Toyota in F1 - How long ?

[rev-erend]

Well with the first ever huge loss posted by Toyota - I guess the with drawl of the F1 team is only a matter of time..

Anyone think they will remain in F1 ?

[Stu R]

Yes. They still have a hell of a lot of money. In the event of them leaving F1 it won't be because they're rubbing pennies together.

[Plug550]

They've turned an $11b profit into a $1b loss in 12 months, so are therefore burning cash ast $1b per month. I think they will take a good long look at any forms of expenditure. I wouldn't want to bet too much on them staying long. It rather depends on how the first couple a races go. If the new motor is a dog, then it'll be an easy descion to make. If it's a winner, then I would imagine they would see the season out. No presuure there then, but when was it any different?

[Alex97]

Plug550 said:

They've turned an $11b profit into a $1b loss in 12 months, so are therefore burning cash ast $1b per month.

Err that's not strictly accurate, is it?

[skinny]

maybe they put enough away during the boom to see them through the bust? i don't see them pulling out, they were finally getting somewhere (even tho i really struggle to see what toyota get out of F1...)

[Stu R]

Alex97 said:

Plug550 said:

They've turned an $11b profit into a $1b loss in 12 months, so are therefore burning cash ast $1b per month.

Err that's not strictly accurate, is it?

or slightly for that matter.

[Plug550]

Stu R said:

Alex97 said:

Plug550 said:

They've turned an $11b profit into a $1b loss in 12 months, so are therefore burning cash ast $1b per month.

Err that's not strictly accurate, is it?

or slightly for that matter.

Why?

OK, they may not be burning it, but they certainly aren't making it either. If the current trading conditions remain the same, it's a fair assumption that next years numbers will remain the same, ie $1b loss (or $1.7b according to Autosport). My assertion is that the trading conditions have only worsened in the last 3 to 6 months, before that, new car sales were only down 5-10% on last year. Therefore the rate of acceleration of losses has increased dramatically over the last quarter. At this rate, losses will be much greater next year.

Or am I missing something? My business works on a much smaller scale, only turning over £7m last year

[Alex97]

Plug550 said:

Or am I missing something? My business works on a much smaller scale, only turning over £7m last year

You own a business that turns over £7m a year? Yet you can't work out why a business that made a profit $11 billion in 06/07 but made a loss of $1 billion in 07/08 hasn't been burning cash at $1 billion a month?

Think about it. Their profit has reduced by $12 billion. They haven't been spending it themselves, it's that their income has been reduced. You don't sell snake oil do you?

[Gun]

Hopefully if they leave F1 they'll go back to LeMans and resurrect the GTone!

[10 Pence Short]

Either way- like the other Japanese manufacturers, they will be seriously considering their options. Toyota have set up a specific board to identify cost savings.

My own opinion is that unless they challenge at the front in 2009, they won't be entering in 2010.

[flasher]

Alex97 said:

Plug550 said:

Or am I missing something? My business works on a much smaller scale, only turning over £7m last year

You own a business that turns over £7m a year? Yet you can't work out why a business that made a profit $11 billion in 06/07 but made a loss of $1 billion in 07/08 hasn't been burning cash at $1 billion a month?

Think about it. Their profit has reduced by $12 billion. They haven't been spending it themselves, it's that their income has been reduced. You don't sell snake oil do you?

Only on PH could you see a law student with a Audi TT lecturing a businessman with a Ferrari 550 Maranello........unreal.

[Stu R]

Plug550 said:

Stu R said:

Alex97 said:

Plug550 said:

They've turned an $11b profit into a $1b loss in 12 months, so are therefore burning cash ast $1b per month.

Err that's not strictly accurate, is it?

or slightly for that matter.

Why?

OK, they may not be burning it, but they certainly aren't making it either. If the current trading conditions remain the same, it's a fair assumption that next years numbers will remain the same, ie $1b loss (or $1.7b according to Autosport). My assertion is that the trading conditions have only worsened in the last 3 to 6 months, before that, new car sales were only down 5-10% on last year. Therefore the rate of acceleration of losses has increased dramatically over the last quarter. At this rate, losses will be much greater next year.

Or am I missing something? My business works on a much smaller scale, only turning over £7m last year

Apologies for 'copping out' by quoting others, however in another thread flemke explains far more eloquently than I would have.

flemke said:

Wrt Toyota, $1.1B is pocket change to them. The last I heard, they had cash reserves of $20B. Furthermore, a company with such huge plant and equipment investment is going to have huge non-cash depreciation charges against earnings every year. It is quite possible that, despite losing $1.1B, Toyota was cash-flow positive in FY '08.
If Toyota were to drop out of F1, it wouldn't be because they needed the money.

