Honda, Monaco, 2018

Analysis: Why Red Bull has taken the engine deal McLaren rejected

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Red Bull’s 12-year alliance with engine supplier Renault is to end. The four-times world champions will have Honda power for the 2019 F1 season.

Why have Red Bull thrown their lot in with the Japanese manufacturer whose power units drove McLaren to a costly divorce less than 12 months ago? Dieter Rencken analyses the move.

Back in 2015, when the love-hate relationship between Red Bull Racing and engine supplier Renault was at an all-time low, Dietrich Mateschitz, the boss of the lifestyle energy drink company, suggested he would pull the once-dominant team out of Formula 1 unless they procured a winning engine.

He also accused the French company of ‘destroying’ the satisfaction the team derived from the sport. “How many more things have to happen before we lose all enjoyment?” the Austrian asked rhetorically.

In the event the partners patched things up after some harsh criticism on both sides, although so fraught were reconciliation negotiations after Renault suggested that Red Bull had brought its brand into disrepute via its public criticism that for a period Red Bull faced having the best chassis on the grid but no power unit after Mercedes and Ferrari refused to supply their main competitor. They, in any event, had full customer quotas.

In the process Renault dropped Red Bull’s junior outfit Scuderia Toro Rosso in favour of supplying its own team, having reacquired the Lotus outfit it sold six years earlier. This forced the Italian team into accepting year-old Ferrari engines, while Red Bull badged its (Renault) power units engines ‘TAG Heuer’ in honour of its engine cover sponsor, which had defected from McLaren.

Although any subsequent criticism was muted, it was clear Red Bull and Renault were locked into a loveless marriage, made all the more difficult by the engine supplier (understandably) concentrating on its own interests. For example, recent engine upgrades favoured the Renault installation more than Red Bull, simply as the former’s BP fuel reacted better to the changes than did Mobil’s product in the Red Bull.

Red Bull had switched to Mobil after Total withdrew from F1, leaving both Renault and Red Bull to procure fuel and oil deals. Renault struck a ‘first-fill’ deal with BP, the benefit to the oil company being that the majority of Renault products (and those of alliance partners Nissan and Mitsubishi) would leave their factories with BP in the tank and sump. That is gold dust to oil companies, particularly where dealer service centres follow suit.

Max Verstappen, Red Bull, Circuit de Catalunya
Renault understandably prioritises its own team
As Red Bull manufactures drinks rather than cars, it has no such benefits to offer; the closest being ‘first-fill’ with title partner Aston Martin, also a partner in the Valkyrie hypercar joint venture. Given that Aston Martin moves 5,000 units per annum versus the 10 million-plus of the Renault/Nissan/Mitsubishi alliance, that’s small beer; thus Red Bull struck a commercial deal – estimated at £12m annually – with Exxon-Mobil, which includes technical support.

However, validating different specification fuels and lubricants is time-consuming and costs millions, and thus understandably BP enjoys first call at Renault. It’s unlikely that priorities would be any different at Mercedes or Ferrari, but this is a moot point: their engine customers pay to use the same products. Thus Red Bull is the architect of its own fuel disadvantage, but banks a tidy sum in return…

Equally, when it comes to architecture, installation and ‘tweaks’, the engine company is clearly more likely to consider the needs of its own team before those of its customers, who is also unlikely to be party to ‘inside’ developments. When teams fight for hundredths of a second, such matters are absolutely crucial, and with their current Renault contract expiring this year, Red Bull needed to consider its options.

Red Bull realised that as long as it remained a customer – whether with Ferrari, Mercedes, or Renault (or any notional engine supplier with an owner team) – it would not obtain engine parity, and would thus be unlikely to replicate the soaring heights the team reached as Renault’s works engine partner between 2010 and 2013, when the partnership walked both titles for four straight years.

Can it be coincidence that the winning streak commenced immediately after Renault withdrew from F1 as team owner to concentrate on engine supply, and ceased just as Renault’s board began mulling a full return to F1?

Thus Red Bull Racing faced two stark choices if it wished to break out of the customer engine conundrum: build its own engine, or cut a deal with an engine supplier not prioritising its own team.

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Helmut Marko, Adrian Newey , Red Bull, Bahrain International Circuit, 2018
Red Bull ruled out building its own engine
The former option was considered and rejected as too expensive, as Dr Helmut Marko, Red Bull’s F1 consultant, told this writer in January 2016 – ironically on the eve of the announcement of the Aston Martin-Red Bull Technologies Valkyrie hypercar joint venture.

“We looked at it, but very quickly found out it wasn’t for Red Bull,” he said. “[The timing was] when we had the first tests in 2014. We were looking at it, investigating it.” In short it was too complicated and too expensive – his estimate was “250-300 people just to develop such an engine”.

As an aside, many consider it baffling that Red Bull employs 700+ people to build chassis for a single race team, yet considered it too costly to employ half that number to design, build and develop an engine that the company could share across two teams – while, saliently, controlling its own power unit destiny?

Whatever, Red Bull bombed the idea, which left Plan B: a full works deal. That led Marko to the only available option: Honda. As the McLaren-Honda partnership unravelled acrimoniously, so he wooed Honda as supplier to Toro Rosso. The rest is history: a deal was done, McLaren took over the Renault engines Toro Rosso had signed for until the end of 2018, and the Italian team went the other way.

Despite Honda’s well-known reliability and performance shortfalls the deal had considerable merit. Stung by McLaren’s unrelenting criticism, Honda had committed to ‘westernising’ its approach, and increasingly employed a considerable number of seasoned F1 personnel rather than operating the engine division as a Japan-based research laboratory for domestic engineers. In addition, a mass shake-up of management was on the cards.

Unsaid, but alluded to, was that the deal would permit Red Bull to evaluate Honda’s potential with a view to the Big H becoming engine supplier to both Red Bull teams – with the British-based operation, of course, enjoying priority – which would simultaneously deliver technical and operational synergies between the two teams, enabling them to gradually move towards a Ferrari/Haas-type relationship, with all the associated benefits.

Toyoharu Tanabe, Honda, 2018
Toyoharu Tanabe’s team have kept Toro Rosso happy
Once Toro Rosso, which had but five months to re-engineer its chassis, proved a
Honda’s reliability (by recording the third-highest number of laps during pre-season testing while McLaren languished at the bottom of the table), then demonstrated its performance potential (by Pierre Gasly’s superb fourth place in Bahrain) the deal was all but done.

