ON TRACK WITH ‘CRENNO’

How many industries can brag about having their own sport?

If there is anyone who knows everything there is to know about Australian Motorsport, it is John Crennan, who successfully ran Holden Special Vehicles (HSV) and the Holden Racing Team (HRT) for many years – that was until he ‘retired’ to head up Nissan Motorsport.

I know many Australian Dealers subscribe to America’s Automotive News as it is recognised as the world’s premium industry publication for automotive information. It is part of the privately owned Crain Publications group who specialise in all aspects of automotive reporting with a staff of 850 people in 11 countries.

I recently had to re-subscribe to their digital publication and was asked to tick which part of the automotive industry I was involved in. They listed 16 categories:

  • Franchised New Car Dealer
  • Used Car Dealer
  • Rental/Leasing/Fleet
  • Automotive Aftermarket
  • Vehicle Manufacturer
  • Parts Supplier
  • Material Supplier
  • Independent Design and Engineering Firms
  • Other Manufacturing/Supplier
  • Finance/Legal/Investment/Insurance
  • Advertising/Marketing Services
  • Media/Information Services
  • IT/Electronic Services
  • Consulting Services
  • Education/Organizations/Government Services
  • Other Service Providers

I rechecked their listing and tried to locate ‘Motorsport’ thinking I must have missed it. This segment employs more people than a lot of the other categories listed in their menu, in America as well as Australia.

The same can’t be said for one of Australia’s newest automotive publications, the AADA’s Automotive Dealer who have invited me to be a regular contributor to their bi-monthly publication where, amongst other topics, I want to fly the flag for Australian motorsport, the role it plays in the automotive economy, as well as the hearts and minds of the enthusiast.

Whilst the enthusiast category represents 15 per cent of all new and used buyers, they have a profound influence on the purchasing habits of their family, friends and networks when it comes to their choice of brands, Dealers and servicing.

It has been my experience to never underestimate the influence of this group, including their knowledge and passion of our industry. All the research that I have been exposed to highlights their number one recreational interest is motorsport; be it V8 Supercars, Formula1, Nascar or Go Karts – all are  regular watchers of motorsport and avid readers of the many motoring magazines and the road test reports in our national dailies.

Any car company or Dealer who doesn’t recognise the importance of motorsport in the overall fabric of the car industry is shutting out significant business opportunities. The word ‘Motorsport’ obviously contains the word ‘Sport’ and one thing I learnt very early on about cars and buyers is that the word ‘Sport’ or ‘Sporty’ is one of the most important and frequently used terms when the consumer is looking for a new car.

No matter whether the intending purchaser is an enthusiast or an everyday driver who uses the car to go from A to B, they are automatically predisposed to the one that looks ‘sportier’. Show me a car company in the past 10 years that doesn’t showcase any sporty flair and I will show you a company losing market share and struggling due to diminishing brand equity, particularly with the under 50 demographic.

Motorsport does make a significant contribution to the Australian automotive industry. I was recently interviewed by one of the big five accounting firms who are undertaking a major study of the Australian motorsport industry and its economic impact. It will be most interesting to read their findings and place this element of the automotive business into the perspective it genuinely deserves. It has been touted it will come in at $2 billion for our industry so one could only start to imagine what the figure in America would be. Based on my long standing WAG (wild arse guess) formula in converting Australian and USA relevancies of 1:20, the US racing scene may well be around $40 billion. This makes the Automotive News exclusion of the motorsport category even crazier.

There are 60 different national motorsport disciplines conducted under the control of the Confederation of Australian Motorsport (CAMS). Of these, 30 take place on sanctioned track circuits around Australia. It’s worth noting that at present, various interested parties are in discussions with government on potential new race tracks in Adelaide, Hobart, Central Coast NSW and Toowoomba, and each of these projects would come at a cost of $30 million each.

Of the 60 different racing categories, the biggest economic contributor to the Australian motorsport landscape is the V8 Supercar Series. Here are some key points on this category.

There are four manufacturers directly involved, Nissan, Ford, Holden and Volvo, and a fifth is a Mercedes-Benz privateer.

There are 28 franchises approved to compete with one car per franchise. Average per car cost is around $3 million per season, that’s $70-$80 million the teams have to find just to go racing with the additional capital cost of entry of $2 million-plus to acquire a franchise, and approximately $300,000 to construct a race car chassis and $100,000 per engine.

10 Teams operate the 28 franchises with each team having substantial investments in facilities, plant and equipment, technical and marketing staff.

The 10 Teams between them would have an inventory of approximately 40 racing chassis and 90 race engines which would equate to an investment of approximately $20 million.

In addition, there is a V8 feeder program named the Development Series where a further 30 cars of near identical race specification with a further investment in cars and engines alone of around another $15 million.
The V8 Supercar sport is owned 65 per cent by private equity group Archer Capital who three years ago acquired this equity for an unconfirmed enterprise value of $300 million. The 10 teams own the balance of 35 per cent of the entity.

The lifeblood of this sport is sponsorship, with naming rights starting at approximately $1 million per car for 75 per cent of the teams to $2 million per car at the top end.

For an industry so fortunate to have its own sport, it is most frustrating that motorsport does not get anywhere near the support it should from within its industry.

I have no issues with car companies spending millions to support other nationally televised sports like AFL and NRL, tennis, golf and cricket. But how about supporting the sport of your industry and promoting the people who are constantly striving to achieve higher standards of performance and lift the DNA attributes of the cars on the showroom floor.

I would like to see a program put into place by 2016 (which would coincide with the exit of our local manufacturing) introduced with the government and the senior body representing the industry (FAPM) whereby each car company would be required to allocate $10 per car sold into a motorsport fund. Obviously any company already investing the equivalent amount or more like Nissan, Ford, Holden and Volvo would not be required to contribute.

My estimate would be a $5 million fund per annum from this initiative which should then be matched dollar for dollar by Ian Macfarlane’s Department of Industry. Could there be any better way to allocate this $10 million than to assist the engineers who will be dislodged by the closures to bring their talents to the motorsport industry, and also spend the funds intelligently by promoting all 60 layers of employment with Australian motorsport?

Given the final days of local manufacture are fast closing in, lets look after our own sport (before others) and set about building our motorsport industry to a world’s best practice for very modest levels of investment from all car brands and government. The infrastructure does not have to be created, it’s already there waiting to have its endless opportunities exploited.
No other part of the Australian automotive industry can create the passion and commitment that motorsport does.

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