Category Archives: Sermon

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Salt Fever

2009 Bonneville Speed Week

Bonneville Salt Flats and the Speed Week. It is like nowhere else on earth, they tell you….

2009 Bonneville Speed Week

Yeah, sure……….but they are right………..there IS nowhere like it.

2009 Bonneville Speed Week

The pure speed, the free spirit, the sense of freedom and the almost infinite space………………I hear that salt gets into your blood…………….I tested positive for Sodium Chloride…………

2009 Bonneville Speed Week

One day I will go back to the remote salt flats, perhaps you never leave…………..

2009 Bonneville Speed Week
Ry Cooder caught the mood of the addiction to speed on the salt………..

Three o’clock, this morning, I woke up in a dream.
Thought I heard a FlatHead motor roar, I thought I smelled gasoline.
A feeling came upon me, that I ain’t had in years.
Something like a hot dry wind, whistling past my ears.
Saying “Time, Time, Time is all you got”.
There’s a memory that’s still burning, way down in my mind.
And that’s why, I’m going out and trying, a FlatHead one more time.

I ain’t seen my racing buddies in thirty years, or more.
One by one I lost them, out on the dry lake floor.
We learnt to push those FlatHead cars as hard as they could go.
Just like old Whiskey Bob, down on Thunder Road.
I hear their voices calling, just across the finish line.
And that’s why, I’m going out and trying, a FlatHead one more time.

I’ll get back to you baby, don’t you have no fear.
‘Cos I been there, and I wrecked that, and baby I’m still here.
But I can’t take you with me, when I cross the finish line.
And that’s why, I’m going out and trying, a FlatHead, one, more, time.

Time,

Time,

Time is all you got………………………………….

2009 Bonneville Speed Week

John Brooks, October 2013

In The Old Days When Life Was Simple

HDK 4904

At the age of seventy I find myself thinking and talking like my parents before me, which something I swore I would never do, but have done nevertheless. In short I find I’ve become an “old fart” who is not necessarily willing to accept the world as it is today. Clearly then I need to get out of the rut I find myself in, for the world has changed and I need to deal with it as it is, not as it was.

So what has any of this to do with sports car racing?

Just like the genetically engineered foods we now eat, my sport – pardon me, our sport – has been engineered to produce the results its organizers want to see rather than letting chance and nature dictate the final random outcomes of the past. Yes, there remains the element of chance, but it has been reduced substantially by maneuvering the regulations so that there will be no boring finishes.

For those of you who are non believers I would suggest you examine the NASCAR’s Grand American Rolex championship whose scriptures seem etched in sand because they appear to change on a moment’s notice, as was the case in last month’s season opening Rolex 24. There, in the name of equalizing performance, the officials decided to reduce what they saw as a perceived advantage the Corvette Daytona Prototypes enjoyed over their rivals, only to give the Chevrolet sports racers some of it back when it became obvious they –the officials – had been a bit over zealous in their approach.

I’m not for such actions, but I recognize why they are taken. After all, racing – at least here in the United States – is more entertainment than it is sport. Yet, in this case the changes were made in a matter of days, not years or months, but in days. Moreover, there will be further performance balancing changes for the next two Rolex rounds, after which the Grand-Am will review things again.

Even in the relatively low tech Grand-Am universe, this imposes unnecessary costs on the participants, just as it does when Formula One and others make regulatory revisions throughout the season in an effort to enliven the show. It is as if the rules makers want to wipe out their mistakes on an ongoing basis rather than trying to get things right in the first place. Indeed, about the only other comparable such situation is in the mortgage industry with its variable rate loans, and we all know what they’ve led to.

But, those in charge of the Grand-Am haven’t stopped at performance balancing. At Daytona, they instituted new full course yellow flag regulations that made it easy for those who had lost laps to make them up. In fact the loosening of the scriptures was such that one of those prototypes that was in a position to win in the final stages had been as far as seven laps in arrears – not once, but twice.

No one can argue that the Grand-Am’s actions made the Rolex 24 far more exciting than it otherwise might have been. But, is that what the sports car fan wants? Certainly the NASCAR spectator does. However, I’m not sure that certainty applies equally to the world of road racing.

In my day, what sports car spectators seemed to desire the most was to watch excellence and to dream about that excellence. Consider the 1973 Can-Am where Mark Donohue and his 240 mile-an-hour turbocharged Porsche 917/30 dominated the proceedings. Despite the lack of close competition, the 1973 Can-Am was the most successful season at the gate in the history of the series; something that can not be said about its subsequent years when the turbo Porsches were not present, leaving in their place equally matched, but largely uninspiring lower performing substitutes in their place.