True, there were blips such as China, but in general the feedback from Toro Rosso was extremely encouraging.

Come Canada, the decision was virtually made for Red Bull after Honda introduced mega updates that delivered exactly as promised – unlike a succession of updates promised by Renault over the years, or, for that matter, by Honda during their three years with McLaren. Fresh winds had obviously swept through Honda’s R&D base in Tochigi, Japan – just as McLaren split with the team…

FIA engine regulation guidelines call for teams to nominate engine suppliers by 15 May, yet Renault extended that by a fortnight. According to Renault F1 Team Managing Director Cyril Abiteboul the later deadline was necessary for planning purposes – Renault needed to commit to long lead-time items, and potentially losing Red Bull would affect order quantities by a third.

Still, Renault (unrealistically) held out for a reprieve. Why so? With Red Bull (said to be) paying around €25m (£22m) annually for its two-car supply – well up on the guideline price of €18m (£15.6m) because the team had backed itself into a corner with Renault last time – its bottom line loss to the French company is around €10m (£8.7m) after costs of materials and manpower required to service the contract.

This had gone straight into R&D, and would need to be covered internally – a big hit to a budget-conscious company, one run by Carlos Ghosn, aka ‘Le Costcutter’.

Then there is the question of grid politics: Renault realises that for the foreseeable future its primary hope of winning grands prix lies in the back of the Red Bulls. Its own team, rebuilding after the decimating Lotus years, is currently around a second off front-running pace. Thus it would rather have Red Bull as grid ally than as formidable competitor powered by a rival manufacturer.

Furthermore, there is the question of development via two teams rather than one: during its current F1 engagement Honda historically supplied a single team, which hampered development progress; with two closely aligned outfits its rate and pace of development with increase almost exponentially, making it more of a threat. Renault would, though, drop from three teams to two, with no chance of an increase in the medium term.

Fernando Alonso, McLaren, Circuit Gilles Villeneuve, 2018
McLaren severed its ties with Honda last year
Thus losing Red Bull to Honda has a triple-whammy effect: commercial, sporting and technical. There is also a fourth, oft-overlooked, factor: Retaining Red Bull would have provided Renault with a benchmark: where teams run identical engines and tyres, deficits are down to chassis – no hiding from that – and thus Abiteboul would be able to apply pressure internally. Given all these factors, any wonder he stretched deadlines to retain Red Bull?

Let us now, though, examine the same question through Red Bull’s prism: The company is owned by two entrepreneurs – Mateschitz, and Chaleo Yoovidhya, the Thai who owned the drink’s original recipe – each of whom own 49%, although the former controls the company by mutual agreement, and thus holds the purse strings. (The remaining two per cent is held by Yoovidhya’s son, Chalerm.)

It was Mateschitz’s decision to enter F1 as part of his ‘edgy’ marketing strategy. Although Marko and team principal Christian Horner operate the team on a day-to-day basis – as does Franz Tost at Toto Rosso – Mateschitz is involved with every major aspect, and takes the final decisions. According to sources, he is the ultimate micro-manager.

Now consider that Red Bull is a privately-held company, and that for every outward-flowing two cents, one cent less flows into Mateschitz’s notional back pocket. True, there are expenses and tax structures, but fundamentally all profits are shared between the partners, and outgoings directly impact on the bottom line. Thus any engine deal affects profitability proportionately – particularly where Red Bull pays for engines.

Consider also the potential Honda package: free ‘works’ engines, commercial support worth up to £80m across two teams, and a closer tie-up with an Asian company already bearing historic allegiance to Red Bull in MotoGP – in short a marketer’s dream, even without the financial “swing” estimated at £100m annually – around half of which is Mateschitz’s share. Which way would you vote, multi-billionaire or not?

From a Red Bull/Mateschitz perspective there are only ups and no downsides; the same applies equally to Toro Rosso, and hence that deal was cut first: With Renault power Red Bull Racing is unlikely to win championships, yet neither would it conceivably drop below third in the overall classification; equally Toro Rosso hovers about its natural fifth-seventh environment, whether with Renault or Honda power.

Free engines and commercial support, though, provide a budgetary shot in the arm of around 30 per cent on Toro Rosso annual budget of about £100m – expressed differently, Red Bull can reduce its support by £30m – while at Red Bull Racing the numbers are even starker on account of its larger financial base: £100m or around 40% on £215m spend, including full commercial support.

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Given F1’s current revenue structure, free engines and Honda income more than compensate for any losses in Formula One Management revenues that either team may incur. Last year Red Bull received $88m (£68m) from FOM in performance payments based on third place in 2016.

Had it placed fifth (unlikely given its superior chassis and drivers over Force India and Williams), with Honda power the corresponding payout would have amounted to $69m (£53), a delta of $19m (£14.6m). Toro Rosso’s 2017 FOM pay-out was $59m (£45m) for seventh; a worst-scenario tenth place would have paid $49m (£38m). See the benefits of switch from paid Renaults to freebie Hondas plus commercial support?

(Note: These numbers exclude the constructors championship and preferential bonuses paid to Red Bull racing by FOM under current agreements, that in 2017 amounted to $74m (£57m), paid whether it scored a single point or not.)

Thus for Red Bull a switch to Honda through to the end of 2020 makes perfect sense. It coincides with the expiry date on current commercial, technical and sporting covenants, and sets the company up with a strong ‘works’ partner thereafter should the partnership pan out. If not, Aston Martin may emerge as its post-2020 engine supplier, while rumours of an entry from VW Group – with whom Red Bull enjoys strong ties – refuse to die.

Does all this mean Red Bull has taken the money ahead of results? Not at all: it examined all angles, including impact on performance, and taken commercial decisions that best position both team through to 2020 and beyond, while scoring an estimated 100 million quid (or even more). What’s wrong with that?

Once Renault realised it had lost Red Bull it moved into damage limitation mode ahead of its home grand prix. This scuppered Red Bull’s planned announcement at the Red Bull Ring, scene of the Austrian Grand Prix, a week later.

