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15 Jun 2010, 12:39 (Ref:2712544) | #851 | |||
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Wouldn't like to seem going off topic, but a country with an usual Deficit/GDP rate round 10% cannot be held as the best option |
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15 Jun 2010, 13:49 (Ref:2712587) | #852 | ||
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I agree it's very bad in the US as well but from the point of view of IndyCar manufacturers, I think Dallara is potentially in the worst predicament.
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15 Jun 2010, 14:08 (Ref:2712595) | #853 | |||
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(edit: speaking of AEP: http://www.telegraph.co.uk/finance/c...-meltdown.html ) In all seriousness though, all the jawboning in the world hasn't fixed the world's structural problems when it comes to finances, either public, private, or bank. We'll muddle through and all imbalances will eventually correct one way or another. If it happens in Europe, so be it, it happens. If it happens in the U.S., so be it, it happens. It's in the interest of the people with the money to run the game a little longer, such as the Chinese who don't want to appreciate the yuan and depreciate their dollar holdings. It looks like the world is going to duplicate what the Japanese did in the '90s. The only real issue concerning Dallara here is they're wanting to build a low-volume, high-value car to sell to customers currently only based in Indiana, Illinois, Ohio, and Charlotte. From a geography and customer service standpoint, it'd make far more sense to have that manufacturing be in the Midwest instead of northern Italy. If the European economy collapses, Dallara's in trouble anyway regardless as is the entire racing industry just because that means less rich people are going to have the money to put into auto racing. That'll be true if Dallara gets the contract or if Lola or Swift got it. Last edited by Flyin Ryan; 15 Jun 2010 at 14:28. |
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15 Jun 2010, 14:50 (Ref:2712612) | #854 | |||
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As for the entire motor racing industry it will be particularly hard for the lower Formula series that rely on manufacturers like Dallara to supply them with chassis. Those manufacturers will have to ramp up their prices to compensate for a weak Euro. Though I think you'll find F1 will fair a little better considering 99% of the teams are based in the UK and won't be effected quite as badly as if they were based in the Eurozone. |
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15 Jun 2010, 15:15 (Ref:2712620) | #855 | |||||
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Say Dallara built a Formula 3 car in northern Italy. Dallara runs the numbers and determines the break even point for their car is 80000 euros. So they decide to sell the car for 88000 euros. At today's exchange rate, 88000 euros comes out to 73114 pounds. Now say there was a competing British company, say Lola, that built a competing Formula 3 car. They run the numbers and let's say they sell their car for the roughly equivalent price of 73000 pounds. Say the European economy collapsed and the euro fell 5% against the pound. The price that Lola charged would stay the same: 73000 pounds. The price in euros that Dallara would charge would stay the same as their work rates stayed the same (for the sake of this simple argument, we're ignoring continental European demand dropping due to said European economy collapse which would probably drive the price of the Dallara in euros downward to drive business). However, that 88000 euros is now only worth 69458 pounds. So the drop in the euro against the pound gave Dallara a further advantage against the Lola of the Dallara car could be sold for 3600 pounds cheaper. Good for Dallara, bad for Lola, good for the British consumer buying the car. Likewise, the price of the Lola would go up in Europe; and consumption there would also move toward Dallara. Quote:
Last edited by Flyin Ryan; 15 Jun 2010 at 15:30. |
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15 Jun 2010, 16:14 (Ref:2712650) | #856 | |||
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If your currency becomes too weak, your exports are now even cheaper so you won't be able to make enough money to cover your imports, which in turn are now more expensive. It's about striking a balance. So in Dallara's case, their cars will be cheaper than Lola's if the Euro falls further against the Dollar than the Pound does. However Dallara don't want the Euro to fall to the extent their cars are so cheap they can no longer balance their books, also they are selling to a limited customer base; though having said that, it's good for the teams as they can buy extra chassis and components for less. If you look at the sponsors in F1 the vast majority are multi-nationals, with assets all over the world. I think the largest European company involved in F1 is Shell but it's a multi-national. The Santander banking group is another large European concern but again it has assets outside of Europe and the Eurozone. Last edited by bjohnsonsmith; 15 Jun 2010 at 16:21. |
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15 Jun 2010, 17:36 (Ref:2712688) | #857 | ||||
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Read up on the Japanese carry trade and its effect on Japanese export manufacturers. And if the cars do get really cheaper, that means the barrier of entry is less and more people can afford a car, which increases sales. Quote:
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15 Jun 2010, 18:05 (Ref:2712702) | #858 | |||
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By barrier of entry do you mean trade tarriffs? The problem with exporting cheap products, is that you can run into the problem of dumping. Dumping is selling goods lower than the cost of producing them. There looks like there's the beginning of a tarriff war with China and the US, as each accusses the other of dumping cheap exports. China is launching an anti-dumping investigation into American chicken and auto products, due to complaints that these products are being sold in China at below-market prices due to huge subsidies received from the US government. This is in retaliation to the US decision to impose sanctions against cheap Chinese tyre imports. But not all of Europe is in the EC and not all EC countries are in the Eurozone. |
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15 Jun 2010, 22:48 (Ref:2712880) | #859 | |||||
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16 Jun 2010, 00:01 (Ref:2712901) | #860 | |||||
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"If you're not winning you're not trying." Colin Chapman. |
16 Jun 2010, 01:11 (Ref:2712912) | #861 | ||
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16 Jun 2010, 01:28 (Ref:2712918) | #862 | ||
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Motor racing had a bubble just like the financial and real estate business. I would say just about everyone I know is probably underemployed, on contract or unemployed and if they are full time, no comfort of likely job security. The only way out I think for indycar is to open it up to all comers with chassis, engines and tires. That's the only way you are going to bring money, competition and interest into this tough environment. |
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16 Jun 2010, 01:35 (Ref:2712920) | #863 | |||
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I totally agree open it up to all, so competition, interest and money are generated but is that sustainable under with the current economic crisis? |
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16 Jun 2010, 02:10 (Ref:2712931) | #864 | ||
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Once again in a radio interview tonight, Mark Page of Swift reiterated that his compny's bid is based on sole supplier status. All of the designers made this clear except Delta, who hasn't made clear they can build a chassis at all.