With Grand-Am and its NASCAR approach to the sport about to take over the North American sports car scene in 2014, there are many worried about the future. And, in my mind, they have more than a little justification for having those concerns. Not only did the Can-Am fade away into history after its competitive playing field was leveled, but in the decade since the Grand-Am debuted its techno restricted Daytona Prototypes, it has not been particularly popular with its intended audience.

It appears that even now there is a desire for excellence rather than engineered mediocrity. And that gives this “old fart” hope for the future.

Bill Oursler, February 2013

 

 

 

 

 

Keep Your Friends Close, Keep Your Enemies Closer?

GRAND AM AT LE MANS?

If you’re a sports car racing fan, you’ve most likely given little respect to the NASCAR owned, Grand American Rolex-backed, series led by the dowdy, less than pleasant looking Daytona Prototypes. And, while those at the Grand Am may disagree with your opinion, you’re not alone.

For the most part the DP concept was conceived as a cost containment exercise that would allow the rich gentlemen drivers in North America to indulge their desires to race in the higher, more exotic reaches of U.S. road course sandbox without having to spend the hundreds of millions of dollars it takes to win at places like Le Mans these days.

The problem for the Grand Am and its competitors is that the rules have so reduced performance that what emerged from the NASCAR kettle was something that no one other than the participants themselves cared much about. In short, while the Rolex series and its premier event, the Rolex 24, retained their prestigious names, that’s about all they kept.

Put another way, the Grand Am championship retained the bun, but threw out the meat. Well, boys and girls, get ready for a shock: the Grand Am may be going big time. Following on the heels of last week’s announcement that an upgraded version of the Daytona Prototypes will be merged with current crop of LM P2 cars to form the top division of the combined ALMS-Rolex successor title chase in 2014, came rumors that the DP set may well be headed to Le Mans.

What insiders have been saying quietly for months, namely that such talks between Grand Am officials and their ACO counterparts have been ongoing, peeked into the daylight with a report on SPEED TV’s website not long after the Grand Am-ALMS press conference in Daytona Beach.

Whether or not those supposed talk produce a substantive result remains to be seen. As with all things concerning the merger of the two American road racing camps, when it comes to the details there is only vagueness; vagueness that for the most part is justified given the disparity in the basic philosophies behind the Rolex and ALMS championships.

What is not so vague, however, is the major league problem facing the sports car segment of the motorsport industry. Put in a single word it is “cost.” Up into the early years of the 21st century, privateers such as South Florida’s Champion Racing, which won Le Mans with its non-factory Audi R8, could obviously play and equally obviously be successful at the highest levels. With the coming of today’s computerized, electronically dependent prototypes that require crews measuring in the hundreds that is no longer true.

The creation of headlining programs now rests solely with the manufacturers, some of whose resources have been stretched beyond the breaking point; as witnessed by Peugeot’s abrupt department in 2011. For The ACO limiting the pointy end of the finish order at the Sarthe is a desired intention. However, it is also one that pushes championships like the ALMS, and even the Rolex down a notch out of the so-called “Big Leagues” where, for promoters the money is.

Of course there is an answer to the dilemma, cheap horsepower and lots of it, which is readily available not only in the engines used by off shore powerboat racers, but in NASCAR’s stock car world as well. However, in the current “green” environment the horsepower solution is path not likely to be taken, even if most fans might like to see it become reality.

So, what does all this come down to? The answer is “dog food,” or how best to sell it. No matter how good the salesmanship, if the dogs don’t like, and won’t eat, the dog food, its maker might want to consider changing the recipe. Will the public flock to Le Mans to see the Daytona Prototypes scurry around for a class victory? Probably not. Would they pay more attention if those same DP’s had a chance at beating the sophisticated manufacturer prototypes? You bet.

Returning to America in 2014, if fans knew they were watching cars with such a potential, would they pay more attention, and perhaps more importantly for promoters pay to watch in person in larger numbers? That is the question. After all, car racing is a professional sport first and a testing ground second. Given a choice, one suspects that people will make their choices based on their preferences. One can only hope that those in charge read the tea leaves correctly.