In the interim, though, Red Bull kept Renault hanging, which will have impacted on the team both ‘Red Bullers’ aim to beat next year…

Follow Dieter on Twitter: @RacingLines

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Dieter Rencken
Dieter Rencken has held full FIA Formula 1 media accreditation since 2000, during which period he has reported from over 300 grands prix, plus...

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  • 106 comments on “Analysis: Why Red Bull has taken the engine deal McLaren rejected”

    1. Nice article and viewpoints, Dieter, especially the specifics of the financial aspects!

    2. When you build a story on the premise that the RBR Honda deal is a “works” deal, but it turns out that it’s not … that leaves a lot of the subsequent conclusions struggling to tread water.

      1. @Dale Assumingly it’s going to be that way, though. Yes, STR holds the ‘works’ status now as they’re the only Honda-powered team at present, but it’s more or less a given that RBR is going to get that status as they’re a significantly bigger team than STR, so, therefore, it’s safe to build a story on that premise.

        1. Since it is Red Bull signing the deals, you can bet that RBR is the team getting the “works” deal though. And just as the marketing potential is there for Red Bull, it is also there for Honda to enjoy.

      2. I was very careful to define a ‘works’ deal as one where an engine support does not have an owned team to prioritise, plus used parenthesis when describing ‘works’

        Honda is being politically correct so as not be perceived to be supplying different levels of service or specification as demanded by the FIA, plus is being respectful to STR.

        But who do you think will get priority when it comes to requests – the flagship of the rear gunner?

        Regardless of how Honda dress it up, Red Bull Group is its ‘works’ partner, with RBR set to gain the most.

        1. Totally agree, Honda just wants to show the same respect to Toro Rosso but for all intents and purpose RedBull is the works team.

        2. For sure. It may not be Merc/Merc, Ferrari/Ferrari, or Renault/Renault, but it is very much the next best thing to those setups, to be RBR/Honda, with the proper designer fuel and oil to boot.

        3. Support = supplier

        4. Just with regards to “works” status, surely the Renault engine manufacturers were prioritising the named Renault F1 team even though they didn’t own the team at that time. Renault were still listed as the car constructor at the time after all, even if they didn’t own the team.

          It just seems a bit incorrect to label the Red Bull team as Renaults works team from 2010-2013, when there was indeed a Renault named team for at least 2 of those years. I simply can’t believe Renault were solely focusing on Red Bull as their priority.

          1. For starters, the 2010 “Renault” F1 Team was known as that because of licensing/commercial deal peculiarities, just as Sauber was known as BMW Sauber F1 Team despite using Ferrari engines – basically Ecclestone insisted that they continued running under their entered team names to obtain their shares of the revenues. Only later were they permitted to change their names after a Formula 1 Commission meeting majority.

            Second: Renault F1 Team changed its name to “Lotus” at end-2010 – so it was one year, not two, during the 2010-13 period as you maintain that there was a Renault F1 Team under different ownership. But even then it was clear which was the favoured team – and it wasn’t Enstone.

            Finally, Red Bull obtained its “works” status by cutting the Infiniti deal – a brand that belongs to the Renault-Nissan alliance – in 2011.

            1. Still seems a bit like rewriting history to me. Red Bull won those four championships as a customer, not a works team and Renault were a constructor for two of them.

            2. I’m not sure i agree there @Skipgamer, Red Bull racing was the de-facto Renault works team for most, if not all of that period. I.e, works status in all but name, the first call on upgrades, spec changes, chassis integration etc. They were closer to what McLaren Mercedes used to be until they also got their own F1 team and reverted back to true customer status, the same way Red Bull have with Renault since they got their own team (back).

          2. @skipgamer Yes, Renault still had their own team in 2010, but for 2011 it became the Lotus (although the name ‘Renault’ was still used to a certain extent during that season) it was known as until Renault re-bought it ahead of 2016. During the five-year period when Renault participated in F1 solely as an engine/PU supplier, RBR effectively was their ‘de facto’ works team in more or less the same way as Mclaren was with Honda, and with Mercedes until 2009 (when they were still participating in F1 as an engine supplier only), or STR now.

            1. Still there’s a big difference between a race team buying an engine as a customer and being a works team. I think it diminishes Red Bull’s accomplishments. They built the car and everything around the engine, not Renault.

              There’s a pretty clear and common definition for works team that exists, and it doesn’t apply to Red Bull in that period.

          3. “There’s a pretty clear and common definition for works team that exists” – and that definition is?

            Apart from that question, would you like to explain which was the “works” Renault team in 2011? What was it called, and who owned it?

            I have no reason to rewrite history – why on earth would I?

            1. Give it a google… There’s little disputing it, or perhaps alter those definitions on the sites that pop up if you disagree.

              I don’t know who you would either… So why are you trying to? There are numerous articles out there of quotes from Horner himself from the time period of even up to when Red Bull were the sole customer saying that they do not have status as a works team.

            2. This is the last word I’ll say on this: At end-2009 Renault sold 75% of its team to Genii Capital, and at end-2010 sold the remaining 25% to Genii, when the team was renamed Lotus. I don’t need google for this, I broke the news story at the time. There was NO official Renault works team between end-2009 and 2016 save in name only for 2010 due to commercial and administrative considerations. Similarly, there was NO official BMW team in 2010, although the entry list reflects BMW Sauber F1 Team for the same reasons. Again, I don’t need google, I broke the news about BMW’s withdrawal at the time.

              If you think your googling can throw up other information, feel free to post it here.

              As for the definition of “works”, please provide it and also who defined it. Thank you.

            3. @skipgamer, don’t you think a journalist who has been covering the sport up close (first person, in the paddock close) for decades now, like Dieter Rencken is, would have more reliable and knowledgeable sources than to “google it up”?

              As for especially Horner, and RBR (but other teams official channels too at times), their statements are only too often more guided by PR needs than to strictly keeping with the facts as they are. At best, they offer their own views, more often the views they want to promote.

              As far as I understand the only reasons for the close ties of the Lotus team with Renault were that Renault wanted to get away from F1 really fast, so Genii got quite a solid deal, with Renault providing guarantees for the pleasure of stepping out.

