Japan Brief/FPCJ, No. 0972
November 20, 2009


Toyota’s Withdrawal from F1:
Japanese Auto Industry Reaches a Turning Point

On November 4 Toyota Motor Corp. officially announced that it will withdraw from the Formula One racing championship, the pinnacle of motor sports, at the end of this season. According to Japan’s major newspapers, since Toyota will not supply engines to other teams or engage in joint management, the announcement means a complete pullout from the F1 championship. Regarding its withdrawal announcement, which follows that of Honda Motor Co. last year, the newspapers reported that it was symbolic of a change of course in the auto industry toward emphasis on the environment. They observed that environment-friendly eco-cars hold the key to the future of the Japanese auto industry.

Japanese Automakers Pulling Out of Motor Sports

At a press conference held in the early evening of November 4, Toyota President Akio Toyoda made it clear that the worsening of the business situation was the reason for Toyota’s F1 withdrawal. He explained, “There were heated discussions within the company, but in view of the current economic conditions, we decided that there was no option but to withdraw” (Asahi Shimbun, November 5). According to the major newspapers, due to the downturn of the global auto market, Toyota is expected to register a large operating deficit for the current fiscal year.

Since the outbreak of the financial crisis Japanese automakers have announced their withdrawal from motor sports one after the other. Honda has already pulled out of the F1 since the end of last season, and Bridgestone Corp., which monopolizes the supply of tires for F1 cars, has announced that it will cease supplying tires from 2011. So following the latest announcement by Toyota, there will soon be no Japanese makers participating in the F1 championship at all. Furthermore, Suzuki Motor Corp. and Fuji Heavy Industries Ltd. announced the suspension and termination, respectively, of their participation in the World Rally Championship from the end of last season, and Daihatsu Motor Co. and Mitsubishi Motors Corp. have respectively discontinued their participation in the Japanese Rally Championship and the Dakar Rally.

It is not only Japanese makers that are withdrawing from motor sports, either. According to newspaper reports, BMW AG of Germany has decided to quit F1 at the end of the 2009 season, and French automaker Renault SA has convened an emergency board meeting to consider withdrawal.

From “Speed” to “Environment”

While the major newspapers reported that Toyota’s F1 withdrawal was a business decision necessitated by its slumping performance, they also offered the view that it reflected the present state of the auto industry, which is facing a once-in-a-century turning point toward the introduction of environment-friendly and non-gasoline vehicles. The Yomiuri Shimbun (November 5) noted, “Toyota’s withdrawal, which follows that of Honda, symbolizes the fact that the auto industry is changing course from speed technology to environmental technology.” The Asahi (November 5) similarly remarked, “Toyota’s withdrawal symbolizes the fact that the F1 is being left behind by the changing times in which environmental performance rather than speed now holds the key to survival.” The Yomiuri editorial on November 10 also commented, “. . . the gas-guzzling F1 grew incompatible with Toyota’s need to promote its technological strengths in response to consumers’ growing environmental awareness.” It added, “Toyota’s withdrawal from F1 may be a move that symbolizes a strategic shift in the automobile industry.”

Eco-cars, which will hold the key to competition among automakers from now on, are thought to require a huge investment in their development. Indeed, according to the major newspapers, Toyota is going to channel the tens of billions of yen that it invested every year in the F1 races into the development of eco-cars and other environment-related projects and seek to focus its investment on eco-cars. In the press conference on November 4 Toyota President Toyoda emphasized that “Without a doubt environment-friendly cars are going to be the most important issue from now on” (Yomiuri, November 5). Nissan Motor Co. has already invested 500 billion yen in the development of electric vehicles (EVs) (Asahi, November 5), and Honda, which decided to withdraw from the F1 even earlier than Toyota, has diverted the 50 billion yen or so a year that it spent on the F1 to its eco-car sector. Honda plans to introduce three new hybrid vehicle (HV) models in 2010 and 2011, aims for HVs to account for 10% of its annual sales volume worldwide, and is also considering EV sales in the United States (Yomiuri, November 5).

Tokyo Motor Show also Emphasizes Environment

The automobile industry’s shift to an emphasis on the environment was also strikingly evident at the 41st Tokyo Motor Show, which closed on the same day as Toyota’s announcement of its F1 withdrawal. Due to the impact of the recession and other factors, participation by leading makers in Europe and the United States was greatly reduced, but nevertheless Japanese automakers competed with one another at the show by exhibiting their state-of-the-art environmental technology. Toyota, which is driving the new vehicle market with its popular HVs, displayed for the first time in Japan a plug-in hybrid (PHV) that can be recharged from household outlets and can run on its electric motor alone for 20 kilometers per charge. In addition, in view of the possibility that the diffusion of EVs could accelerate depending on national environmental regulations, Toyota also exhibited an ultra-compact EV for the first time in the world. In addition, Nissan has placed EVs at the center of its eco-car strategy. Nissan CEO Carlos Ghosn himself drove a two-seat EV called the Land Glider onto the stage at the show, and the company has announced that after the compact Leaf EV goes on sale in the fall of 2010, it plans to add electric-power functions to its commercial vehicles and luxury Infiniti brand (Mainichi Shimbun, October 22). Meanwhile, Mazda Motor Corp. and Daihatsu exhibited a super-low fuel consumption car that runs for more than 30 kilometers on one liter of gasoline (Yomiuri, October 25), and Suzuki, which has devoted much effort to producing subcompact cars with low fuel consumption, revealed a five-seat PHV that it has developed (Mainichi, October 22).

Due to the fact that Japanese automakers are concentrating their investment in the development of HVs and EVs, and from the perspective of their global strategies as well, eco-cars can be expected to play an important part in Japan’s next-generation automobile industry.

(Copyright 2009 Foreign Press Center, Japan)

*Japan Brief is an original production of the Foreign Press Center, Japan, and does not represent the views of the Government of Japan or of any other body.


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