Bill Oursler, January 2013

The Ghosts of Christmas Past

The phone rings, Oh God, another snake oil salesman? The voice is clear and distinctive,

“Mis-ter Brooks”

Ok it is Porsche Guru, Bill Oursler, there goes an hour at least. After the usual discourse on the happenings in the world generally and the world of endurance racing in particular we get to the nitty gritty.

“What do you know about former Porsche guys being charged this week?”

Nothing, like most folks in the motorsport business I have tunnel vision when it comes to events outside my narrow range. Still two minutes of Google unearthed this:

Ex-Porsche CEO Wiedeking Charged Over Failed Volkswagen Bid
By Karin Matussek – Dec 19, 2012 1:19 PM GMT
Former Porsche SE Chief Executive Officer Wendelin Wiedeking and ex-Chief Financial Officer Holger Härter were charged with market manipulation over the use of options in a failed bid to take over Volkswagen AG. (VOW)
The indictment was filed after more than three years of investigations into claims Porsche misled investors in 2008 when it denied that it sought to buy VW. The company in October of that year disclosed a plan to take control of the carmaker.

 

I suggest you read the rest of this excellent summary from Bloomberg

HERE

 

My thoughts drifted back five years to a time when I ran another website, SportsCarPros with my old buddy, Kerry Morse. We were the Becker and Fagan of our part of the sport, or so we imagined. To be fair we did tweak a few tails and were generally just about tolerated by the grown ups. I recall certain folks getting more than a bit tetchy with one of our posts, I mean what did the Pros from Dover know?

Gardening in Stuttgart: Porsche Hedges It’s Future

As an auto enthusiast and a Porsche fan, I remember when the most important, relevant, and exciting discussion surrounding this unique and successful manufacturer revolved entirely around its cars. However, today it seems the cars are yesterday’s news.

The most intriguing articles about Porsche in recent weeks involve comment and speculation surrounding the company’s financial results and have nothing to do with their cars. This is not to say that Porsche’s commitment to its iconic sports cars has in any way wavered, but we can scarcely be surprised that the market’s attention lies elsewhere. After all, if any manufacturing company in its past fiscal year made 3.6 Euro trading stock options with allegedly, a further three and a half billion of additional profits in its pocket for the current fiscal year, compared with 1 billion Euro from the operating business, it’s not surprising that the operations are overlooked. Time to trade the automotive engineering degree for an M.B.A.

I do not pretend to understand the analysis in the press concerning the nature of Holger Harter’s option strategy. However, while writers in the Financial Times and other journals are clearly pulling their punches in deference, presumably, to the marque and its legacy (hey it’s also a profit, not a loss!), they raise some legitimate questions which non financial readers (and Porsche car fans) should take note of. It’s been suggested, for examples, that, given loopholes in European stock exchange reporting regulations and Porsche’s ability to deflect pressure for greater transparency in financial reporting, they used their credibility, reinforced with a bid (a bid allegedly designed from the outset to fail), to increase the value of VW stock, the value of their VW holdings acquired in 2005 and 2006, and, unseen to outsiders, the profit of their option trading strategy. The announcement in November that they would postpone their acquisition offer (the stock price was too high!!) took that card off the table but by then it appears the 3-4 billion Euro of option profits was in the bag. Some might construe this as a little too cute. At a minimum, most observers, while restrained in their comments, construe this as a spectacularly aggressive trading strategy which has little to do with making cars and makes many of the world’s hedge fund managers look like underachievers.

With no more information with which to better explain the future options or hedging strategy of Porsche A.G., most financial writers have advised caution aimed at Porsche management and, presumably, analysts and followers of Porsche and VW. Quite apart from the impact that deteriorating economic conditions may have on consumer spending or credit and equity markets, it is virtually certain that these extraordinary returns cannot be repeated and that the “hedging in the normal course of business” explanation cannot be justified by the underlying activities of the group (if you exclude the possibility of ‘Texas hedging’, of course).

There can be few, and I suspect no, industrial companies in the world that in the last few years have, with or without hedging, generated the same ratio of financial profits to operating income that Porsche demonstrated in its recent fiscal year (and is likely to demonstrate in the current fiscal year). This alone should serve as a warning that any continued earnings from this source and of this magnitude suggest far higher levels of pure financial risk than can be possibly be warranted. Hopefully, that will not be the case and we can instead give credit to Porsche for having used this one off strategy to finance, at essentially no cost, a significant increase in its VW stake, now worth 14 billion Euro. No harm, no foul – the market has a tendency to forgive speculation if it’s successful, despite all the initial tut-tut ting.