            4. @skipgamer I am afraid that Horner did in fact make statements in 2011 stating that Red Bull was Renault’s nominated factory team – to quote Horner directly “The partnership with Renault/Nissan alliance is an important one for the team. It guarantees stability, it makes us the premier, factory team of Renault Sport, so our colleagues where the engines are produced will be working hand in hand with the engineers and designers at Red Bull.” https://www.motorsport.com/f1/news/f1-red-bull-now-renault-s-works-team-horner/

              If you do not believe that, here is another article from 2012 with Horner where he stated “We’re now to all intents and purposes Renault’s works team in F1. Adrian has won seven of his eight constructors’ championships using Renault power, and he has a key input into the architecture of the new engine.”. https://www.motorsportmagazine.com/archive/article/january-2012/66/lunch-christian-horner

              You could also, for example, refer to the technical articles written by Craig Scarborough on the partnership between Renault and Red Bull in that era, such as the bespoke engine mapping setting that Renault created specifically to blow the diffuser in the way that Newey wanted them to, or to the bespoke modifications to the alternator that Renault made in 2012 that were designed specifically for the Red Bull chassis.

              It is not a case of “rewriting history” – Horner stated at the time that Red Bull was the de facto Renault works team, and the technical developments that were being made to Renault’s engines were changes that Renault’s regular customers could not request and could only come about because Red Bull were Renault’s works team.

      3. This whole ‘works’ term is so stupid in 2018, has been for 15 years. Now there is no extra testing and Honda have to supply the same unit. Redbull and torro rosso are just customers. Commentators keep using the term works, and it is getting irritating to be honest. The old definition of works is long gone.

    3. Wish them the best.

      You can’t repeat history but you can write your own, so let’s hope Red Bull-Honda is more successful than McLaren-Honda

      1. Red Bull-Honda is more successful than McLaren-Honda

        @paeschli Looking at 1988 whatever comes after will probably involve sprinklers, success ballasts and Chases for the Championship

        (though looking at 2014 not necessarily)

    4. Yeah, this deal makes perfect sense. The only reason why it would not have happened, would have been Honda completely failing to reflect and learn from the breakdown of their relationship with McLaren and keep under delivering on power increases and racking up failures.

      I am curious to see how things pan out now. How will this affect Ricciardo resigning (and then what about Sainz). How will Renault fare – will they start delivering updates?

    5. Great article as always Dieter, well pointed out that F1 is rarely purely performance or finance in decision making- a combination usually prevails in big decisions like this. I think a smart one to make in the circumstances they were in, but couldn’t help a parting insult to Renault could they- hold them out for a decision just to hang them out to dry.

    6. Bjornar Simonsen
      19th June 2018, 12:39

      So do we know that RBR will get the engines for free? Has that been announced?

      1. @Bjornar Simonsen Nothing yet on that.

        1. Helmut Marko confirmed that engines for both teams are free. What hasn’t been confirmed, and is unlikely to become public knowledge, is the size of Honda’s commercial contribution, but I doubt Red Bull will have accepted less than what McLaren was paid.

          1. @dieterrencken Honda specifically said the deal is “very fair” for both parties. I wonder if this could mean slightly less money.

            1. ‘Fair’ can have many forms – Sporting, commercial, financial, process. It is also subjective, plus Honda are hardly likely to admit they signed an unfair deal. So it could mean many things, or none at all. Corporate speak.

              But one thing I will add is that it could refer to the vote and veto rights within the contract – I believe the McLaren deal had five votes on any decision, with McLaren having three votes and Honda two. Hence McLaren could veto issues such as a second team – which Honda’s new management considered unfair…

            2. johntodiffer
              21st June 2018, 3:15

              Given that they now have to produce twice as many engines – slightly less overall cash would certainly have been on the table.

            3. @johntodiffer: Honda had planned to supply McLaren and Sauber from this year, and there was no talk of less money for the former. In addition, improved reliability should (hopefully) mean less engines built than before despite supplying two teams.

    7. Great article Dieter! I am so interested to see how the Red Bulls perform against McLaren next year. I will say this though. Although Honda was returning to F1 with McLaren, is seems apparent that there was a certain lack of respect between McLaren and Honda, leading to massive public tension. Toro Rosso seems to have a very respectful relationship with Honda and there seems to be benefits on both sides. How long will it be before Dietrich Mateschitz puts his foot in it and threatens that good vibe relationship (in the same way he did with Renault)?

      1. @nooma341 – I agree with that, Boulier or Zak Brown would often comment their chassis was on par with Red Bull and only if they had a better PU (maybe they followed Red Bulls book on “How to treat a engine partner”). They clearly haven’t/didn’t. Zak Brown always speaks very well (maybe not unlike Chase Carey with positive spin but little detail) yet they were too critical of Honda publicly, one thing the Japanese don’t take lightly.

        Franz Tost at Toro Rosso seems to have done this better this year which is unlike his usual blunt style. Maybe he was tired of being a RBR pawn and having Honda gave them an opportunity to show their own a little. Think they have too.

      2. It seems you have missed couple of things. First of all the honda engine was really really poor. It was an undeniable fact. Second thing that you can read from Dieter’s article is that honda changed the way it builds and designs its engines because of the valid criticism from mclaren:

        “Despite Honda’s well-known reliability and performance shortfalls the deal had considerable merit. Stung by McLaren’s unrelenting criticism, Honda had committed to ‘westernising’ its approach, and increasingly employed a considerable number of seasoned F1 personnel rather than operating the engine division as a Japan-based research laboratory for domestic engineers. In addition, a mass shake-up of management was on the cards.”

        Basically honda has now done what mclaren has been asking for 3 or 4 years. Back some years ago mclaren offered its own team personnel to honda to help things but honda refused. It seems to me honda has finally made a total 180 turn in how it manages it f1 engine program. It has gone from rigid japan-only approach to fully integrating into f1 by hiring experienced f1 people and working with their race team instead of focusing on being a separate entity. Had honda done this 3 years ago the story might be very different.

        1. @socksolid Thank you for your comment. My post is solely speaking to relationships. Your points about the technical challenges faced with the Honda engine while at McLaren are completely valid. I’m merely pointing out that McLaren’s (especially Alonso’s) campaign of negativity towards Honda, especially in their third year together, did nothing to improve their relationship, even though they had good reason to be frustrated. My point is that Mr. Mateschitz also has the ability to sour relationships as well.

