Site logo

F1 team remains the driving force as McLaren records 44% increase in revenue

NEWS STORY
02/05/2019

On a weekend when the Woking based F1 team scored a double-points finish to go fourth in the team standings, the financial statements for the year ending 31 December 2018 were being released, and they too were something to smile about.

Sales of the company's supercars were up 44.6% on 2017, which is pretty impressive when you consider that prices start at around £125,000 ($165,000).

In total McLaren sold 4,829 cars which gave the automotive division a revenue of £1.1bn ($1.4bn), which positively dwarfs the £132.8m) ($173.2m) recorded by the F1 team.

Indeed, courtesy of the loss of Honda and its money, and the need to buy engines from Renault, the F1 team's revenue fell by 36.5% on the previous year.

Though the team finished sixth in the standings, a considerable improvement on 2017 when it finished last, as the prize money is based on the previous season's results, the improvement in 2018 won't be reflected until the prize money is handed out this year.

While team founder Bruce McLaren first explored the idea of following the example of Ferrari and producing road cars, it was under Ron Dennis' leadership that the dream was fully realised, when the company launched the Gordon Murray-designed F1 in 1992.

Almost two decades later, McLaren borrowed in excess of £40m ($52.1m) in order to build a designated supercar factory, and in 2011 the first 207 mph 12C rolled off the production line, along with a price tag of £190,000 ($250,000).

The rest, as they say, is history

As Forbes reports, McLaren now employs almost 1,700 people and markets eight models through 95 franchised dealers around the globe. North America is the biggest market, accounting for 36.2% of sales, while sales in Asia have rocketed by 150%.

Like Ferrari, McLaren utilises its racing heritage to sell its road cars, no less so than the $1m, 211 mph Senna, which sold out even before it was launched in December 2017.

Almost half of the 500 cars in the production run had been delivered by the end of last year, while a $1.4m track-only version was unveiled at last year's Geneva Motor Show.

In all, 75 of the Senna GTRs are to be produced, and all had sold out within days of their announcement.

When F1 celebrated its 1,000th race recently, much was made of the fact that Ferrari has been an ever-present for almost all of them. However, McLaren has almost 850 Grands Prix to its credit.

"The success of the McLaren brand in motor racing that has been established over five decades enabled us to accelerate the growth of our McLaren Automotive sportscar and supercar business in just nine years," says Mike Flewitt, chief executive of McLaren Automotive. "We've also taken some of the fundamental attributes of racing - lightweight, technically advanced materials, putting the driver at the centre of the action and entertainment - and incorporated them into our product range to appeal to customers and to differentiate us from our competitors in the luxury automotive market."

Though, as on the race track, Ferrari is ahead of McLaren, the Woking-based company is in hot pursuit, and while sales in the Middle East have been hit by the economic climate, sales in China were up 141% and in North America the company sold 514 more cars than in 2017.

And while Ferrari hasn't won a title since 2008, when it won the Constructors' Championship, that same year marked McLaren's last title, courtesy of Lewis Hamilton. In both cases, relatively poor performance on the race track does not appear to be compromising road car sales.

Indeed, the claim in 2015 that McLaren intended to increase production to 5,000 cars a year by 2022, proved somewhat wide of the mark, the Woking-based company almost achieving the magical target last year. As a result it has now updated its business plan, targeting 6,000 cars a year by 2025 as the company introduces 18 new models including a successor to the P1, which sold for£1m ($1.3m).

To meet this ambitious target, McLaren plans to invest £1.2bn ($1.6bn), and in 2018 alone pumped in £240m ($313.4m).

Meanwhile, the F1 team is doing its bit.

The Formula Money Sponsorship Database, the first ever searchable archive of F1 sponsorship values, reveals that in 2018, McLaren boosted its sponsorship income by £21.1m (27.8m) in signing ten new sponsors, double that acquired by any other team. This year the trend continues, with Coca-Cola, Swedish confectionery company Huski Chocolate and British American Tobacco all partnering with the Woking team.

With a seat on the board of F1, McLaren has made no secret of its desire to see a major overhaul of the sport's regulations from 2021, especially moves to limit spending and divide the prize money more evenly.