If indeed this was a one-time phenomenon, it is good news for us automobile types. We can now get back to evaluating Porsche as an auto company, confining our interest and even our concerns to the preservation of that brilliant heritage built around its legendary sports cars and honed with studied diversification into vehicles like the Cayenne. We can also focus, as we should, on the strategic decisions Porsche faces given its now substantial 31% holding in VW. What is the role of this strategic stake? Is it merely a financial play or is this to become Porsche’s platform for a global footprint as a volume manufacturer? In the latter case the nature of Porsche may change forever. The investment could prove to be a major distraction from the company’s past and present mission; note for example, current rumblings from Berlin aimed at protecting VW’s labor force. This might militate against attempts by Porsche management to restructure parts of VW and divert important management energy away from the sports car business. To Porsche followers this should perhaps be the question of the hour.

Whatever happens I hope we will see less of these financial profits and more of Porsche as the company we know and cherish. However, and just in case, I will re-subscribe to the Financial Times that will join the raft of auto magazines which arrive every month.

Lindsey Harcourt-Lathrop
January 2008
Sandy Bay, Gibraltar

So what has this to do with anything in our sport? Well the vultures are circling as hedge funds and other investment groups aim to recoup their losses, remember for Porsche to make a profit, someone else had to take a loss. The sums involved are counted in the billions and if the charges against the ex Porsche pair are proved, then some very heavy hitters will be looking not only for their pound of flesh but also an arm and a leg, perhaps even the whole carcass.

The immediate or short term future of the FIA World Endurance Championship could be in question, given that the current intention is to have both Audi and Porsche duking it out in the top category with anyone brave enough to challenge them. What happens if the money men come calling, they will not be satisfied with two sacrificial lambs doing time, they will want serious amounts of hard cash. The Volkswagen Group has been on the crest of a wave in the past few years, strong sales growth reflected in sustained profitability and extremely positive cash flow. They probably have the resources to ride out any tsunami but the flag should at least be waved. Maybe it will all be a storm in a tea cup, but that’s what “folks in the know” told us five years ago. Maybe it’s time to call Lindsey again.

Missing In Action

2000 Le Mans 24

In an outburst of the festive spirit the ACO have launched a competition to mark the 90th Anniversary of the race, assuming that we get to next June that is. Three cars have been selected for each decade that the race has been run and the public is encouraged to vote for one from each set and in return there are some big prizes.

2001 Le Mans 24

The competition can be accessed HERE

2002 24 Hours of Le Mans

However a quick glance at the contenders raises a few questions. Why the Porsche 908 that failed in both 1968 and 1969? Why the Renault Alpine A442 or Rondeau M379 instead of the three time winner (and twice second) Porsche 936? No hint of a Tricolour being waved then.

2004 24 Hours of Le Mans

The same logic is at work when the Peugeot 908 is included but not the Audi R8, a five time winner and arguably one of the greatest endurance racers of them all.

2005 24 Hours of Le Mans

Sacre Bleu! And including the Delta Wing…………..bandwagons and jumping methinks. Still it is the Season of Goodwill to all Men and the prizes are well worth having, just salivate to the top one.

Winner: prizes with a value of 3 570 Euros
Two pitwalk passes for the 2013 Le Mans 24 Hours plus the complete collection of the Le Mans 24-Hours Yearbooks from 1978 to 2012 plus the book of the Le Mans 24 Hours 1961-1973, as well as the 2-volume set celebrating the centenary of the ACO, and two invitations for the exhibition whose theme will be the winning cars.

I have the Yearbooks, well all bar 1983, and can attest to them being an essential part of any Le Mans fan’s library. So enter and hopefully enjoy. Just thought I would remind folks of the R8’s record at La Sarthe.

John Brooks, December 2012

Once Upon a Time in the West

American Gothic
Much trepidation over WTCC’s first USA visit.  Would we be subjected to another European export that can’t survive the crossing, a steaming helping of tripes a la mode de Caen — the chance to watch old men grinding the tires off of a gaggle of front-drive shit-box SEAT Leons that Americans have likely never even heard of?

Un-American

Sunday, a surprisingly large and enthusiastic crowd turned-up at the raceway in Sonoma to see what it was all about — and the racing was quite entertaining.  I had to scratch my head about the made-for-television format of two 13 lappers with lots of dead-time before, between, and after, but the open grid for pre-race festivities and plenty of tradin’ paint appeared to keep the youthful throng happy enough.

