Death knell to US GP? America no longer world’s biggest car market
December 26, 2009 by SJ Skid
Filed under Prime & Option, SJ Skid
This is news that Bernie Eccelstone no doubt has seen, and probably saw before the rest of us.
J.D. Power & Associates has estimated that people in the U.S. bought 10.4 million cars in 2009. The country’s all-time high? 17.4 million, back in 2000.
But the real kicker is this: The biggest market? China, at 12.7 million.
The numbers come from a NY Times article on the state of automakers, which is worth a read for those watching the state of the industry. It is a nice quick overview.
But this “biggest market” news certainly runs counter to the argument so many — including us here at F1B, where Grace is nearly as hungry for a US GP as she is a second breakfast of pie — make about the need for Formula 1 to be in America.
It’s hard to see Bernie not looking at these numbers and saying, “We don’t need a second race in North America. And I’m still not convinced about Canada.”
Keep your ears out to hear whether this does get any play in F1 circles.
Loading ...
It would be interesting to see the comparison of sales in terms of USD instead of number of units. China surpassing the US in shear volume is not too surprising to me, but I would be surprised if they had a larger value.
Every brand end of the day has their margins ear marked and hence the number of units sold are directly proportional to monetary value generated as well.
And this rule is valid for all sectors, FMCG, Electronics, and even Automobiles.
Another factor that one needs to take into account in case of emerging economies is that the MNC brands are looked upon as “Status Symbols” and MNCs exploit that mentality of customers and make more margins than what they make when the sale the same product in the US.
I was recently doing price comparison of GM’s models sold in the US and those in India and China. You would be surprised to know that the models that GM sells in China and India are sold at 2000 USD extra in Sedan class and anywhere between 5-10 grand in luxury car segments. Now for the kicker a friend of mine who was recently in Beijing on Business trip was telling how Chinese people are making complete payments in hard cash and are on waiting list to get their GM cars.
Irony is GM manufactures these models in China and still manages to make more money on these models than they would have made selling it in the US. Its just that they are cashing on the “Status Symbol” mentality of Customers there rather than just “convenience” mentality of the US customer
This article might interest you – http://www.nytimes.com/2009/12/10/business/economy/10consume.html
You should see The prices in some European countries. They buy big good cars at the price of super cars in the US and small cars at the price of big good cars at the US.
Half of the poor Europeans will be just fine economically if they lived in the US.
I think a point to be made is that we unlike the Chinese, but the cars that are in the sport. The Chinese buy a lot of state sponsored cars that nobody has ever heard of. That is not to say they don’t buy the Mercedes and toyotas but when the manufacturers were in the sport heavy, we bought more of them than our friends across the pacific pond.
WFP – while we the fans blame Bernie of not “moving with the Times” and expect him to get a “Reality Check”.
Our statements like “The Chinese buy a lot of state sponsored cars that nobody has ever heard of.” Are not exactly reflection of “Reality Check”
The Article that SJ has quoted here and I have referenced in my post are pointing to the current state Chinese are waiting in queue for Impalas and Malibus, and not on credit/bank loans, but with hard cash in hand ( this is from recent visitor to the country). The GMs and Daimlers and Toyotas are encashing on this “Status Symbol” purchase mentality and selling the Chinese and Indians Cars that are “Manufactured in China” at a Higher price than they sell that model to their American Customer.
Of course with Bernie(or Max), he can connect totally irrelevant things to justify the decisions he takes
All good points; my worry is Bernie simplifies it down to: The US isn’t even the biggest car market anymore, so why do we need to go out of our way to hold a GP there?
I could have made that clearer; post-Christmas fail! :)
I think Bernie will make a GP even in the fifth floor of hell if they payed him enough. And anyway now most manufacturers are out of F1. Bernie is interested only in the money he makes.
And Bernie is almost 80. He won’t be El Supremo forever; maybe the rights holders will be a little less greedy after he’s gone. I really can’t understand why the guy is still so profit driven; he certainly has all the money he can use and then some. It will be refreshing to (possibly) have someone in charge who has more of a sense of F1 history and tradition than we have seen for the past 15 years, although of course there is nothing to indicate that that will be the case. We look at F1 as sport, Bernie et al look it as a business. There must be some happy middle or the real base will be lost. I thought the track in Abu Dahbai (sp) was a spectating abomination that made the race very hard to follow. Give me some grass and trees and hills.