        2. @socksolid
          Not sure if this reply was for myself or Nooma but I don’t think we missed your points, but they are certainly very valid.
          You must be a McLaren fan? So am I. The Honda engine was really bad but McLaren should have kept it in-house rather than be open about it. Red Bull bagging Renault (and vice versa) is the English v French, like Aussies v New Zealand – you know the others culture and stir them up a little, but with tounge in cheek. But with respect. The Japanese don’t do that.

          You are correct in Honda wouldn’t out source it for 3-4 years but it wasn’t they didn’t want to do it for McLaren per se, but its wasn’t their way. It took that long to realise they needed help and that needed change in their culture at Honda.

          Through my wife’s work I have become very familiar with the Japanese culture and pride is the word that comes to mind most. Its a culture many Western countries need to look at – there is little violence, murder, drugs, they like a drink but there is respect for all.

          But they like to do it their way, and that’s why Honda and McLaren didn’t work- communication & culture differences.

        3. To think that just now Honda had some revelation and is working massively different to how they do is silly. A company works how they work, especially one as successful as Honda. It’s fine to say they didn’t work well with McLaren… But to say that they weren’t working right when they were working with McLaren, and now they left McLaren and it’s just bad luck that McLaren left, and now they are working right… It really is silly.

          A partnership is 50/50 and McLaren are as much to blame as Honda for the results. As they always said, win as a team, lose as a team, and that team lost. Poorly, to the point of its dissolution.

          Maybe Honda will work better as a team with Red Bull, but time will tell.

          1. that they weren’t working right when they were working with McLaren

            @skipgamer the article more or less says as much

            A partnership is 50/50 and McLaren are as much to blame as Honda for the results

            don’t think I’ll disagree there though

    8. What a superb article, @dieterrencken!

      By the way, an update for you: Chaleo Yoovidhya died of natural causes in 2012. Nowadays, ten Yoovidhya family members share the 49% percent originally held by Chaleo, including Chalerm Yoovidhya – the patriarch’s eldest son – who with his original two percent now reportedly holds 11%.

      And a fascinating fact: Red Bull sells more than 5 billion cans every year!

      1. Yes, at a gross profit of about a buck a can..

        Thanks for the update on the Yoovidhya family. Noted.

      2. I’m surprised to hear the partnership is so balanced and so much money gets paid to them. The Red Bull of today is a very different drink to that classic Thai drink and Mateschitz no doubt deserves more than he’s getting for the empire he built on the brand.

        I remember Webber saying he was a very fair and supportive man. I hope that trait pays off in this deal as to me it seems Honda deserve more than what they got from McLaren…

      3. I was wondering about that myself, I thought I remembered him having passed away. One heck of a supernatural contract to still be earning from the grave!

    9. Top Notch article!

    10. Great article as always, Dieter.

    11. I have a question. What are the chances of Honda making full return to F1, as Mercedes and Renault have done. I would think the RB set up an excellent start for a factory team.

    12. I doubt it – Honda burnt their team ownership fingers a few times in the past.

    13. For redbull, the problem with switching to honda is I believe as follows: the engine manufacturers are starting to converge in power, with Honda seemingly behind, so I can only ever see Honda ever matching Renault, and that could take 2 years, but never giving better performance than Renault. Just look at qualifying in Canada, a power track, redbull with the Renault was a match for ferrari and Mercedes. Added to that the work needed to transition to using a different engine in their car, both polical and engineering wise. Don’t see redbull matching ferrari and Mercedes consistently until next engine cycle

      1. @kpcart I think that is a fair comment, a fair assessment of what we might witness over the next few years. At the same time though, RBR has decided Renault is a dead end street for them, for the various reasons as well summed up by @dieterrencken and if from a customer standpoint and regarding even fuel and oil RBR has lost hope that they could actually win the Championships in the current setting, they might as well rather pin some hope that a closer relationship, as in a works relationship with Honda, is well worth the risk. ie. they have little to lose and potentially much more to gain. I think that in fairness we should also not expect RBR/Honda to come out of the box instant contenders as relationships take time to gel and evolve.

        1. Yes, engine power output will naturally tend to converge at some level. That is until one group stumbles on a magic bullet and gains a few percent.
          Where the current formual is different from other engine regulations in the past is the openness in some areas (boost pressure as an eg.) and the hard stop on fuel flow. This provides great rewards for efficiency, something that some are better at than others. Read this as … “opportunity”.
          Another area where differences show up is in drive-ability. I recall Jenson B. mentioning that the Honda in the McLaren was … poor, in terms of drive-ability. This is an area, as well as efficiency, that is worth lap-time and not captured in the HP measurements. All in, there are still areas that engines can be improved even though “power output” is converging.
          Question … who is going to be the Red-Bull Honda fuel and lubricants supplier .??
          I didn’t pick it out of the …. awesome, article. Thanks a great read.

    14. Great article as always, Dieter. I think its a necessary risk and one worth taking for Red Bull. This effectively gives Honda two works teams with Toro Rosso, and STR has already established more goodwill with Honda than McLaren ever did from 2015 onward. Results may not come immediately, but Red Bull won’t likely drop any further than 3rd in terms of pace.

      It’s also pretty funny seeing all the armchair engineers’ responses to this claiming Red Bull just killed their chances of returning to glory.

      1. Hmmm i clearly remember that last year Honda announced that STR will be the works team and any other teams will at most have customer status.

    15. Really brilliant article – and to have that released only hours after the news broke, very impressive!

    16. Great insights Dieter. So, if my Maths is correct, compared to 2017,

      1) Red Bull Group is better off by 130 million – 50 million of engines free + 80 million injection by Honda
      2) Honda is better off by ~45 million – 25 million severance penalty from Mclaren + 20 million (100 million injected to Mclaren – 80 million injected to Red Bull Group). However, Honda’s production costs have doubled as they are supplying double the number of teams. That probably sets their benefit back by ~15 million to plus 30 million
      3) Renault is worse off by ~32 million (50 million reduction from Red Bull – 18 million addition from Mclaren). However, Renault’s production costs have reduced. That probably reduces this 32 million penalty by ~15 million to 17 million
      4) Mclaren is worse off by ~143 million (25 million severance penalty to Honda + 100 million injection of Honda + 18 million engine fees to Renault)

      Those who made decisions at Mclaren really need a good answer as to why letting of 143 million was a correct decision so as to go from 9th in the championship to 5th (best case)

      1. What is 9th to 5th worth? They earnt 20 million+ when Alonso bumped them up only 1 place in the constructors.

      2. They had no choice, they just couldn’t work with Honda… Sure they’re not happy now either but they can be confident they have a platform they can build on with Renault rather than just constant and regular disaster.