Trading Paint

In this age we’ve become accustomed to their short attention spans — sailing’s America’s Cup World Series was on San Francisco Bay earlier in the month, and Cup defender tech-billionaire Larry Ellison exchanged traditional blue blazer yachting’s endless hours of tacking duels for an explosion of fixed-wing catamarans contesting a series of brief high-tech dinghy races.

Future Ford

The micro-burst races of the WTCC follow a similar tack in attempting to present our old-school sport to an X-Games audience.  WTCC’s sprint-race format has the advantage of keeping the field from stringing-out, while the reverse grid assures that there is plenty of action during the brief moments during which millennial attention-spans can accept stimulation.  It’s all over before the next round of Tweets can come through.

Witness Protection Programme

Of course, I can’t imagine that the tires of a front-driver would hold-up to any more than the required 13 tours, so it works out rather well for teams trying to compete in cars employing on this unfortunate layout.  The speeds, handling, and size of the WTCC cars is quite well-suited to the Sonoma circuit.  Real racing, real teams, real drivers, well presented and organized.

G ‘n T

If the shotgun wedding of ALMS and GrandAm can be interpreted as evidence that the manufacturers are heading back to racing what they really sell, this series presents a fine showcase for the sort of car that the newly-pauperized 99-Percent are actually buying today.  Why, even Morse showed-up in a press-fleet Kia Forte rather than his accustomed Panamera Hybrid or Bentley Flying Spur.
David Soares, October 2012

Per Ardua Ad Astra

The attention of many in my world will be on a press conference later today held at Daytona Beach, though I doubt that anything will be revealed that has not already been leaked. Around about that time some of us will raise our eyes to the sky and reflect in awe at the depth of the human spirit. At 15.15 GMT Alessandro Zanardi will compete in the first of his three races at the 2012 Paralympics, participating in the Mens Individual H4 Time Trial.

We should be inspired by the determination and sheer guts of Alex and all his fellow Paralympians. Here he is at the same track back in 2009.

John Brooks, September 2012

Carpe Diem Quam Minimum Credula Postero……….

As the field blasted off for the 47th edition of the 12 Hours of Sebring, who could have imagined that 14 years on that we would still have the American Le Mans Series? Sportscar racing in North America had been in turmoil for the best part of a decade and it seemed that state of affairs would continue.

Well it has been a helluva ride for those lucky enough to have a small part. My involvement was full on during the first four years but much less since, nevertheless I always look forward to rolling into Road Atlanta or Sebring. Will that be true in the future? Who can say.

So rather than get angry or despondent, celebrate the fact that we have been lucky enough to be part of some of the greatest racing seen in the past couple of decades. Nothing lasts forever, ask Peugeot.

The message is the same today as it was in Roman times, Horace had that nailed down. Perhaps we should party like it’s 1999.

John Brooks, September 2012


Sebring 2012 – The Old Gal Wasn’t What She Used To Be

When I was studying military history as a young college student back in the 1960’s, my professor told me that if someone asked why I was doing so, I should immediately change the subject. In retrospect, it was both sage and non sage advice.

 
History, which is truly important (“those who don’t learn the lessons from it are doomed to repeat them over and over again”), gets no respect. Indeed, for the most part it is ignored in a world preoccupied by the present in a near total self indulgent way. And, perhaps even more sadly, when those among us decide to pay attention, they tend to do with such superficiality that they might as well not have bothered in the first place.

 
All this was brought home to me at Sebring this year. Aside from the fact that its duality as both the season opener for the American Le Mans and the new World Endurance Championship caused it to be possibly the most confusing, difficult to follow long distance event of all time, it marked the 60th anniversary  of the first ever 12-Hour in 1952. And, while Sebring has Ken Breslauer as both its press officer and “historian in residence,” the folks at the top all too often pay only lip service to his knowledge and talents.

 
As an example, despite Breslauer’s efforts, Sebring has yet to put a proper museum together to celebrate its legacy, or even to explore a working relationship with the Collier Museum, one of the finest collections of significant race cars anywhere, that is located in nearby Naples, Florida.