And no public mention by anyone in the IRL of permitting existing equipment of any vintage to participate. If the new chassis is mandated for 2012, and using Delta's cost estimate of the chassis price ONLY, Andretti Autosports would have to come up with $2.66M in new investment to put four cars on the grid, and have a spare chassis for each as they do today. That figure is adjusted to include the best possible scenario of the Honda engine lease reduction, from $935K down to $700K per car. Today, AA can't find funding to run Ryan Hunter-Reay or Adam Carroll. They already own the chassis. |
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16 Jun 2010, 02:21 (Ref:2712933) | #865 | ||
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This is going to sound lame but we are just going to have to wait until ICONIC reach their decision.
As much as I would like to see Lola get the deal, if one chassis is chosen, Swift might be the best option as it is a homegrown operation and therefore will be a little less susceptible to outside economic factors. |
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16 Jun 2010, 02:38 (Ref:2712935) | #866 | ||
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Nope, not lame...even if you're still limping.
But it's only gonna be one, and Lola and Dallara would have to have big stones, access to big loans, and be in one hell of a hurry. BAT wants to use existing Indy subcontractors. Ashmore already builds sprint cars there. Swift has one local sub on board, but they are not a large facility. If Dallara's commitments and financial health are guaranteed, they get the deal. BAT is my second choice. But we'll soon find out... |
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16 Jun 2010, 02:44 (Ref:2712937) | #867 | |||
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So you reckon BAT? |
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16 Jun 2010, 03:18 (Ref:2712945) | #868 | ||
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It still will come down to money, and how IMS/ IRL will benefit most.
That's why I was sure from the beginning that Dallara was in like flint. But Bernard now says 70% chance that the car will be ready for 2012, and the delays have been continuous so far. As climb reminded us, that's not much time. So either offshore constructor would have to be very solvent, and very quick about producing a facility. Local jobs and tax revenue are the payoff: Local and State government will be pleased, and share the love with IMS. That means manufacturing in Speedway, and Swift can't. BAT claims that they have based their whole proposal on Indy subcontractors. |
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16 Jun 2010, 03:28 (Ref:2712947) | #869 | ||
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Is decision day 30th June?
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16 Jun 2010, 03:32 (Ref:2712948) | #870 | ||
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I watched a few minutes of some video of the indy 500 from this year, horrific is all I can say. I'm right in staying away and I hope others do as well. It's a crap product run by crap people. |
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16 Jun 2010, 03:41 (Ref:2712950) | #871 | ||
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THEY don't want competition, they have a business to run. They don't care about what fans or drivers have to deal with or what they want. They are not in that business. Their business is cranking cars and parts out the door to whoever. Of course these guys are going to give you a sob story about how rough it would be to have competition. |
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16 Jun 2010, 03:58 (Ref:2712954) | #872 | ||
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The other thing is that now the realization is sinking in, that there will be only one chassis constructor to cap costs, the same logic has not entered into the discussion about the engines.
IF Honda continues to play as indicated, there isn't much sense in guessing who will pay for the privilege of splitting the market with them. Another engine would likely not appear until 2013: so all the 2012 chassis will be built to accept a Honda V6. If you eventually have an option of fitting a 4 cyl, you have to build or buy the conversion components and gamble on the fortunes of an untested package. Other engines are only going to come from a full blown manufacturer development and lease program, according to Barnhart. The Iconic decision is promised for June 30, no telling what or when announcements will be made. It goes to Bernard and then the IMS Board. Any engine manufacturer must submit a proposal by Homestead (October) to be considered for competition in 2012. |
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16 Jun 2010, 04:04 (Ref:2712955) | #873 | ||
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I thought multiple engines had been agreed, or did I miss something?
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16 Jun 2010, 04:10 (Ref:2712957) | #874 | ||
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Yup. Thanks for the cartoon show, though.
That was where I was going with the thought on currency exchange. If you are selling chassis and parts at a contracted price, and exchange rates still stand between the two parties, you have a problem. Like your sole supplier saying "we're raising the price 20%, or we're not building any more tubs". Kevin and Cavin followed the logic through in their discussion tonight, and got back to the real world. If you build new cars, and they're all the same too, does it get you any viewers? Will all the people who don't watch now give a squat? Right back to where I came in. Make the current cars more competitve, enable variety, put on a better show. Then add more variety when teams can afford it. |
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16 Jun 2010, 04:16 (Ref:2712958) | #875 | ||
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Multiple engines are invited. Same as two years ago, only now it's public.
Barnhart wants a competitive entry from an auto manufacturer with a lease program. I believe that falls under the definition of "Badging rights", which manufacturers also have to pay the IRL for . Not a definition I am familiar with, though. If it's not done that way, how is it an equal playing field for Honda's participaton? Independent builders are not invited. That's based on Barnhart's answer to the question at the press conference in Texas. |
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