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IndyCar
INDYCAR: Owners, Series Continue To Work On Cost Reduction Strategies
With patience beginning to wear thin, owners are willing to solve the problem on their own if the series fails to bring costs down in a timely manner.
Through 2011, IndyCar teams made or out-sourced most of its high-consumption spare parts, but with that option outlawed with the DW12, and high prices on other new items, a solution is needed. (Photo: Marshall Pruett)
As SPEED’s Robin Miller first chronicled, IZOD IndyCar Series team owners have joined forces to demand a reduction in the price of spare parts for the new-for-2012 Dallara DW12, and after months of little to no progress being made, a more solution-minded dialogue has slowly started to build.
But with patience in the paddock beginning to wear thin, and according to multiple sources, owners are willing to solve the problem on their own if the series fails to bring costs down in a timely manner.
After detailing the cost overages for the series at Long Beach in April, owners met with the series at Iowa for their latest round of discussions and held firm to their call for a 40 percent reduction.
The series reportedly negotiated somewhere between a 10 and 20 percent reduction with Dallara, which the owners rejected last weekend, and now Brian Barnhart, who is leading the initiative on behalf of INDYCAR, is looking for ways to get closer to the 40 percent mark.
“The owners have drawn a line in the sand and said ‘we aren’t doing this anymore,’” one team owner told SPEED.com about the elevated costs of running the DW12. “And this isn’t one or two owners; it’s 100 percent.”
To meet INDYCAR’s low-price chassis mandate with the 2012 car, Dallara required complete control over production and parts sales. Although a rolling DW12 chassis came in at less than the price of the Dallara IR07 it replaced, the DW12’s spare parts price list shocked team owners and pushed the total price of car ownership well beyond what the series told its teams to prepare for.
After years of using local vendors to manufacture the most common IR07 components at a significant discount (many teams also produced parts for their IR07s in-house), owners have been livid ever since the series mandated that all DW12 parts must be purchased from Dallara.
“We want a 40 percent savings across the board,” said another owner. “We’re trying to keep a longstanding relationship with Dallara, but we don’t feel like we need to be their golden parachute. If we can buy the suspension for 50 cents on the dollar for what they’re charging, we don’t understand why they can’t hit the same price point we can find on our own.”
“Some things we can buy off-the-shelf for one-fifth the price,” another owner added. “Other things can be bought for as much as 80 percent less than what Dallara’s charging. Also keep in mind the exchange rate has changed considerably in their favor. The Euro is stronger than the dollar, and we’re buying parts at the Euro exchange rate. That's like a markup on a markup.”
Multiple owners told SPEED.com their preferred solution is to have Dallara continue to supply all of their spare parts needs, but only if the costs are brought closer to what they paid for similar items with the Dallara IR07.
“I think everyone knows how expensive this car has proven to be,” one owner said. “We’re looking at things we can go down the street and save big money on, but right now, the rules say we can’t do that. It just isn’t realistic to think that we’re going to just sit here and swallow double the costs on parts and do nothing about it. That’s what we’ve conveyed to the series, and they understand our position. We’re united in this.
“It’s up to [the series] to bring the prices down to what we can get elsewhere, or run they the risk of having all of us show up with parts that we sourced ourselves. You really don’t want to get to that point, and I don’t think it will, but it’s an option.”
Taking things a step further, another team owner gave the series a fairly defined period of time to work with if it intends to maintain peace and harmony in the paddock.
“The League has a contract with Dallara…we don’t,” he said. “We own these cars, not the league, and it’s far more expensive to run them than in the past...and than what we were told it would cost. Those are two serious problems we’re being expected to pay the penalty for. What’s to stop us from going to Lola or Swift, for example, and asking them to make wishbones for all the teams at a more realistic price? And then what’s the League going to do?
“Are they going to throw out the entire field when we go through tech? Are they then going to cancel the race? The best thing we could have happen is to get back to the 2011 costs. Return things to what we paid for parts with the last car last year, and our budgets will start to return to where they’re supposed to be. I think [the series] has maybe another month before the owners get tired of waiting for real solutions and start to find them on their own.”
But with patience in the paddock beginning to wear thin, and according to multiple sources, owners are willing to solve the problem on their own if the series fails to bring costs down in a timely manner.
After detailing the cost overages for the series at Long Beach in April, owners met with the series at Iowa for their latest round of discussions and held firm to their call for a 40 percent reduction.
The series reportedly negotiated somewhere between a 10 and 20 percent reduction with Dallara, which the owners rejected last weekend, and now Brian Barnhart, who is leading the initiative on behalf of INDYCAR, is looking for ways to get closer to the 40 percent mark.
“The owners have drawn a line in the sand and said ‘we aren’t doing this anymore,’” one team owner told SPEED.com about the elevated costs of running the DW12. “And this isn’t one or two owners; it’s 100 percent.”
To meet INDYCAR’s low-price chassis mandate with the 2012 car, Dallara required complete control over production and parts sales. Although a rolling DW12 chassis came in at less than the price of the Dallara IR07 it replaced, the DW12’s spare parts price list shocked team owners and pushed the total price of car ownership well beyond what the series told its teams to prepare for.
After years of using local vendors to manufacture the most common IR07 components at a significant discount (many teams also produced parts for their IR07s in-house), owners have been livid ever since the series mandated that all DW12 parts must be purchased from Dallara.
“We want a 40 percent savings across the board,” said another owner. “We’re trying to keep a longstanding relationship with Dallara, but we don’t feel like we need to be their golden parachute. If we can buy the suspension for 50 cents on the dollar for what they’re charging, we don’t understand why they can’t hit the same price point we can find on our own.”
“Some things we can buy off-the-shelf for one-fifth the price,” another owner added. “Other things can be bought for as much as 80 percent less than what Dallara’s charging. Also keep in mind the exchange rate has changed considerably in their favor. The Euro is stronger than the dollar, and we’re buying parts at the Euro exchange rate. That's like a markup on a markup.”
Multiple owners told SPEED.com their preferred solution is to have Dallara continue to supply all of their spare parts needs, but only if the costs are brought closer to what they paid for similar items with the Dallara IR07.
“I think everyone knows how expensive this car has proven to be,” one owner said. “We’re looking at things we can go down the street and save big money on, but right now, the rules say we can’t do that. It just isn’t realistic to think that we’re going to just sit here and swallow double the costs on parts and do nothing about it. That’s what we’ve conveyed to the series, and they understand our position. We’re united in this.
“It’s up to [the series] to bring the prices down to what we can get elsewhere, or run they the risk of having all of us show up with parts that we sourced ourselves. You really don’t want to get to that point, and I don’t think it will, but it’s an option.”
Taking things a step further, another team owner gave the series a fairly defined period of time to work with if it intends to maintain peace and harmony in the paddock.
“The League has a contract with Dallara…we don’t,” he said. “We own these cars, not the league, and it’s far more expensive to run them than in the past...and than what we were told it would cost. Those are two serious problems we’re being expected to pay the penalty for. What’s to stop us from going to Lola or Swift, for example, and asking them to make wishbones for all the teams at a more realistic price? And then what’s the League going to do?
“Are they going to throw out the entire field when we go through tech? Are they then going to cancel the race? The best thing we could have happen is to get back to the 2011 costs. Return things to what we paid for parts with the last car last year, and our budgets will start to return to where they’re supposed to be. I think [the series] has maybe another month before the owners get tired of waiting for real solutions and start to find them on their own.”
2013 INDY 500 Practice
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