The news that Honda will close, unless a buyer can be found, is sad, but it is not surprising. It is hard to see why Honda returned to Formula One in the first place just as it is hard to see why Toyota, Mercedes-Benz, Renault and BMW are involved. None of these companies need F1, they have established first class reputations without it. Toyota has spent squillions over eight or nine years (there was all that activity before their debut) and has had the odd podium. You cannot call that money well spent.

People aspired to a BMW or Mercedes-Benz before they entered Formula One. Audi make some of the best cars around and they are not in F1.

When Mercedes-Benz went racing in 1952 and 1954 and '55, it had an important point to make as it recovered after WWII. M-B made its point and withdrew. This has been the pattern of every major manufacturer that has entered any high level of motor sport.

There was a time when Subaru made dreadful cars with clunky four-wheel-drive. A bog-standard Subaru Impreza is now one of the most delightful road cars made and both Subaru's image and product have been greatly enhanced through rallying.

Few companies need Formula One. About the only one I can think of which would be enhanced is Hyundai. Its road cars have much improved, but there is still resistance. Even a moderately successful programme could give Hyundai a powerful boost.

A major fall in sales across the industry is the present headline, but there are further problems in store. Many new sales are done via a leasing agreement. A typical lease expires after three years whereupon the leasee can either buy the car for a predetermined amount, say 100 golden clams, or receive 100 golden clams off a new model from the same manufacturer who then has a three-year old car to sell.

There are all these leasing contracts which will have to be honoured during the next three years. A manufacturer can effect a short-term saving by cutting production. Honda is to close its British factory for two months, redundancies will be among suppliers, but those leasing contracts will bite.

Part of the problem has been created by manufacturers. Cars are now so well made and equipped that it is really no hardship to keep one for an extra year or so. The modern car, even at the low end of the market. is a miracle of design and quality. There are cheap cars with more computing power than NASA had when it put men on the moon.

Until now, the used car market has been fairly stable. A Mercedes-Benz or BMW would lose about 15% of its value in its first year, given an average mileage. Most cars lose about 30%, and some will drop half their value. The bottom has dropped from the used car market and dealers will be trying to obtain 100 golden clams for a car with an agreed resale value and they are not going to realise anything like that.

A friend of mine bought an Aston Martin V8 Vantage last year and it cost £85,000. He sold it after 12 months for £65,000, which is what he expected. Six months further on and it is worth £40,000. In any other six months it would have dropped £5-10,000, but the last six months have not been any six months.