        Their biggest issue was why they got themselves into that situation in the first place. Forcing Honda to only work with them when Honda would have been happy to work with other teams and get other teams solutions for problems they were having. That was the bigger issue than deciding to end the partnership when they did.

      3. @sumedh and yet the comparison with red bull is probably the best gift they could do to themselves. Costly gift indeed, though I suspect they have a few plans for 2021.

      4. SomeoneFromBelgium
        20th June 2018, 8:27

        For me the answer is the missing part in the article:the sheer level of incompetence and self delusion Mc Laren has fallen to.
        Yes, the first years the Honda engine was crap. But instead of urging them on to make their chassis better it seemed to have had the reverse effect. “The engine is to blame” they said. “Our car is perfect”.
        Look at the start of this year. They had no idea they were behind both on straightline speed and in cornering speed.
        I remember an interview with Eric Boulier where he said they had hit the target they set for themselves (or something to that effect). That says it all.
        Mind you, I want them to do well, since I’m a Stoffel fan.

        1. There was nothing ‘missing’ in the article: It’s about Red Bull / Honda. McLaren’s incompetence (or whatever) was covered here:

          https://www.racefans.net/2018/06/06/why-mclaren-is-failing-to-attain-f1-perfection/

          1. Steven Van Langendonck
            20th June 2018, 20:51

            Dieter,

            Thanks for your response. Reading back I see that it seemed as if I was critsizing your article. In actual fact I wanted to respond to the question posed “Those who made decisions at Mclaren really need a good answer as to why letting of 143 million was a correct decision so as to go from 9th in the championship to 5th (best case)”.

            And the answer is, of course, that they convinced themselves that with a Renault engine they suddenly would be fighting for victories and (why not) the championship.
            This hubris part is not covered extensively in your article (since it was already covered in previous articles). This is why I highlighted this.
            Cheers!

    17. @dieterrencken Would it be fair to say that the switch in engine partners STR and McLaren made is very comparable and somehow STR coped very well and McLaren failed miserably? If that’s so, that’s again another mark off the big team that is McLaren,…

      1. @flatsix I don’t think so considering

        Despite Honda’s well-known reliability and performance shortfalls the deal had considerable merit. Stung by McLaren’s unrelenting criticism, Honda had committed to ‘westernising’ its approach, and increasingly employed a considerable number of seasoned F1 personnel rather than operating the engine division as a Japan-based research laboratory for domestic engineers. In addition, a mass shake-up of management was on the cards.

        1. @davidnotcoulthard I wasn’t very clear but I was actually talking about 2018, and Renault/McLaren.

          1. @flatsix it is obvious that STR did a better job than McLaren but they benefitted of an army of Honda engineers desperately wanting some success whereas McLaren was just another customer for Renault. McLaren did a bad job on the chassis side too which did not help.

        2. I also don’t think it is fair to say, because STR has ‘enjoyed’ Mac doing all the grunt work with Honda for 3+ years, who have only now finally started to show a bit of promise. Too many by F1 standards. STR got Honda pu’s that have had way way more R&D put into them than Mac had, who started fresh with Honda upon their re-entry into F1.

          That Honda is finally improving shouldn’t be too much of a surprise since it has already been too many years for them to get this far, and Mac is already doing better with Renault behind them than they were with Honda.

    18. There are various factors. When two people divorce blame can usually be apportioned in both directions – to differing degrees. I doubt Honda was blameless in the McLaren split, but the latter must surely have some culpability as well. Let’s call it an ill-fated marriage that both could have saved with some effort – so both get a negative mark in ny book. But STR seems to be a better marriage partner for Honda; let’s hope we can say the same about McLaren and Renault…

      1. @dieterrencken hehe, sticken by the commenting button. Thanks for the answer.

        Let’s hope we can say the same about Red Bull and Honda. May they continue this positive trend.

    19. I suppose one of the outstanding questions is how does this effect Ricciardo’s choice over his future. If indeed he has a choice? If there a decent offer on the table will he want to risk staying put whilst RBR and Honda get up to speed?

      You can bet your life that if he does leave then Sainz will almost certainly be called back from Renault. Or RBR could even promote Gasly and ask Sainz to go to Toro Rosso.

      1. @phil-f1-21

        Mercedes or Ferarri simply have to go for Riccairdo now, given some journalists have claimed they would’ve signed Alonso if he hadn’t ‘burned bridges’.
        Now they have the chance of probably the most respected driver in F1 at the moment at half the salary of a multiple world champion.

        Honda need at least two years to overtake the top two engines and only then that will be with heavy European help. Riccairdo should look at how Alonso got sold and then burnt by the nostalgia of Honda. They rarely impressed with BAR and their own team from 2006-2008.
        There’s a potential world title waiting for him at either Ferarri or Merc.

        1. Both teams have solid driver pairings though. Why would Red Bull getting a Honda engine mean either Ferrari or Mercedes have to go for Ricciardo… Also the Honda car is what Brawn used to win the WDC with in 2009. To say that they didn’t impress is silly. They just dropped out at the worst possible time and wasted the time and money they’d spent developing.

          I really don’t think Red Bull are going to drop down as far as people are expecting with Honda. They are no amateur engine manufacturers across all of motorsport. McLaren just couldn’t work with them at all as was clearly apparent in the Grand Prix Driver documentary. There were very clear communication issues and culture clashes…

          1. @Tristan You are overlooking the fact that Brawn chucked out the Honda engine on the “Honda” car and won the championship with a Mercedes engine. That is the main reason why the team was sold to Mercedes.

            1. @angie I think this is a bit of a misconception, or at least a slight oversimplification. When you look at most of the development work which was being done by Honda for the RA109, very little of it is directly apparent on the BGP001. Even if you do maintain that the BGP is essentially the Honda with a Mercedes engine, you should acknowledge that Honda spent the majority of 2008 doing the groundwork to develop that car. The double diffuser to which the Brown owes most of its early performance advantage appears to be a fairly late development; something which crucially appeared only in a very limited fashion on two other cars. Would the RA109 have had the same performance as the BGP001? We’ll never know. But I think there’s plenty of evidence that it would have been a significantly different machine, and a very innovative one at that. Crucially by the end of the season, the early advantage given by the DD had been eliminated, leaving the Brawn at best the second fastest car on the grid – importanly, second to the Red Bull running a Renault engine, not to another Mercedes team.

