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Thread: Engine Manufacturer Talks

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  2. #2
    to summarize, they're talking to a few OEMs and things are encouraging.

    The big statement here is the quote for costs. Over 5 years they are telling manufacturers it will cost between $8 and $10 million a year with advertising built in to that figure... That seems mighty low to me but what do I know? If it really is that low then I would think getting a 3rd OEM shouldn't be all that hard.

    I have nothing to back this up but I feel like that number is a real stretch. Maybe it doesn't count any real development? Maybe it really is that cheap now?

  3. #3
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    What it costs them now would be for the expert insiders to say. To my thinking the total cost to all the manufacturers goes down as they supply a smaller percentage of the field. When/if Honda and Chevy drop from 12 of 24 to 8 or 4 their R&D and advertising costs might shrink or stay the same but the actual engines supply and the number of engineers would be reduced. That's why they welcome more to the game.


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    not this again

  5. #5
    Quote Originally Posted by ColdSpiderGT View Post
    to summarize, they're talking to a few OEMs and things are encouraging.

    The big statement here is the quote for costs. Over 5 years they are telling manufacturers it will cost between $8 and $10 million a year with advertising built in to that figure... That seems mighty low to me but what do I know? If it really is that low then I would think getting a 3rd OEM shouldn't be all that hard.

    I have nothing to back this up but I feel like that number is a real stretch. Maybe it doesn't count any real development? Maybe it really is that cheap now?
    I have been saying for a long time, with decent sourcing from both sides that the ENGINE portion of the OEM program (including sponsorship commitments) is well less than $25 million.

    At the moment, both Honda and Chevy spend more than $10 million a year, but that is due to the fact that they are each absorbing half the field. Adding a third manufacturer will cut some costs borne by Chevy and Honda by 33%.

    Do some Math:

    1) Assume each car "Costs" the OEM half a million a year, out of pocket. Engines cost about $1.2 per car per year, teams pay $700k. OEM eats the rest.

    2) If there are 24 cars, each OEM will eat the expenses for eight cars, which is $4 m per season. Without the 500, that's what the ongoing engine operating "loss" to the OEM is for the entire season.

    3) Development. First, engine development could be built into my $1.2m per season total cost figure about. I have gotten conflicting information about that. But let's say that it's not. And let's say that is going to cost $10 million to develop a REVISED engine from the current formula. This seems like a lot (because the formula is not THAT open and not THAT different from what we have now), but let's use it. So you amortize that over five seasons of the formula and you're at another $2 million to your per-season operating cost.

    So you COULD probably OPERATE the program for $6 m per season over the course of a five-year program. The rest is for sponsorship, marketing, etc.

    BEFORE YOU SAY: "WHAT ABOUT INDY?"

    It is my understanding that the 1-off indy programs are closer to break-even, from the Manufacturer's point of view. That is, the "extra" cars are not subsidized to the extent that the full-season entrants are.

    As I have been saying for a while now, OEM participation in Indycar is a relative Bargain compared to other motorsports. Among other things:

    1) Honda spends more on the Acura DPI program than they do on the Indycar program.
    2) GM spends more on the Cadillac DPI program than they do on the Indycar program
    3) GM spends more on the Chevy ACO/IMSA Corvette program than they do on the Indycar program
    4) I have heard it speculated that Honda is spending more money LAST SEASON and THIS SEASON on the F1 program than the TOTAL it has spent on Indycar Engines EVER, since the program started in the 1990s.

    Finally, the big budget buster for the Indycar manufacturers, particularly Honda, was Aerokits. Cost more than 10 times what the engine program cost.

    Engine costs are generally predictable. Aero, not so much.