I agree that Bernie may use that as some cheap ammo…but Bernie should think about it for a second…china is the biggest but their race=fail! I hope he would not go that low but Bernie has been lower and really hates us in the states.
Bernie doesn’t hate anyone. He just goes where the money flows. Obviously the US weren’t willing to pay him lots of million like others. And who can play them. It’s not like the country if full of F1 fans that demand an F1 GP.
Bernie is not going to change his ways till his “Current Revenue Model” falls flat on its face.
As Gerard Lopez pointed to Bernie (and to larger extend the other team bosses in F1 Paddock) Its time F1 changes its Dependence on TV money based revenue model and adopts more of Internet based approach, give free with Advert revenue as the model. I only hope the Bernie and other Dinosaurs in F1 realize its time to evolve or perish.
I am willing to give Bernie and you much more credit than simply pegging the future of a US GP on vehicle sales. Also, let us be all inclusive with our geography; the Republic of Mexico is part of the North America. All three countries have had or continue to have Grand Prix races.
Car sale figures are projected to go up this month according to J.D. Powers and Associates. They are projecting December 2009 sales of 1.03 million. If one takes that as gospel and expands it to twelve months you are looking at 12.36 million – right up there with China. Unquestionably, there are many other factors involved with selecting the U.S. for a future Grand Prix – money and F-1 politics play a significant role.
I stand corrected
As China’s economy grows and gets more modernized, of course they are going to be selling more cars. However, I bet a vast majority of those cars sold in China this year were people/families buying their first car ever. As people trade in their bikes and mopeds for cars, that number is only going to grow.
What kind of cars they are selling? I am sure not very many that are represented by the few manufacturers that are left in F1. Wasn’t a company in China working on a $5,000 car? Just cheap cars to get around town in. Nothing that would really draw interests from racing fans I am sure.
I think you are thinking of the Nano Tata (I think I have that right). Indian maker.
I’m going to chime in with Robert and Monad on this one. Manufacturers, in my opinion, were a huge reason to get back tot he states but ultimately TV revenue will driver Bernie’s decision and I suspect many teams still represent sponsors who are looking for increased presence or perhaps penetration in the US market. just my hunch.
last i heard,america is still mercedes,ferarri and bmw’s number one market,anyway i think us americans will just keep watching it on television i guess,by the way i live in charlotte north carolina,probably 20 minutes from USF1 headquarters,it is not really a big deal around here yet,this being nascar country and all,can imagine it will be when they get on the grid
Comparing car prices in different countries can be tricky because tax plays a big role. The socialist Chinese govt may be forcing prices a bit higher to control numbers, just like socialist European govts control prices to get eveyone driving 1.1L shoeboxes instead of sensible 5+L V8s. I don’t know how the socialist US govt fixes prices but I’m sure they must.
The other thing is that cars often get spec’d to get the price point where it can be competitive, so different markets can have the same car with quite different features. Maybe in the US the cars are sold with some of the non-essential features deleted, like seatbelts, quality plastics, decent handling etc.
WFP I don’t know what state sponsored cars you are talking about because I think most of the cars there are ones you would recognize; VW, Honda, Nissan, Toyota etc. Google some images of china and you will see.
Just to throw another point out there, S. Korea is getting a GP and they don’t even have foreign cars there!
there are a number of chinese car companies,one of them recently purchased the tooling for the saab 9-5 from GM,another is trying to buy hummer from GM,there was one that was trying to buy volvo from ford to,some of these chinese companies will invade america soon,so make no mistake,america is still a important car market,and i am sure bernie knows it is not all about car companies in f1 anymore,there are other global companies involved in f1,like fedex,dhl,at&t,etc,america is still the media capital of the world also,when greedy bernie leaves the race will return
If Yugos were still around, would 12.7 million of those POS cars constitute a No.1 ranking? Yeah….riiiiight. Bernie is smart and would never point to that as being the No.1 car market. The question remains, what are the import sales vs. domestic sales? If 3/4 of that is domestic…the whole number is rubbish in terms F1 manufacturer exposure….total BS. What about Canada? What kind of yearly sales do they generate? Bet it is somewhat less than US sales and yet they have a race. NEWS FLASH for the writer and readers….sales figures have ZERO to do with ANY country getting a race. It goes to the highest bidder. Simple enough for ya? If yearly car sales had ANY bearing on it then the manufacturers would have told Bernie to get your troll arse BACK to the US.