              Anyway, what I’m driving at here is that it’s not a simple case of saying that Honda had a brilliant chassis with a rubbish engine, and that replacing the engine with a Mercedes one suddenly unlocked its performance potential. Honda’s cars were dreadful in virtually every way in the two years before they dropped out. Honda had a plan in place for putting themselves back into contention – a plan which involved largely sacrificing 2008 while they invested hundreds of millions into developing a title contender for 2009. Brawn GP owes its success largely to this massive investment by Honda, without which it would have struggled to match the other Mercedes runners. None of which were faster than RBR’s Renault-powered car without the benefit of the magic diffuser.

      2. Ricciardo’s grid locked until a Ferrari/Merc seat opens up. Neither team has shown signs publicly to want to get rid of their drivers. Until then I don’t think it really matters what he does, Renault and McLaren the chances are slim, as is his chance to beat Verstappen if they get in a title fight…

        It’s just a question of whether he can get a seat at one of those two teams and I think Red Bull being with Honda makes no difference to that at all.

      3. I don’t think sainz will ever return to toro rosso, why would he? As long as seats are occupied at red bull, toro rosso leads nowhere, now he’s at renault he’s gonna stay, unless he can go to red bull ofc.

    20. So Red Bull have chosen Honda for exactly the same simple reason McLaren did. They’ve decided they can’t challenge for the title with a customer engine.

      Next season it will be exactly the same anticipation and some hype that we saw with McLaren yet still a lot of unknowns.
      We wont however be able to directly compare Honda under McLaren to them under Red Bull if it’s true Honda have changed their practices to what McLaren advised in the first place.
      Maybe Red Bull have new ideas for Honda? Both being based in Milton Keynes they could develop a ‘best buddies’ relationship.

      What I expect-
      Red Bull to stay the 3rd best team in the first season with Honda.
      McLaren to see slight improvements in their 2nd season with Renault.

      Now it’s interesting of Mercedes and Ferrari (assuming they were in any positon in the first place to sign Alonso given we’re regularly told ‘he burned bridges’ so can’t go there) who now woos Riccairdo away from Red Bull ?

      1. And Renault team next year?

      2. @bigjoe – very nice points in your first few sentences.

        Maybe Red Bull have new ideas for Honda? Both being based in Milton Keynes they could develop a ‘best buddies’ relationship.

        RBR have worked closely with Ilmor in the past, and Ilmor has been one of the partners who Honda used last year, so I’m sure there’s a lot of synergy on the engine side in such a manner.

        Red Bull to stay the 3rd best team in the first season with Honda

        I agree with this, but there are different shades of 3rd best, and I think that aspect might change for year 1 of the tie-up. Where today RBR is a comfortable 3rd and frequently harassing Mercedes and Ferrari, next year I think they will be fighting harder to secure their 3rd spot (though I don’t see a big risk to that unless Ricciardo goes and replaces Sainz at Renault).

        PS: Are you the same BigJoe who was posting earlier without an account? If so, welcome, and it is good you’ve signed up for an account!

        1. Let’s say if that happens I’ll be disappointed, currently at least red bull takes the fight to mercedes and ferrari, it’s rare that 3 teams fight it out at the top, if honda causes red bull to slump down to early 2017 levels I’m gonna call it a bad choice, they’d have to be at least at the same level as renault to start with, also I wasn’t one of the pro-honda people, I always said it’d be a risk.

          1. Same level as they were with renault engine ofc*

    21. This was a good read.

      What do you think is a realistic goal for RBR in 2019? A McLaren-like Q3+top 5 in a good day? A podium? More than 5 podiums? A win? More than a win?

      I think they will be disappointed unless they can win at least one race. And as an F1 fan, I would celebrate this win a lot, Honda deserves it. I also think they won’t panic as long as they can get podiums, but less than that would be a disaster.

      1. They can always win in Monaco even with half an engine working just add Ricciardo.

    22. Honda/Red Bull association is in World Superbikes not MotoGP (as stated in the article) where Red Bull have an association with KTM (both Austrian Companies).

      1. Last time I looked at a 2018 Honda
        RC213 it had Red Bull on the lower fairing and front mudguard. I’m aware of the KTM and Superbike sponsorships, but this analysis is about the deep existing relationships between Red Bull and Honda at top levels.

        https://motogp.hondaracingcorporation.com/rc213v-2018/

    23. Smart as is said, nothing to lose. Can’t be much worse than what they’ve had with Renault the last 3 years.

      I’d fully expect Red Bull to continue where they are in terms of performance. The Toro Rosso’s aren’t that much behind where they have been the last few years and with a years development when plonked into a Red Bull chassis, the difference should be about the same.

      I expect a lot of egg on the face of Boullier and I’ll be amazed if he holds any position of note at McLaren next year if Red Bull perform with Honda. I question how he even found himself in that position to begin with, being the manager for the terribe Lotus-Renault as mentioned in this article also… Basically run two teams into the ground.

    24. Also of note in both situations blaming the engine, moving Lotus to Mercedes and now McLaren to Renault when in both cases honestly it hasn’t led to a magical turn around.

      It seems like he has only one play: Blame the engine manufacturer.

    25. Interesting article, but
      “Can it be coincidence that the winning streak commenced immediately after Renault withdrew from F1 as team owner to concentrate on engine supply, and ceased just as Renault’s board began mulling a full return to F1?”
      Yes, this has nothing to do with Renault withdrawing as a Team Owner or Returning again – other factors was at play – Adrian Newey entered RBR before the period started and at the end, new rules with new PU’s gave Mercedes the upper hand – Mercedes Engine Development did a much better job, than anyone else.