  6. #6
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    Quote Originally Posted by LowRyter View Post
    not this again
    Not kidding. Some one was kidding around in another forum that Marshall Pruett and other known Indycar writers secretly rotate these news stories everytime they're bored or when there's nothing else to write about. I agree. I think this is also true of any Alonso/McLaren related stories.
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    Quote Originally Posted by Hitokiri View Post
    Marshall Pruett and other known Indycar writers secretly rotate these news stories everytime they're bored or when there's nothing else to write about.
    What do these guys do in the 6 months off-season? Especially in years like this where the car config is essentially carryover.
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    Insider milliesdad's Avatar
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    What’s happens when Miles and Co do a really good job of selling and have 2 manufacturers agree to participate?
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    Quote Originally Posted by LowRyter View Post
    not this again
    Agreed.. yawn
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    Quote Originally Posted by milliesdad View Post
    What’s happens when Miles and Co do a really good job of selling and have 2 manufacturers agree to participate?
    Then TrackForum will find something to hate about it I'm sure.
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    Quote Originally Posted by milliesdad View Post
    What’s happens when Miles and Co do a really good job of selling and have 2 manufacturers agree to participate?
    \

    that'll be the day a game show hosts gets to be president.

    ahhh nevermind.

  12. #12
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    whoever it is can participate, but if they don't snap up Andretti, Ganassi, SPM, etc., they will be an also-ran.
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  13. #13
    I think any new manufacturer that comes in will understand the series is talking about budgeting to participate, but will also need to budget for additional expenditures.

    A new manufacturer could come in and put funding behind an existing midfield team like ECR or Dale Coyne to help raise them up the grid, in a similar fashion to how Honda put money into Ganassi to win them back over from Chevy. Another scenario could be a new team entering with the manufacturer as their lead team, McLaren or a returning DRR.

    New manufacturers will mean new/more money flowing to the teams, which should help raise the competitiveness of the mid pack.

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    Quote Originally Posted by Bullwinkle View Post
    I have been saying for a long time, with decent sourcing from both sides that the ENGINE portion of the OEM program (including sponsorship commitments) is well less than $25 million.

    At the moment, both Honda and Chevy spend more than $10 million a year, but that is due to the fact that they are each absorbing half the field. Adding a third manufacturer will cut some costs borne by Chevy and Honda by 33%.

    Do some Math:

    1) Assume each car "Costs" the OEM half a million a year, out of pocket. Engines cost about $1.2 per car per year, teams pay $700k. OEM eats the rest.

    2) If there are 24 cars, each OEM will eat the expenses for eight cars, which is $4 m per season. Without the 500, that's what the ongoing engine operating "loss" to the OEM is for the entire season.

    3) Development. First, engine development could be built into my $1.2m per season total cost figure about. I have gotten conflicting information about that. But let's say that it's not. And let's say that is going to cost $10 million to develop a REVISED engine from the current formula. This seems like a lot (because the formula is not THAT open and not THAT different from what we have now), but let's use it. So you amortize that over five seasons of the formula and you're at another $2 million to your per-season operating cost.

    So you COULD probably OPERATE the program for $6 m per season over the course of a five-year program. The rest is for sponsorship, marketing, etc.

    BEFORE YOU SAY: "WHAT ABOUT INDY?"

    It is my understanding that the 1-off indy programs are closer to break-even, from the Manufacturer's point of view. That is, the "extra" cars are not subsidized to the extent that the full-season entrants are.

    As I have been saying for a while now, OEM participation in Indycar is a relative Bargain compared to other motorsports. Among other things:

    1) Honda spends more on the Acura DPI program than they do on the Indycar program.
    2) GM spends more on the Cadillac DPI program than they do on the Indycar program
    3) GM spends more on the Chevy ACO/IMSA Corvette program than they do on the Indycar program
    4) I have heard it speculated that Honda is spending more money LAST SEASON and THIS SEASON on the F1 program than the TOTAL it has spent on Indycar Engines EVER, since the program started in the 1990s.

    Finally, the big budget buster for the Indycar manufacturers, particularly Honda, was Aerokits. Cost more than 10 times what the engine program cost.

