Detroit — The streets of the Motor City were transformed last weekend into the country's only downtown racecourse for Detroit Grand Prix V, one of 16 worldwide Formula One events. The attentive spectator might have noticed that two of Detroit's big auto companies, Ford and General Motors, are once again building and backing race cars.
While such programs were virtually required in the 1950s and '60s, carmaker involvement in motor sports faded in the late 1970s and early '80s, primarily because of the oil crisis and a devastating recession.
Going billions of dollars into the red didn't help much, says Michael Kranefuss, director of special vehicle operations at Ford. Another reason ``we got out of racing was because we needed all the engineering capacity it tied up'' to meet increasing demands for fuel economy, as well as safety and clean air standards, he says.
Grand Prix races are the most prestigious in the competitive world of motor sports, a broad term covering everything from the Indianapolis 500 to small-town drag strips. At the Detroit event, spectators saw 600-pound racing machines with the most advanced technology in such categories as engines, suspension, electronics, and aerodynamic design.
But the big question then and now is, are these expenses justified?
French carmaker Renault gave up its Formula One team this year, although it continues to be a major promoter of other motor sports around the world. Ironically, it was a Renault-powered Lotus driven by Brazilian Ayrton Senna that won this year's Detroit Grand Prix. Several independent teams were using the company's engines this year.
Although Formula One engines are barely as large as those in small economy cars -- about 1.6 liters -- they boast 750 horsepower or more, allowing them to hit speeds of up to 200 miles an hour along the short straightaways of the 2.9-mile Detroit course.
Designing and building such complex machines can be phenomenally expensive. The Formula One team sponsored by Renault was estimated to have run up an annual tab of more than $10 million for vehicles, engineering, salaries, transportation, and other costs.
Ford spent about $8 million just to design a new Formula One engine, which made its less-than-exciting debut this year. Ford will likely spend millions more to improve the engine.
While Grand Prix racing may be the most expensive of motor sports, it involves only a small portion of the time, effort, and funding that United States and foreign carmakers spend on auto racing. Exact expenditures are closely guarded secrets, but the totals are estimated in the hundreds of millions of dollars a year.
There are a variety of reasons with which car companies justify such expense. For one thing, they often use motor sports as a way to train and measure up their young engineers under fire. In turn, racing demands rapid technological developments, which can then be incorporated into production automobiles.
``There [also] is a recognition that motor sports are a valuable part of the automobile business in marketing an image,'' says Herbert Fishel, director of special products for the Chevrolet division of General Motors, the largest sponsor of motor racing among domestic carmakers.
Chevrolet has developed a loyal cadre of speed-oriented buyers who equate their Corvettes and Camaros to what they see on racing circuits.
Searching for ways to boost the disappointing sales of the German-built Merkur sports sedan, Ford sponsors such events as the Merkur Motor City 100 NASCAR race, which ran along with the Detroit Grand Prix last weekend. Ford spokesman Paul Preuss notes: ``If you're interested in proving you can match the world's best, there's nothing better.''
Japanese carmaker Honda, which has become a major player in the Formula One game, advertises that the engine in the company's new Integra luxury brand of cars evolved out of the Honda Grand Prix power plant.
But Ford's Kranefuss has his concerns about the escalating costs of motor sports, particularly in Formula One racing: ``If anything requires us to double or triple our efforts in order to remain competitive, we would to take a very serious look at our future participation in Grand Prix racing.''
Although Renault, Honda, Ferrari, and BMW all sponsor their own teams in various forms of motor sports, the Big Three US carmakers prefer to limit their involvement to either developing engines and other hardware -- which can then be used by a number of competing teams -- or sponsoring actual events, like the Merkur-backed races of the National Association for Stock Car Auto Racing.
Measuring the cost effectiveness of these programs in terms of sales is difficult. In fact, Rod Campbell, head of Campbell & Co., which contracts to promote motor sports for Ford, calls it ``a black art,'' noting that it is ``primarily promoting image.''
Still, most automotive marketing and advertising executives agree that motor sports pay their way.
``Many potential buyers, young people particularly, are spending a lot more time doing things than passively watching TV,'' says Jay Kuhnie, national marketing plans manager of the Chrysler-Plymouth Division at Chrysler. ``It's harder to find out what they are watching or reading, so it helps to bring the product right to them at events.''
Fleishman Hillard Inc., a St. Louis-based public relations firm, commissioned a telephone survey of 1,000 racing fans earlier this year to measure how much effect sponsors gain. The results found that 94 percent of those surveyed identified STP as a racing sponsor, while companies such as Ford, Champion spark plugs, and Goodyear tires were identified by more than 70 percent of those polled.
Occasionally, carmakers have found ways to tie their names to a popular motoring event at a relatively low price. Chrysler, which has no Formula One programs, simply sponsored the special race update signs placed around the Detroit track. This put the word ``Dodge'' high in the air, where it was visible from virtually any point around the twisting track.
Similarly, Detroit race promoters reportedly sought as much as $300,000 for a well-placed track-side banner.
``It's great to be competitive and win,'' says Jesse Snyder, who has covered motor sports for Advertising Age, ``but it can be much more effective if, as those cars go around the track, your name is on the wall on the most photographed corner.''