Chevy to drop IRL program

UPDATE #6 This rumor is now upgraded to 'fact.' See feature story on Home Page. Although a GM official says they have no plans to enter any other open wheel series, let's be clear that he means right now they have no plans to enter Champ Car. Can those plans change? Absolutely. 11/03/04 This rumor is now 'strong' and about to go to 'fact.' Officials at IRL teams using the Chevy engine said they had been told that the program would be dropped after ’05, and that the program’s emphasis next season will be on Pennzoil Panther Racing. This is a major setback for the IRL, who officially becomes "the Japanese Racing League" with Honda and Toyota powering their Indy Cars and Infiniti their IPS cars. We’ll have further details of GM’s decision following the announcement at 4 p.m. ET.11/03/04 We hear the GM brass is still locked behind closed doors with Tony George. One can conclude Tony is doing everything in his power to convince them to stay. We wonder what concessions he might make. 11/03/04 Rumor has it that Chevy will make an announcement of some sort at 1:00 PM today and speculation is that they will say whether they have decided to stay in the IRL beyond 2005 or withdraw. A key may lie here – General Motors Corp. posted flat third-quarter earnings Thursday that fell well short of Wall Street forecast and cut its earnings outlook for all of 2004 — news that sent its stock tumbling. The automaker, which earlier Thursday set plans to cut up to 12,000 jobs in Europe to stem losses there, said it now expects full-year earnings of $6 to $6.50 a share, excluding special items, down from its earlier guidance of about $7 a share. Analysts were at $7.05 a share for the full year, on average. GM (down $2.05 to $39.25, Research) stock, one of 30 in the Dow Jones industrial average, sank about 5 percent at midday. CEO Rick Wagoner called the results disappointing, and cited intense competition and price-cutting in most of the company's markets. "We've got to move more quickly in addressing these challenging, chronic structural-cost issues," Wagoner said in a statement. The company's core automotive operations lost $130 million in the third quarter, a big swing from profits of $34 million a year earlier. Losses in the auto business were led by North American auto operations, the company's biggest unit, which lost $22 million versus profits of $128 million a year earlier. It marked the first time in nine years that GM lost money in its North American auto operations, excluding special items or strikes. Stay tuned…. 11/02/04 Various sources, including Robin Miller on Wind Tunnel, have reported that Cheever Racing is talking to Toyota about running their engines in 2005, and the new team, Playa Del Racing is also said to be eyeing Toyota. That leaves Panther Racing and Dreyer & Reinbold with Chevy and there have been reports that they are talking to Honda and Toyota too. It remains to be seen whether Chevy stays in the IRL in 2005. A board decision to due Wednesday or Thursday regarding 2006. Whether they will pull the plug on 2005 as well may be irrelevant if they have no teams. 10/30/04 According to this week's AutoWeek magazine, a decision on whether Chevy will stay in the IRL could be made by upper management as early as November, and there is apparently reason for concern. "When you see what the economy has done, and you see what General Motors' financial numbers were last year quarter, of course I am concerned, " said program manager Joe Negri. We will leave this rumor as speculation for now, but we suspect it's about ready to move to 'strong.' Mark C. 10/27/04 We are hearing rumors that Chevy has decided to dump the IRL. Apparently they have not re-upped for 2006 like Honda and Toyota have and with no teams wanting their engines in 2005, they may be gone effective the end of the 2004 season. If they get a couple of IRL teams perhaps they will stay, but it isn't looking good at this time. Robin Miller writes on SPEED – "By the way, Cheever is looking to switch to Toyota because he's heard the same thing as IRL vice president Brian Barnhart — that Chevy may not even be back for 2005, let alone 2006."

Adding fuel to this fire are new rumors that Chevy has an opportunity to co-badge the Cosworth Champ Car engine with Ford and make Champ Car a Ford vs. Chevy series with equal engines and using Champ Car as a marketing vehicle rather than a costly R&D vehicle. With Champ Car owner Kevin Kalkhoven buying Cosworth, and with Chevy already having a relationship with Cosworth, it's easy to see Kalkhoven making Chevy a sweet deal to put their name on 50% of the Champ Car engines for a too-good-to-be-true price. Rather than beating their heads against a wall in the IRL vs. Honda and Toyota, both of whom have a bottomless pit of money, they can come into Champ Car and be competitive on day one and know their chances of winning are equal.

Customers of know that we have been beating this badging drum as the best model for two years now. As we have maintained for a very long time, there is a lot more to a passenger car than just the engine. The car companies can engage other factions within their organization to help their teams win races, but having all the engines identical with just different names on the cam covers is a receipt for success. It's the best value for a manufacturers money and allows them to compete on equal terms. NASCAR did it with body templates and the sport got even bigger. Nobody blinked an eyelash. Champ Car can do it with the engines and as long as the manufacturers do their marketing and advertising right, the badging concept will succeed. For Champ Car and the manufacturers, it's better if the manufacturers plow money into marketing and advertising than R&D.

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