Wednesday, July 23, 2008

Let's go racin' boys! Maybe not

One of the elements of General Motors Corp.'s latest cost-cutting initiative, announced Tuesday, that didn't get a great deal of attention was the automaker's decision to cut back on financial support of auto racing. GM North America President Troy Clarke said GM's entire racing budget, estimated by some to be in the hundreds of millions of dollars a year, is under review. Clarke said GM's support of Chevrolet racing teams in NASCAR, the most popular racing series in the United States, is included in that review.

Racing for automakers has been a combination of ego and good business sense. Mercedes-Benz and Porsche, for instance, say the engineering lessons learned in racing helps them produce excellent products for their not-so-general-public customers. The same goes for Honda, which regards its racing-engine development as an important element helping it produce dependable engines for its Civics and Accords.

Henry Ford II pushed Ford Motor Co. to develop the legendary GT 40 race car in the 1960s basically for one reason--to allow him to travel to Europe and watch his racing teams beat Ferrari on its own turf.

There's an old adage about automakers participating in racing: Race on Sunday, sell on Monday. That used to work when the stock cars running in NASCAR races weren't too far removed from the models people could buy in dealer showrooms. But today's NASCAR race cars are custom-built with virtually identical bodies. The only visible differences between Dale Earnhardt Jr.'s Chevrolet Impala and Kyle Busch's Toyota Camry are the paint jobs and decals.

And being connected to racing might not be a good thing for automakers at a time when most consumers are more concerned about saving gas than they are about pretending they are Kasey Kahne or Danica Patrick. In fact, I would dare say that an automaker's connection to racing is irrelevant to most buyers.

GM Chairman Rick Wagoner made an interesting point about that at yesterday's news conference. Wagoner said GM's "legacy costs" extend behind pension and health care costs for its retirees. They include business practices that exist just because that's the way they've always been done. Support for racing is one of those legacies that GM may no longer be able to afford.