 
A second example, was the non presence, at the luncheon celebrating the occasion, of my friend Luigi Chinetti, Jr., who lives barely 100 miles from the track, and who, with his father, a three-time Le Mans winner, played a significant role through their Ferrari North American Racing Team, in Sebring’s past.(Among other things, NART fielded the first Ferrari 250 GTO to race at the 1962 12-Hour, the car winning its class and finishing second overall behind a NART entered prototype.)

 
There are others who weren’t part of the tributes to the now more than six decade existence of Sebring’s famous affair. However, Chinetti would have brought a unique perspective to the happenings this March on the aging circuit, having grown up in and around the race and the sport. For Chinetti, like so many others, the past was a better place to be: a time when humans, rather than computers were the keys to design excellence and design individuality. Yet, just as is the case with other aspects of life, respect for and an understanding of history does not mean we should live in the past, and as I noted learn from its lessons to make the present and the future better.

 
Over time motorsport in general has made tremendous strides in safety and efficiency while not forgetting the inherent excitement any speed contest generates. Love them, or hate them today’s prototypes are the ultimate in ground bound racing technology, and as such are truly unforgettable. It is that factor, which was present in spades at the 12-hour among the prototype categories, as well as in the production GT entries, that will keep the interest of the fans.

 
What history does is to polish the tradition that this new wave of racers are carrying on, and thereby enhance their importance. I may be an old fart, but that 250 GTO which Chinetti and his dad put on the 12-hour grid 40 years ago, now is worth well over 25 million dollars: not bad for an obsolete race car that, along with its almost equally valuable contemporaries that some would so casually dismiss as part of the dustbin of racing’s past.

 

Hopefully as people decide to explore history, I will be relieved of the necessity of having to change the subject when I’m asked why I’m a historian. And, that, as far as I’m concerned can only be a good thing.

Bill Oursler March 2012

Financial Reporting

La Route est Dure

It would appear that Peugeot’s sudden withdrawal from its Le Mans campaign has provoked a state of ire amongst the motorsport mavens of the UK’s journalistic community. As I noted recently, Autosport ran a piece last week purporting to the REAL reasons behind the Lion’s retreat. Of course, it did nothing of the sort and I was surprised at the reaction of those who took the time to peruse and reply to my piece. Some of what was written would not make comfortable reading for the magazine’s leadership, as they appear to have alienated a significant section of what should be their core market. Maybe only the cranks write to me, an unrepresentative selection; it would make perfect sense.

This week Damien Smith, editor of Motor Sport, gets into the act in his monthly editorial “Matters of Moment”. Mr Smith correctly declares that the stuffing has been knocked out of FIA WEC and Le Mans as a result of Peugeot’s withdrawal and Audi having little or no opposition, except a small Japanese company called Toyota. However getting the bit between his teeth he veers away from the rational.

“Peugeot is likely to return one day, if finances allow. But for now the best thing about a company that produces dull road cars is over. What a shortsighted and plain selfish decision, totally in keeping with a corporate bean-counter boardroom mentality.”

What??

What??

Motor Sport has been one of the recent success stories in the motoring print media. Since being sold to an independent publisher by the Haymarket empire, it has put on circulation, bucking the trend in the market and I would guess that advertising revenues are also on an upward course. The secret of this performance is simple really, well written content matched to top level production values; it is a premium product. This is why I take issue with the statement quoted above. It is completely at odds with the customary intelligence displayed throughout the magazine.

PSA Peugeot Citroën is Europe’s second largest car manufacturer, employing around 200,000 directly, though recent events have seen that number cut by over 5,000. So perhaps up to a million or so people are directly affected by the company’s performance, a number that is amplified many times when one considers those employed in the supply chain and other related businesses. Then there is the huge amount of tax that these people pay, directly or indirectly. These are big numbers.

Furthermore, in common with virtually the whole motor industry, PSA has strategic alliances with other giants such BMW, Chang’An, Dongfeng, Fiat, Mitsubishi, Renault and Toyota, either producing models under licence or developing new technologies. So even more people around the world who are directly affected if there are problems at PSA. New legislation is being introduced throughout the world is aimed at reducing emissions from motor vehicles, a costly process with all the expenditure and risk front loaded, a major financial headache for the management of any car manufacturer. Consideration must also be given to the social responsibilities that large corporations are bound by, particularly in Europe. The fortunes of PSA have potentially a major impact on the financial stability of France, Europe and the rest of the world. The Supervisory Board of PSA have on their shoulders a heavy responsibility. Many people depend on them doing the right thing; peoples’ future prosperity is at stake.