      “Thus Red Bull Racing faced two stark choices if it wished to break out of the customer engine conundrum: build its own engine, or cut a deal with an engine supplier not prioritising its own team.”
      And now RBR is almost repeating the McLaren error. After reading the book of Ross Brawn, I lost any hope of Honda getting back to the top of the grid, either as an Engine Supplier or as a Team. I still don’t believe it, but hopefully RBR will fare better than McLaren. If I were RBR, I would’ve gone for a long term plan of becoming an engine supplier, back in the days were the issues with Renault started. Now they are leaving Renault when these engines are bringing them close to the front – it isn’t Renaults fault that Max has blown points away all over the tracks all spring.
      And McLaren made 3 errors: Firstly, when they went for Honda engines, disregarding the cultural issues and the fact that the Japanese wanted to do everything in Japan, with only Japanese engineers. Second error was to continue after first season, where it was obvious that it didn’t work. And third error was to bail out, when Honda was finally improving.

      1. I agree on all points, except for leaving Renault (although I agree making their own moves to produce engines would have been better long term) shenanigans are already afoot with Renault saying there is a performance difference due to fuel supplier. Who knows how much they would hamstring Red Bull with that reasoning.

      2. What possible synergy is there for a drinks company to design and manufacture F1 engines?
        McLaren is the company that should have committed to building engines, both for F1 and their road cars.

    26. Great article that offered some rare insight into how some of the relationships in the industry work. Fuel suppliers, “first fill” – wow … I did not know that.

      Given the number of disadvantages RBR had in its relationship with Renault I’m now not surprised at all that they have made to move. Whether it’s successful or not will depend on how well they manage the relationship with Honda.

      I fully expect it to be just as successful as thy are currently with Renault if not more so as Renault don’t appear driven enough to make improvements to its PU.

    27. A very detailed article about a very intriguing annoncement.

      I have to say that, although Renault’s relationship with Red Bull was fractious, Red Bull was the only team giving them wins. The Renault works team is a long way off winning – and I wonder whether Renault really want to spend the kind of money that is needed to close that gap. I’m not sure what the marketing angle is for Renault to be in F1. Although they have had many successes, their passenger cars don’t have an image that benefits from motorsport, and the Renaultsport versions have become very niche indeed.

      Medium term my concern is that we might lose Renault from the sport if they become the last-placed engine supplier every weekend.

    28. I’m not happy about RBR’s decision because to me it is a big gamble.
      Renault wasn’t perfect but I have more confidence in them making bigger gains than Honda.
      This could also impact RIC’s decision although I think he would bolt to Ferrari or Merc no matter what engine RBR ran.
      I’m also concerned Newey will jump ship and head to Renault as he isn’t denying moving on.
      I think this is a move Marko will regret.

    29. I’m just wondering how Williams missed the opportunity they had last year to get Honda partnership. Claire wasn’t brave or creative enough or something else happened, maybe.

      1. johntodiffer
        21st June 2018, 3:35

        Williams had been doing pretty well with Mercedes… and then there was the unfortunate (for Monisha) two step with Sauber.

    30. @dieterrencken,

      Thank you so very much for this article. This spelled out some aspects that I would have never though about, especially the bind that Renault has been put into now. This is well worth the read.

    31. @dieterrencken small point but I’m pretty sure Chaleo Yoovidhya is dead. i assume his son now controls 51% but it seems mateschitz is still making all the decisions.

    32. Yes, he died in 2012 – see above. The shareholding was split amongst family members.

    33. ‘Stung by McLaren’s unrelenting criticism, Honda had committed to ‘westernising’ its approach, and increasingly employed a considerable number of seasoned F1 personnel rather than operating the engine division as a Japan-based research laboratory for domestic engineers. In addition, a mass shake-up of management was on the cards.’

      Had Honda already committed to this before McLaren dropped them?
      Or did they do it after the ‘divorce’ (effectively out of spite)?

      Considering McLaren were clamouring for this for years, if it’s the latter then it puts Honda in a very bad light.
      But if it’s the former then it makes McLaren look even more stupid for dropping them.

      1. @olliej

        There was a rumour they were receiving some outside help for the final season with McLaren. Obviously not enough for McLaren to be impressed. Maybe dumping them woke them up.

    34. They seem to have started recruiting mid-2017 – the number of new faces increased noticeably as the year went on. But the relationship with McLaren had probably broken down irretrievably by then even if not then terminated.

      1. Okay @bigjoe and @dieterrencken thanks for clarifying. So McLaren would at least have been aware that Honda were finally making the changes when they took the decision to split.
        Last year I was in favour of McLaren switching to Renault, but now with more information thanks to these really insightful articles from Racefans and Dieter, it increasingly looks like a terrible decision.

        1. Here’s an article – https://www.autosport.com/f1/news/131354/honda-ilmor-boost-creates-mclaren-dilemma

          I did remember Ilmoor being mentioned, but the article shows Renault have used them in the past at Red Bull’s request.
          Ilmoor is a consultancy so there’s no reason why McLaren couldn’t do the same with Renault or even a future supplier. In theory Ilmoor could turn them all into spec engines. They were behind the original Mercedes engines. I think Mercedes operate from their old premises?

      2. I understand dieters reasoning in this article, but don’t thing redbull will be better off with Honda, at best Honda might equal redbull…. power is converging between the makers at the end of this engine cycle, yet still Honda are 4th best, and still Renault slightly behind ferrari and merc. By the time Honda catches up, they will only catch up and not beat. They came into this formula 3 or 4 years after Mercedes started developing for this formula. Honda though have shown great speed to catch up, for this reason I believe red bull are thinking long term, and not 2019 or 2020, ie new engine formula from 2021, its a gamble I believe, but politically they are out with Renault, so they prefer marketing and positive politics over next 2 years. I really hope ricciardo leaves red bull. Max might want to but is owned by them for now.

    35. @keithcollantine they announced the press conference lineup for French GP:
      Obviously Cyril Abiteboul (Renault), Eric Boullier (McLaren), Christian Horner (Red Bull), Frederic Vasseur (Sauber)

      Source: https://www.formula1.com/en/latest/headlines/2018/6/fia-press-conference-schedule—france.html

    36. Am interested in seeing what happens to sainz now. Will he be back at redbull partnering verstappen, while ricciardo takes raikkonens seat? I actually hope it pans out that way. Renault should ha e taken kubica

    37. What a pathetic excuse of a team Mclaren has become. Doing everything Alonso wants is really working out for them huh?
      As for Red Bull, makes perfcet sense and i think they will have a good partnership with Honda.

    38. YellowSubmarine
      20th June 2018, 23:26

      Top, top article, fantastic stuff. Love the big-picture approach too.
      Thank you!

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