Following a meeting today of its board of directors, Toyota has announced a withdrawal from Formula 1 with immediate effect. As reported in The Guardian, Toyota president Akio Toyoda said in an official press conference, “Based on the current economic environment, we realize we have no choice but to withdraw. This has been a very painful decision. I offer my deepest apologies to Toyota’s many fans for not being able to achieve the results we had targeted.” The press conference was an emotional one. At one point, Toyota team principal Tadashi Yamanashi broke down weeping.
The decision was not entirely unexpected. The 2009 season had been rumored to be a make-or-break year for the Japanese team. Some paddock prognosticators have been saying that Toyota was sure to withdraw if they went winless for another season. The team entered the sport in 2002 with high expectations, but thus far their most consistent success has been two consecutive second place finishes by Jarno Trulli in 2005. With an estimated annual budget of $300 million for their Formula 1 team, it has become increasingly difficult to justify participation in the sport, especially in light of the recent downturn in the global economy.
The Toyota corporation is scheduled to release its semi-annual performance firgues tomorrow. Two years ago, Toyota, the world’s largest car manufacturer, announced record profits. Last year, however, the company reported its first annual loss, in the amount of $4.8 billion.
Toyota’s move may be seen as part of a larger retreat from the sport by Japanese companies. One year ago, Honda stunned the sporting world by announcing their sudden departure. (Fortunately, team principal Ross Brawn was able to salvage his title-winning privateer team from Honda’s remains.) And then, this Monday, the sport’s sole tire supplier, Bridgestone, announced they would be leaving Formula 1 after the 2010.
Japanese companies who rely on exports for much of their business have been impacted severely by the world’s economic malaise in general, and by a strong yen in particular. The dollar has recently been trading in the range of 90 yen, which hurts Japanese sales in the American market.
Although Toyota recently signed the new Concorde agreement, which ostensibly guarantees their participation in the sport through 2012, there have been some warning signs that their commitment might be troubled. In July, the Fuji International Speedway announced it would not host the Japanese Grand Prix in 2010 and beyond. The Fuji venue is owned by Toyota. And Toyota has been noticeably slow in guaranteeing a budget for the 2010 season. The budget was to be finalized on November 15th, but this announcement obviously precludes that action.
Ironically, FOCA head Bernie Ecclestone, in an effort to quell rumors of Toyota’s pullout, told The Telegraph yesterday, “Listen, it’s very simple, Toyota are having a board meeting in Japan. It was always foreseen that there would be a board meeting in November to discuss what they will do about their team competing in F1. They have signed a Concorde Agreement until 2012. It’s signed by Toyota Motor Company so I very much doubt they would not go through with something they have already signed. They are not the sort of people to back out of a deal like that.”