I wrote last week of the catastrophic losses in the second half of 2011 suffered by Peugeot.

Desperate times call for desperate measures. In last October PSA planned a reduction of annual overheads amounting to €800 million, coming at a cost of 6,000 jobs. Subsequently further cost cutting of around €200 million from annual overheads has been considered necessary. A race programme consuming a rumoured €50-60 million per annum would be an obvious target for both management and unions, given that any easy options had already been exhausted.

The losses will have also drained the cash reserves of PSA, so assets are being disposed of. The company raised €440 million from the sale of car rental company CITER and there is plan to dispose of real estate which is anticipated to raise a further €500 million. Perhaps the most significant sale is that of an undisclosed shareholding in wholly owned transport company GEFCO. Even in the difficult market conditions of 2011 GEFCO accounted for 16% of the PSA Group’s profits. Furthermore, disposing of these assets in the prevailing economic climate and in the circumstances of a fire sale is hardly likely to maximise potential returns. The PSA Group is hoping raise €1.5 billion from these transactions, a tall order.

What I had not looked closely at until now was the cash flow statement. Cash and liquidity are the life blood of any business. You can be profitable but if you run out of cash then you will go out of business. Even I can understand that.

The PSA Group had net cash and cash equivalents at the 2011 year end of €5.7 billion, a drop of €4.7 billion from the end of 2010. This massive decrease can be attributed to several factors, some planned, some not. On the planned side of the ledger the accounts reveal investment in new plants and ventures in India and China, markets that are expanding while Europe contracts. In addition there are the development and launch costs anticipated in 2012  of the Peugeot 208, the Citroën DS5 and the introduction of four other diesel hybrid models. During the first quarter of 2011 PSA also repaid €2 billion to the French State, the balance of a financial assistance package agreed in 2009.

What could not be foreseen at the time of budgeting for 2011 was the calamitous effect that the European Sovereign Debt Crisis would have on trade, particularly in PSA’s major market sectors. There are several problems affecting cash flow that manifest themselves in these circumstances, lack of profitability as margins are eroded, the holding cost of inflated inventory levels and the difficulty of hedging against currency fluctuations. The cost of raw materials was also increased unexpectedly by the instability on the currency exchange market. The ability to raise finance is also under pressure as sovereign nations struggle to meet their own liabilities. Put simply, borrowing and lending are a matter of trust and that is in short supply right now. Another unforeseen event that had an adverse effect was the Great East Japan Earthquake and Tsunami, causing a costly interruption of the supply of vital components.

So taking all of these factors into account it is difficult to see how the Supervisory Board of PSA could have done anything but axe the Le Mans project. If they are to continue to raise finance in an adverse market, then they need to demonstrate that they are willing to make difficult decisions and what better way than making a substantial cost saving in a high profile manner? There is also the small matter of the powerful French Trades Unions. There is no way that are they going to allow a non core activity such as racing to continue while their members are faced with possible redundancy. The argument that the new technology necessary to provide personal transport in the future will be developed faster in the heat of competition is a valid one, but all the technological advances in the world are pointless if the business has gone bust. The development will go on, perhaps at a reduced pace, but we live in an imperfect world.

Most people do not have as the centre of their universe a small city 120 miles to the west of Paris. Motorsport will not bring the cure for cancer or save the universe; it is part entertainment, part technological development and to those, like myself who are lucky to being involved in some minor capacity, mostly hugely enjoyable. Like all children I do not want my toys taken away, but just occasionally it has to happen. Who is being selfish now?

Finally calling the members of the PSA Supervisory Board “corporate bean-counters” is not polite nor strictly accurate. The Vice Chairman of the Managing Board is one Jean-Philippe Peugeot. He is definitely a motorsport enthusiast, having raced in 2010 in the Nurburgring 24 Hours in a Peugeot RCZ HDI. He also took part in four rounds of the 2005 Le Mans Endurance Series, driving a Pilbeam MP93 in the LM P2 class with Pierre Bruneau and Marc Rostan; he scored points in two races, including a podium place at Spa. However much Mr Peugeot enjoys motorsport, as senior management at PSA, he has responsibilities that must be discharged. A lot people are depending on him and his colleagues. I suspect that others in high places are “car guys” too.

So Mr Smith, withdraw your remarks. They are not in keeping with the brand values that are proclaimed on Motor Sport’s front covers:

Passion, Independence, Perspective, Opinion, Authority.

John Brooks, February 2012