Though my reply, whilst a bit open ended and throwaway, was more regarding the incorrect assumption that they're 'burning through' said billions.

I can see them leaving F1 as it happens, maybe even sighting financial reasons, however I'm fairly confident there will be other reasons for it we'll never hear of in anything other than from a rumour mill.

Glad your business seems to be prospering

[flasher]

Trouble is Toyota will be forced to lay off people at some point which will then make their F1 activities look a waste of money. Whilst I agree that they probably have a massive pot of cash saved up they will still be under pressure to pull out, particularly as Honda, Suzuki and Subaru have made moves to distance themselves from motorsport.......

[hot metal]

Anyone notice how its all Japanese manufacturers pulling out of motorsport,makes me think they never really had a passion for it but merely saw it as a marketing exersize.

[skeggysteve]

hot metal said:

Anyone notice how its all Japanese manufacturers pulling out of motorsport,makes me think they never really had a passion for it but merely saw it as a marketing exersize.

As far as I'm aware all the manufactures view any involvement in motor sport as a marketing exercise.
But some may be more able to see the engineering benifits.

WRT Toyota the BBC report says they have forecast a loss, for next March, of 150bn yen. That is compared to a profit last year of 2.27 trillion yen.
Autosport quotes different figure but the exact numbers are so mind boggling that they don't really matter.
Toyota has/if forecast to make a loss for the first time in 71 years that is the key.

The question is do Toyota need to throw more money at their (very) unsuccessful F1 team or not. Don't get me wrong I don't want them to go but I don't think they will be around in F1 for much longer.

Link to BBC article

Link to Autosport article

[Frik]

flasher said:

Only on PH could you see a law student with a Audi TT lecturing a businessman with a Ferrari 550 Maranello........unreal.

Too right. I'd hate to be on a forum where people would talk down to you if you didn't drive the right car.

As has been said, if Toyota pull out it won't be because they have to. This is only newsworthy because they've been so damn good at making money.

[andyps]

hot metal said:

Anyone notice how its all Japanese manufacturers pulling out of motorsport,makes me think they never really had a passion for it but merely saw it as a marketing exersize.

Actually, the one manufacturer who I would have considered did not just do F1 as a promotional exercise were Honda, and I don't mean because of the results they had recently. They saw it as something they could do, and which was part of the "Power of Dreams" - enabling engineers and others within the organisation to pursue dreams of innovation etc. Shame it didn't work out.

If done properly, it is unlikely that a manufacturer would pull out of a pure promotional exercise like F1 just because of poor sales - it actually is the ideal time to be involved to gain differentiation and therefore benefit. So long as the results justify it of course.

[rev-erend]

flasher said:

Trouble is Toyota will be forced to lay off people at some point which will then make their F1 activities look a waste of money. Whilst I agree that they probably have a massive pot of cash saved up they will still be under pressure to pull out, particularly as Honda, Suzuki and Subaru have made moves to distance themselves from motorsport.......

Very true ..

Only the companies that react very quickly and shed workforce quickly and other big expenditure will survive.. big companies will be particularly at risk as over production can quickly build up.. guess Toyota would know all about this with their huge production capability.

Don't think Le Mans is actually a cheap option either .. they said the GT1 cost almost as much as a season of F1 but can't believe that myself.

[Alex97]

flasher said:

Alex97 said:

Plug550 said:

Or am I missing something? My business works on a much smaller scale, only turning over £7m last year

You own a business that turns over £7m a year? Yet you can't work out why a business that made a profit $11 billion in 06/07 but made a loss of $1 billion in 07/08 hasn't been burning cash at $1 billion a month?

Think about it. Their profit has reduced by $12 billion. They haven't been spending it themselves, it's that their income has been reduced. You don't sell snake oil do you?

Only on PH could you see a law student with a Audi TT lecturing a businessman with a Ferrari 550 Maranello........unreal.

Am i wrong then? Have i fallen into a sarchasm?

Edited by Alex97 on Monday 22 December 21:54

[mywifeshusband]

There's a big difference between cashflow and P&L. Cashflow is everything. Toyota have not been building cash reserves (assuming that the profit generated cash) recently compared to previous year(s).
Don't let a lawyer run your business.

Cash is everything in the short term, medium term and long term. Profit can come and go as long as a company has the reserves to manage and survive.