Mercedes, Hockenheimring, 2018

Profits fall as Mercedes F1 engine builder expands into Formula E

2018 F1 season

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Mercedes AMG High Performance Powertrains Limited, the Daimler Benz subsidiary responsible for Formula 1 hybrid engine supply to the parent company’s serial championship-winning ‘works’ team plus customers Force India and Williams, recorded total sales of £192m in 2017, official financial filings show. The equivalent turnover figure for 2016 was £140m.

The company reported pre-tax profits of £8.5m, a fall from £12.9m the year before, which represents a margin of 4.4% against turnover, down from 9.2%.

Although Mercedes HPP’s primary focus is on F1 engines, the company also provides powertrain engineering services to Daimler. It was instrumental in adapting the F1 power unit for road use in the Project One hypercar launched at the 2017 Frankfurt Motor Show, which is currently being tested at secret locations in England.

Various other motorsport projects were also undertaken on behalf of the group including development work on Formula E power units ahead of the company’s planned entry in the championship’s 2019/2020 season.

The split between F1 and its other activities are not reported. However, in previous years the approximate breakdown split was 80/20, with work on the hypercar project and Formula E development likely skewing that to 65/35 in 2017. HPP reported a headcount of 637 employees, including 89 graduates, apprentices and placements, compared to 571 and 72 respectively in 2016.

During the season under review Mercedes power units achieved 12 wins, 15 pole positions four one-two finishes, and accumulated 46% of available points (they managed 51%) the year before.

The report lists four active directors: Ola Kaellenius (non-executive and chairman), Daimler senior board member; Bernard Heil (non-executive) Daimler’s head of powertrains; Andy Cowell (managing); and Niki Lauda (non-executive). Mercedes Motorsport CEO Toto Wolff is not listed, nor do Companies House registers reflect a subsequent appointment.

Mercedes HPP generated 83% of its total expenditure in the United Kingdom, the filings state.

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9 comments on “Profits fall as Mercedes F1 engine builder expands into Formula E”

  1. Would be interesting to know what the marketing value of the division is for the brand.

  2. “Profits fall as Mercedes F1 engine builder expands into Formula E”… Did nobody warn them Formula E teams won’t buy F1 engines? :p

    On a more serious note, they don’t publicize how the department splits its activities (yet). And if they finally do it is anybody’s guess whether it represents reality. The sport is thinking about budget caps but it is hard to see how it can be implemented over this kind of entanglement.
    Maybe MB does not want a budget cap and deliberately create these cross relationships to frustrate the implementation?

    1. Budget caps won’t apply to engine suppliers. And engine prices are already capped. It’s more the R&D on behalf of Daimler that’s kept under wraps.

      On that note, Ferrari doesn’t split its entire F1 operation from the overall company, at all.

      1. Thanks.
        I assume specific aspects of the engine development will be tailor made to suit the works team rather than client teams.
        This too could add value to the race team without turning up in their books.

        1. Works and customers get exactly the same PU, except occasionally Lewis gets a one off improved lightened version (missing some bits or extra shavings in key components for reliability purposes).

  3. “Mercedes HPP generated 83% of its total expenditure in the United Kingdom, the filings state.”

    Mercedes HPP- One of the great British companies.

    1. … and like most great British companies, it’s owned by a country based somewhere in the EU. Or India, since I don’t think India’s part of the EU. Yet.

  4. It doesnt really matter if profits dropped as for Mercedes this is a marketing expense. The goal is not to make money but to win Championships and further advance the German brand. In doing so, they would be more then happy if profit and loss were equal and zero.

  5. I wonder if the engine subsidiary has a monetary sale of it’s engines to it’s parents company “works” F1 team, or are the sales numbers primarily from Force India and Williams. In other words, does the Mercedes F1 team purchase engines from the Mercedes subsidiary engine builder. I would assume so, as that’s the point of having it a separate company.

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