Racing To Build The Brand - Brief Article - Statistical Data Included

Automotive Industries,  May, 2000  by Ken Gross

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The media exposure can be huge. But so are the costs and risks.

Everybody's going racing these days. From Cadillac's factory assault on LeMans next month, to Johnson Controls, Inc.'s, high-profile sponsorship of a TransAm team, the auto industry is betting that millions spent on the race track will pay off in the showroom.

It doesn't matter that exotic Formula I or LeMans cars bear no resemblance to anything you can buy. Nor is it relevant that those 200-mph Winston Cup cars battling door-to-door on the high banks of Daytona are about as close to a Taurus or Monte Carlo as an F-16 is to a Cessna. Racing success validates everything an automaker or supplier wants to say about its products and brand. But while the media exposure can be huge, so are the costs and risk.

"Racing is like riding on the back of a tiger," noted Wolfgang-Peter Flohr, who ran BMW's racing program in the 1980s. "You're OK if you stay on his back. But if you fall off, you'll get eaten."

Certainly Daimler-Benz knows this all too well. At last year's 24-Hours of LeMans, the Mercedes factory race cars crashed mysteriously in practice. During the race, one of the CLR racers flipped spectacularly in a violent accident witnessed by a worldwide TV audience. Luckily, the car's driver survived without a scratch, but an embarrassed Mercedes is skipping the endurance race circuit this year.

Not so its stablemate Chrysler, whose factory-backed Vipers are shooting for an outright LeMans win after dominating the GT class in recent years. As Viper's racing success has proven the car's credibility around the world, it has also helped establish Chrysler's brand image in new markets. The Audi, BMW, Ferrari, Mercedes and Porsche brands were built the same way. They, along with veteran supplier Bosch Dana, Goodyear, Hella, Michelin, Recaro, Siemens and others, know well the risks and high cost-to-benefits ratio of auto racing. So do the upstarts. American specialty sports car maker Panoz has jumped into the LeMans fray, with Ford and Visteon backing. It will be joined this year by Cadillac, whose last appearance at the famous circuit was in 1950.

General Motors officials realize the challenges of a new effort, but they're committed to proving that Cadillac can compete as a luxury carmaker on the world stage. The same goes for other brands -- Jaguar (via Ford), BMW and Honda -- that are either joining or reentering the megabucks F1 fray this year. Honda's four straight F1 crowns from 1988 to '91 firmly cemented that company's image as a powertrain master.

Does racing make good business sense? Mercedes-McLaren boss Ron Dennis stresses that a company goes racing because market research says it should. As legislation makes passenger cars more similar, establishing product identity becomes extremely difficult. Winning races, Dennis notes, helps nail that critical identity.

It also keeps your name out front, as interior supply giant Johnson Controls has seen for the last three years. JCI's sponsored TransAm race car wears the logo of its popular HomeLink consumer brand.

"We use racing to increase HomeLink's visibility," explains JCI spokesman Dave Roznowski. "Racing multiplies customer exposures. It works whether you win or not."

JCI estimates it receives five times the value of a comparable advertising expense from the TransAm effort, Roznowski notes. "It takes a couple of years to be effective. We review our efforts every year because it's more than writing checks. You need a concerted program to maximize your success."

Clearly, companies that succeed on the racetrack can promote their success in many ways. But before you ride that tiger, remember the high price of failure.

Veteran AI marketing columnist Ken Gross is director of the Petersen Auto Museum in Los Angeles. A former brand manager of a global consumer goods company, Ken has written extensively about automobiles for three decades.

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