Kingfisher Airlines commenced a sponsorship deal with the Toyota F1 team. The Bangalore-based airline is owned by Dr Vijay Mallya chairman of United Breweries (brewer of Kingfisher Beer). The airline currently operates between 34 domestic airports but it has ordered five Airbus A380 "superjumbo" aircraft to allow for international services between Bangalore and San Francisco, and Mumbai and New York City.

Mallya's next move surprised many. In September Mallya joined forces with Spyker F1 boss Michiel Mol to buy out the stricken team. The Dutch luxury car maker, who gave the team its name, had suffered financial difficulties and, in August, announced that it was to sell some or all of its stake in Spyker Formula 1.

At the time, team principal Collin Kolles hinted to CNN that a rescue deal was in place. But it was thought that the team might have to retain the "Spyker" name -- an unattractive proposition for any new owner.

"You even cannot change name more than once in five years without agreement from the other teams," said Kolles, "It's speculation, the name might change, but it might not -- even with different ownership."

But on October 24 the FIA, the sport's governing body, announced that a name change had been accepted. And a most audacious name change at that. For the 2008 season, the team formerly known as "Spyker" (and "Midland" and "Jordan"), will become "Force India". The team logo is "F1", where the "F" is formed from a stylized Indian flag. It's an unambiguous statement: India and F1 are becoming very good pals.

The new driver line up has yet to be announced but Mallya has made it clear that he'd like to have an Indian driver in the future. But Adrian Sutil is contracted to the team for 2008 and Mallya is keen for him to continue. The team wants to partner him with a more experienced driver, which would rule out any Indian driver for 2008.

Now he has his "Force India" team, Mallya is determined to bring F1 to India -- as soon as possible. The Indian Olympic Association reached an agreement with Ecclestone to stage a grand prix in New Delhi from 2009 and Mallya hopes to work on a street circuit in the region with Hermann Tilke, the designer of most modern Grand Prix circuits. However there is a dispute between the Olympic Association and the FIA-affiliated Federations of Motorsports Clubs in India (FMSCI). The FMSCI states on its website that it "the only national sports federation recognized by the Government of India for the promotion and control of motorsports in India".

Whether or not an Indian Grand Prix adheres to Mallya's timetable is a subject for contemplation. But it's clear that it's going to happen. And with a market for automobiles estimated to grow at a rate of 9.5 per cent, year-on-year (to an estimated 13 million units by 2010) it's very easy to see why.

 

On a side note, I'm all for freedom and benefit of the doubt but some of these new countries aren't exactly "loving" when it comes to the "F1 crowd".