Indeed, amidst talk that spending would be limited to £114m ($150m) by 2023, Forbes reports that had such a limit been in place last year McLaren could have made a profit of at least £17.6m ($23.2m) as its revenue came to £131.8m ($173.2m), which, in turn, would have boosted the group's bottom line which narrowed from a net loss of £66m ($86m) to £61.8m ($80.6m) as a 33% increase in costs nearly offset the rising revenue.

Amidst some rather negative reports which have suggested that the F1 team has been a financial burden on the supercar manufacturer of late, let's not forget that McLaren has a division which applies developments it has made in F1 to companies outside the sport and revenue from that business alone soared 10.3% to £64.6m ($84.2m) in 2018.

Last year saw Canadian Michael Latifi buy a 10% stake in the group for £203.1m ($264.8m), thereby joining a group of minority shareholders who hold a total of 27.6%, Mansour Ojjeh's TAG Group, which owns 14.7% and Bahrain's Mumtalakat sovereign wealth fund which owns 57.7%.

The majority of these were on board long before McLaren Automotive was launched, and while the automotive division now represents the bulk of McLaren's business, its F1 team remains the driving force.

LATEST NEWS

more news >

RELATED ARTICLES

LATEST IMAGES

galleries >

  • Pitpass.com latest F1/Formula 1 images
  • Pitpass.com latest F1/Formula 1 images
  • Pitpass.com latest F1/Formula 1 images
  • Pitpass.com latest F1/Formula 1 images
  • Pitpass.com latest F1/Formula 1 images
  • Pitpass.com latest F1/Formula 1 images
  • Pitpass.com latest F1/Formula 1 images
  • Pitpass.com latest F1/Formula 1 images
  • Pitpass.com latest F1/Formula 1 images
  • Pitpass.com latest F1/Formula 1 images
  • Pitpass.com latest F1/Formula 1 images
  • Pitpass.com latest F1/Formula 1 images
  • Pitpass.com latest F1/Formula 1 images
  • Pitpass.com latest F1/Formula 1 images
  • Pitpass.com latest F1/Formula 1 images
  • Pitpass.com latest F1/Formula 1 images
  • Pitpass.com latest F1/Formula 1 images
  • Pitpass.com latest F1/Formula 1 images
  • Pitpass.com latest F1/Formula 1 images
  • Pitpass.com latest F1/Formula 1 images

POST A COMMENT

or Register for a Pitpass ID to have your say

Please note that all posts are reactively moderated and must adhere to the site's posting rules and etiquette.

Post your comment

READERS COMMENTS

 

1. Posted by brenda78, 04/05/2019 5:10 (moderated by an Adminstrator, 04/05/2019 6:58)

"This comment was removed by an administrator as it was judged to have broken the site's posting rules and etiquette."

Rating: Positive (1)

2. Posted by trackrecords, 03/05/2019 23:08

"McLaren are building up a stable of talented young racing drivers to hopefully bring success to their sportscar racing programme to give publicity to their road cars when previously they were intended to be future F1 drivers.p"

Rating: Neutral (0)     Rate comment: Positive | NegativeReport this comment

3. Posted by ZJAY, 03/05/2019 1:14

"Thank you to the Editors for such an article. Good facts, good perspective, no politics, no agenda, no bashing of anyone. Please more like this. "

Rating: Positive (1)     Rate comment: Positive | NegativeReport this comment

4. Posted by BillH, 02/05/2019 18:06

"What McLaren needs to be very careful of is that they do not lean too much on the past. Meaning, they need to start winning again to write new chapters to sell more cars.
Perhaps this is why they are looking outside of F1 more (Indy, GT and perhaps WEC) as winning F1 is so difficult now unless all of the top three teams crashed into each other by turn three.
Still, the revenue scoreboard looks good however it is the profit that needs to be watched."

Rating: Neutral (0)     Rate comment: Positive | NegativeReport this comment

Share this page

X

Copyright © Pitpass 2002 - 2024. All rights reserved.

about us  |  advertise  |  contact  |  privacy & security  |  rss  |  terms