Dollars to Donuts, Auto Racing Draws In Carmakers Despite the Cost

Yahoo

22-03-2025

From the March/April 2025 issue of Car and Driver.
The adage "Win on Sunday, sell on Monday" justified automakers' NASCAR efforts in the 1950s. But is boosting car sales still the reason manufacturers invest in motor racing? With sky-high budgets to compete in Formula 1, any additional sales attributable to a Sunday win likely aren't enough to cover the massive costs. Automakers unable to stomach the hundreds of millions of dollars in annual spending it takes to field a competitive F1 team have plenty of other racing series to compete in, but even sales linked to success in one of these still may not net enough of a profit to cover the expense of competition. However, factor in potential vehicle sales from brand exposure in racing with the earnings from sponsorship deals, potential prize money, and—in some series—revenue-sharing models, and motorsports involvement can help an automaker stay in the black.
"The potential benefits can outweigh the costs," says James Picariello, senior automotive analyst at BNP Paribas, about F1 racing. Most F1 teams operate out of the U.K., a country that legally requires companies to disclose certain financial and accounting information to the public. Thanks to this, we know the true costs of fielding a modern F1 team. For instance, Mercedes-AMG Petronas F1 spent north of $530 million during the 2023 season but ultimately ended the year with more than $104 million in profits. Not all F1 teams are profitable, though. The Aston Martin– affiliated AMR GP, for instance, shelled out more than $300 million in 2023, only to end the season almost $37 million in the red after taxes.
TRACKING NEW TECH: Government regulations and consumer demand limit just how much of a race car's mechanicals make their way to an automaker's road cars, but competition continues to drive innovations that go beyond the track. Manufacturers may approach racing as a place to test proofs of concept or the general reliability of new technologies or ideas, be it in the form of a powertrain setup, thermal management, or a tire compound.
Compared with F1, the tens of millions of dollars it costs to field a two-car team in the FIA World Endurance Championship's (WEC) Hypercar class and the International Motor Sports Association's (IMSA) GTP class is a relative pittance. Though the potential profits from top-level endurance racing are a fraction of those from a large global series like F1, so are the possible losses. For automakers, some of which have multibillion-dollar marketing budgets, operating an endurance-racing team at a potential small loss can be a risk worth taking to increase brand exposure and awareness.
Evidently, Genesis thinks so. In December, Genesis Magma Racing revealed the GMR-001 LMDh-spec endurance racer that will compete in both WEC's and IMSA's flagship classes starting in the 2026 and '27 seasons, respectively. Along with promoting the upcoming Magma line of performance vehicles, the effort aims to increase overall awareness of the barely 10-year-old luxury brand. "Motorsport is known for raising brand awareness," says Genesis chief brand officer Luc Donckerwolke. "But that's not the only factor. The main factor for me is to learn from motorsports and get experience and know-how for our high-performance products."
Cadillac reentered endurance racing 25 years ago. Come 2026, a GM/Cadillac effort will contest Formula 1.
AT ALL COSTS: Since 2023, F1 has enforced a $135 million cap covering almost every aspect of the development and manufacturing of a team's car, the salaries of most team personnel, and garage equipment costs. The sport holds engines to a separate $95 million max. Starting in 2026, those caps will rise to $215 million and $130 million. There are no limits on driver salaries or marketing budgets. Thanks to generous sponsorship deals, ample prize money, and revenue sharing, F1 teams can operate in the black.
"We sold approximately 700 to 800 General Motors vehicles through our IMSA racing platform in 2024," says Meagan Quinn, a marketing manager for GM who works on Cadillac Racing. The company can track just how many sales are directly attributable to leads generated at on-site vehicle displays at races. "If somebody tells us they're in the market right now, a dealer reaches out to them immediately," Quinn adds.
Though IMSA does not share attendance figures, association president John Doonan claims 11 of 12 events in the 2024 season had record attendance. Meanwhile, NBC Sports said last year that viewership of its IMSA broadcasts grew 37 percent in five years, with the network claiming more than 12 million viewers last season.
To Doonan, who before joining IMSA served as the director of motorsports for Mazda in North America, the continued enthusiasm for motorsports—including the growing interest in endurance racing—from automakers and fans alike is little surprise.
"For me, in my heart of hearts," Doonan says, "the most authentic way to market and advertise an automobile brand is through motorsport."
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