    Engine costs are generally predictable. Aero, not so much.
    Your math is suspect, especially the $100 million plus spent on aerokits. That's quite a leap from the well into 7 and even 8 figures you used to throw around. To believe engine cost will go down by 33% with an additional manufacturer is unrealistic. I don't have the number, but I suspect the cost of development is a significant portion of the budget, and that is likely to increase with more competition.
    Last edited by BADGER; 01-25-2019 at 11:56 AM.

  15. #15
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    Quote Originally Posted by Bullwinkle View Post

    As I have been saying for a while now, OEM participation in Indycar is a relative Bargain compared to other motorsports. Among other things:

    1) Honda spends more on the Acura DPI program than they do on the Indycar program.
    2) GM spends more on the Cadillac DPI program than they do on the Indycar program
    3) GM spends more on the Chevy ACO/IMSA Corvette program than they do on the Indycar program
    4) I have heard it speculated that Honda is spending more money LAST SEASON and THIS SEASON on the F1 program than the TOTAL it has spent on Indycar Engines EVER, since the program started in the 1990s.

    Finally, the big budget buster for the Indycar manufacturers, particularly Honda, was Aerokits. Cost more than 10 times what the engine program cost.

    Engine costs are generally predictable. Aero, not so much.
    Not so sure about the DPI vs IndyCar costs...

    From a Racer article
    https://racer.com/2018/08/16/ford-ke...-to-dpi-entry/
    With an estimated annual budget of $30 million per entry, the outline from the ACO/FIA was the opposite of what IMSA and its Prototype entrants were expecting – especially with a suggested budget that is three to five times higher than the costs to field a current DPi entry.
    Even on the pessimistic (high) side, that'd put a DPI effort at $10MM/year. On the optimistic side, a DPI is $6MM/year.

    Yeah Acura/GM is footing more of the bill in DPI than in IndyCar as the teams don't pay leases for engines, but the mfg is also supplying fewer engines (in Acura's case, maybe 4 per season). Chassis cost may be a bit higher due to developing the body kit, but that's a nonrecurring expense that's amortized over multiple seasons. While there's a mfg payment to IMSA, there's not other required promo expenses.

    Likely a GTLM entry is higher cost than a DPI, as there's more continuous development allowed.
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    As Derek Daly is fond of saying, well, well, well...

    Cosworth is opening/expanding a U.S. base after inking a long-term deal with FCA:

    https://www.autosport.com/indycar/ne...s-over-indycar

  17. #17
    Oh PLEEEEEEASE be true!!

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    Quote Originally Posted by Tomsk View Post
    As Derek Daly is fond of saying, well, well, well...

    Cosworth is opening/expanding a U.S. base after inking a long-term deal with FCA:

    https://www.autosport.com/indycar/ne...s-over-indycar
    Quote Originally Posted by ColdSpiderGT View Post
    Oh PLEEEEEEASE be true!!
    Don't get too excited just yet:

    "We've spoken to two or three [manufacturers] over a period of a couple of years," Wood told Autosport.
    "There is interest out there, definitely. "Right now, we're not close to translating it to the real world."

  19. #19
    Quote Originally Posted by Grizzlor View Post
    whoever it is can participate, but if they don't snap up Andretti, Ganassi, SPM, etc., they will be an also-ran.
    Very true. The only other angle would be for someone to come in with Penske being the driving force behind their entry. A new manufacturer simply has to be with one of the big three out of the gate or they are not going to last for long.
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    Quote Originally Posted by I Love May View Post
    Very true. The only other angle would be for someone to come in with Penske being the driving force behind their entry. A new manufacturer simply has to be with one of the big three out of the gate or they are not going to last for long.
    If Chevy loses Penske, then it wont be long before they're gone.
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  21. #21
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    Penske won’t drop Chevy. Either Andretti or Ganassi will associate with potential new manufacturer
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  22. #22
    Quote Originally Posted by EdJVuky View Post
    Penske won’t drop Chevy.
    You seem awfully confident of that. You should ask yourself: "if they are so committed to Chevy-GM, Why is Penske not working with GM in either IMSA or NASCAR?"


