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F1 Mexican Grand Prix: Mercedes ‘already selling power units at a loss’

Toto Wolff explains Mercedes' reluctance to accept a cost cap for power units, saying it is already making a loss at the current customer price.
Toto Wolff says Mercedes is reluctant to reduce the price of its power units for customers since it is already making a loss, though he insists the manufacturer is open to cost cutting dialogue.

The FIA has sparked controversy by submitting a proposal to introduce a standard customer engine for 2017 after it was revealed Ferrari had utilised its veto to vote against a cost cap measures designed to reduce the price of the power units for small, cash-strapped teams.

Indeed, with the FIA expressing its frustration at the lofty price of power units, which are believed to be in the region of 20-25 million euros, the organisation's president Jean Todt revealed the price should be more in the region of 12 million euros, which he believes will still ensure a profit.

“I consider €12 million, which is still quite a lot of money, but it is an acceptable amount,” he said. “I am not responsible for following the budgets of the manufacturers and their expenses, but I think it is not a provocative figure, I think it is a fair figure.”

However, Wolff refutes that claim, saying Mercedes – which will supply Williams, Force India and Manor next season – makes a 'substantial' loss on its power units,

“We already lose money on the engine side and it's substantial,” he said. “The question is how much more do we lose if we continue to subsidise those engines to some of our partners, but it's already a deficit.”

Despite this, Wolff remains willing to discuss measures to reduce costs and though he remains bound to Mercedes' commercial interests, he understands why the FIA is pressuring the manufacturers.

“I think that it's totally legitimate for the FIA to try to convince the power unit manufacturers to reduce the price because the better the price the more sustainable or the easier it is for the smaller teams to make the numbers. So I can understand the position.

“On the other side, as engine manufacturers we have complied to these new regulations and have developed those engines and all that based on a business case. Part of the business case obviously is the income side and if that was to change now then it changes our figures.

“That is why there are different interests, but for the benefit of Formula One in general we have to have that conversation so I absolutely understand his standpoint.”

Mercedes is believed to offer the cheaper power units out of itself, Renault and Ferrari, while Honda's supply is determined through its currently exclusive partnership with McLaren.




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ProfessorX

November 01, 2015 11:33 AM
Last Edited 29 days ago

I remember when people were talking about these things becoming more affordable, but they are doing a better job taking away post race antics and bankrupting teams. This isn't some "social justice issue", this is what happens when rule happy people with too much 'power' decide they know what's best, and tell people what they have to do and limit competition. There is no competition, thus price of a premium power unit is unregulated by the market. It is however Mercedes pleasure how they offer performance to price, because they do not have to worry about competition. History is replete with examples of the 'masses' giving in to the demands of a few who decide for the worse, the fates of others. #IgnoranceIsStrength #CompetitionKeepsUsHonest

mrfill

November 01, 2015 1:33 PM

Mercedes are no strangers to making a loss... Between 1997-2006 the Smart Fortwo lost them £2.82bn (£3762 per unit) Between 1997-2004 the Mercedes A-class lost them £1.44bn (£1214 per unit) Trivial when compared to VWs £3,887,051 per unit loss for the Bugatti Veyron



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