“This just in….the worlds largest consumer of Hungarian Goulash….Hungary!!” Weeeeeeee……they deserve TWO F1 races for THAT!
And to Royce….YOU Google “Chinese made cars” and YOU will see your comment weak.
Here are the REAL Chinese car logos…recognize any of them? Maybe the Star Trek one….and the fake Toyota logo…. http://www.madaboutshanghai.com/images/2008/02/24/china_car_logo.jpg
I travel to China frequently for work; I’m commenting on what I’ve seen with my own eyes. You definately see more recognisable logos like VW etc than your chinese ones. In fact the number of VWs is quite noticable compared with other cars. And if you googled “chinese made cars” did you expect to see anything apart from chinese made car logos? Genius!
“If Yugos were still around, would 12.7 million of those POS cars constitute a No.1 ranking?” – It wouldn’t matter because all the POS US made Fords/GMs/Chryslers would still be in america’s 10.4 million.
I’m sure the size of the car market plays at least a small role (at least in the minds of the manufacturers), Tim, but you’re right that other factors are in play – money where “new” races are concerned, and then probably other things like level of interest, suitability of venues, and driver/team/sponsorhip presence (note losing one German GP and gaining one Spanish one after Schumacher’s retirement – that may flip flop some time…) for those countries that refuse to be completely exploited and yet are needed to make the sport a success. In other words, these are the mitigating circumstances the FOM probably wants to see in order to justify them receiving a lower outright payment for the race.
The US – as I think you were trying to point out – scores number one overall (mixing quantitative and qualitative data) on the car market front. (Though it has now lost its place on the purely quantitative side to China, which is an interesting and relevant issue in my humble opinion.)
But sadly, I fear the US probably does score poorly in a few of those other areas. Interest is fairly high, but geography makes it nigh on impossible logisitcally to gather fans together and secure a sellout crowd – while in Europe the reverse is the case. There is “cross-pollination”; I live in Germany, but am less than 150 miles away from the Belgian Grand Prix, for example.
Probably wrongly, the US is also perceived to lack a truly suitable venue – at least in light of the problems that Indianapolis had, which mean it may well be out of the running.
Currently, at least, there are relatively few US interests directly represented within the sport, as well, but fortunately it seems that is about to change starting in 2010. A fitting year for it too, as McLaren and Mercedes start trying to turn the sport into a more nationalistically charged one.
Hopefully these shifting sands mean the US will get another race very soon, but I can see why Bernie re-secured the perennial-sellout event at Montreal first.
As a final footnote: do I think any of this is entirely just? Absolutely not. It’s just how I surmise these decisions might be made.
As an aside, I am also thinking of the fact that a country may have a stronger affinity for motor sport than others regardless of its size or potential for the car market. North America has a longer passion and love for motor sport than China. While China’s mobility is dramatically increasing, no doubt, the fact is there is a weaker motor sport love affair as evidenced by the turn out at the Chinese grand prix. They bussed school kids in to fill seats.
I think the overall factor of money, cultural relevancy and sponsor interest all play a part but ultimately money will trump most things where Bernie is concerned.
I attended every F1 race at Indy. They were a lot of fun! The midwestern folk were very friendly; one could walk the entire venue on the opening days; the prices were reasonable. Except for the year of the Michelin tire failures, the races were enjoyable to watch (in spite of the Ferrari dominance).
It’s a shame that some old greedy English geezer can so control this sport. The good part is that within a decade, his influence will be gone.
While the Geezer still controls the sport, I’ll follow NASCAR: the races are competitive and include passing(!); the drivers have personalities; tickets are reasonable; the fans know their sport; and no single person is enriching themself.