    Either Andretti or Ganassi will associate with potential new manufacturer
    Because every new manufacturer manages to drag a powerhouse along for the ride? Because Honda is going to choose to keep Coyne and let the newcomer have Ganassi and/or Andretti? You have historical evidence of that?

    History says that establish teams stay with proven winners.

    Sometimes that means going with the newcomer-- (2012: Chevy-Ilmor with Penske and Andretti, Toyota with Penske and Ganassi in the IRL).

    Other times it means the new guys have to build up new or underachieving teams -- (Toyota in CART. Honda in CART and the IRL. Lotus in 2012.)

  23. #23
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    Quote Originally Posted by Bullwinkle View Post
    History says that establish [sic] teams stay with proven winners.

    Sometimes that means going with the newcomer...
    Isn't that statement self-contradictory? How does "teams staying with a proven winners" equate to "going with the newcomer?"

    Quote Originally Posted by Bullwinkle View Post
    Sometimes that means going with the newcomer-- (2012: Chevy-Ilmor...
    Given that Ilmor had been responsible for the design and creation of the engines badged as Hondas in the IRL/ICS it is more than a little ridiculous to label them as being a "newcomer." The only "new" part of the equation was that GM/Chevrolet were now signing those badging checks.

    On top of that, given that Roger Penske is the majority owner of Ilmor, his choice to "go" with "newcomer" Ilmor should surprise no one.
    Last edited by Spike; 12-20-2018 at 12:45 PM.
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  24. #24
    Quote Originally Posted by Tomsk View Post
    As Derek Daly is fond of saying, well, well, well...

    Cosworth is opening/expanding a U.S. base after inking a long-term deal with FCA:

    https://www.autosport.com/indycar/ne...s-over-indycar
    "[IndyCar is] untapped by car companies and I'm surprised more don't think 'OK it's not F1, it's not Le Mans, but the Indy 500 is quite close behind' "

    This ought to be entertaining ....


  25. #25
    Quote Originally Posted by Spike View Post
    On top of that, given that Roger Penske is the majority owner of Ilmor, his choice to "go" with "newcomer" Ilmor should surprise no one.
    In IRL competition, Penske chose to use Toyota engines against Ilmor-Hondas. In CART Penske chose to run Hondas after he dumped Ilmor-Mercedes engines.

  26. #26
    Insider Jakester's Avatar
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    I would opine that Penske's close affiliation with Ilmor would keep him in the Chevy camp.

    Similarly, Andretti's links to Honda would keep him in the Chevy camp.

    That leaves Ganassi as the likely 'big 3 candidate' for a new manufacturer.

    Though I wouldn't completely discount SPM or RLL as lead team for a new manufacturer.

  27. #27
    Andretti and Ganassi have both run Chevrolet engines when inclined. I don't see a strong allegiance with Honda from either. Both run in other series without any Honda connection.

  28. #28
    Quote Originally Posted by Bullwinkle View Post
    In IRL competition, Penske chose to use Toyota engines against Ilmor-Hondas. In CART Penske chose to run Hondas after he dumped Ilmor-Mercedes engines.
    Penske had no stake in Ilmor during these periods, other than a few months overlap while deals were completed.

    Mercedes owned Ilmor outright by 2001, and Penske didn't buy what is now Ilmor back until the end of 2005.

  29. #29
    Alliances all equate to money. If someone offers Andretti or Ganassi enough money, they will go.

  30. #30
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    Quote Originally Posted by TheOtherSide View Post
    Alliances all equate to money. If someone offers Andretti or Ganassi enough money, they will go.
    I don't think current IndyCar rules allow a simple big pile of money from mfg to run their engine. That said, there are mfg partnerships allowed which could considerably reduce the end cost of leased engines to a partner team, as well as allow some additional testing and technical support.

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