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Voice of Vito: Big 3 Bankruptcies & New Government Mandates Spell Doom for NASCAR & Motorsports

There is no way to be polite about this. The United States auto industry is circling the drain.

Two-thirds of the largest manufacturing entities on the planet will have filed for bankruptcy within two months of each other in the next few weeks. First Chrysler filed for Chapter 11, and now word has come down recently that GM is readying for a quick sale to the government, biting the bullet and ripping off the band-aid for good. Sure, Chrysler has always been a bipolar brand, but who would have dreamed that 10… or even five years ago, that General Freaking Motors would be handing the keys over to the government? And while Pontiac gets thrown into the ash heap of automotive history along with Plymouth and Oldsmobile, 789 Chrysler and Dodge dealers across the country are turning out the lights for good.

Is it possible that NASCAR as we know it may not be far behind? Truth-time: Yes. It very well may be.

It is no secret that racecars run on one thing; money. We’ve all heard the old adage of, “to make a small fortune in racing, you must first spend a large one.” The Big Three automakers have, over the past 20 years, been shoveling millions of dollars into motorsports marketing like a Bessemer furnace during the Industrial Revolution. NASCAR has been getting the lion’s share over the last decade; after all, that is where the biggest return has always been. Be it for research and development, assisting race teams, sponsorship or race promotion itself, it was always seen as a boon to be aligned with the hottest thing on four wheels.

Henry Ford’s saying of, “Win on Sunday, sell on Monday” may have lost a little steam once the cars stopped baring any sort of resemblance to what you might find on a dealer lot (that was about the same time David Pearson’s wheels fell off his Wood Brothers Mercury at Darlington), but even today, motorsports marketing and NASCAR in particular have still proven to be one of the most effective marketing tools used by car companies to move iron.

At least, it had been. Unfortunately, the traveling carnival that has always been Lollapalooza on leaded fuel could soon be coming to an end.

Chrysler is only a few weeks into their bankruptcy reorganization but is already getting a foreshadowing of what may be to come. The manufacturer had planned to spend $134 million in short-term advertising during the nine-week period that their plants are idle and distribution channels shut down. But the current Auto Task Force slashed that figure in half – this, after Chrysler already drastically reduced what they had planned to spend during this same timeframe to help move inventory and maintain their brand’s recognition in the public conscious.

While racing budgets may not be directly affected this year, what might this spell for 2010 and beyond? There are already rumblings that Dodge may be on their way out, with their flagship Penske Racing operation repeatedly popping up as a future Toyota team. After getting out of the Truck Series altogether and only having token participation in the Nationwide Series – a total of four Chargers having competed in the last race at Darlington – might Chrysler be preparing an exit similar to the one that played out in the late 1970s?

Apparently, my dreams of finally seeing the Challenger compete in Nationwide CoT trim are going to forever squashed. Sigh

Yes, we’ve seen this act before. In the early and mid-’70s, things weren’t exactly coming up roses for the Big Three either. The dawn of unleaded gas, catalytic converters and rising insurance premiums coupled with a burgeoning fuel crisis and dearth of anything performance-related rolling out of Detroit brought about the end to factory participation in motorsports, including NASCAR. The sport managed to survive – not surprising for one that has its roots sewn in hauling contraband during Prohibition, then finally going legit in the post-war era when manufacturers stopped cranking out B-17s and Sherman tanks and got back to the business of building cars and trucks. Back then, sponsorship was still available and privateers plentiful, even during the dark days of disco, butterfly collars and Billy Beer.

It is a different sport today, to be sure; vastly more technical, complex and exponentially expensive. The circumstances surrounding it, however, are startlingly similar to what transpired 30 years ago.

Back then, America had just ended what was an increasingly unpopular 10-year engagement 10,000 miles away, the economy was sputtering along on seven cylinders and everybody had a bad haircut. But just as many families did then and are doing now, racing trudged along and made it through the same time period. We have a long and storied history of repeating the past, and are about to embark down the same path as we did a generation ago. Except this time, as far as racing is concerned, it is akin to a cow being lead down the chute at a slaughterhouse. We already have one automaker in bankruptcy, and another – the largest manufacturer in the galaxy – soon to join.

This one, folks, we may not come back from; and it has nothing to do with NASCAR, Goodyear or the Car of Tomorrow.

All of this is not the result of any true changing trend in consumer taste or a legitimate global disaster. No, the problem this time is more localized – hidden within the halls of Congress in Washington, D.C. The higher mileage and emissions standards that have been arbitrarily set by the Obama administration this past Tuesday begin to take effect in 2012, ones that are federally mandated to be achieved by 2016.

These changes will immediately transform the American car and truck fleet to something drastically different than what we have today. The new rules force new cars and trucks sold in the United States to achieve an average of 35.5 miles per gallon, about 10 mpg more than today’s standards. Passenger cars will be required to get 39 mpg, light trucks 30 mpg. That means cars and trucks sold in the United States will have to become smaller, lighter and more efficient. This will have the effect of adding an additional cost of approximately $1,300 to the cost of a new vehicle.

I can hear the commercial now. “Come on down to the new GM – Government Motors where we dictate what you drive, and pass the savings on to you!”

Don’t think this will have any effect on motorsports or NASCAR? I beg to differ.

Read any racing-related website (including this one), blog, forum, or talk to the fan on the street, and they will usually to a man (or woman) declare the best racing to be had is in the Camping World Truck Series. If you recall, this was a feeder series that was created in the mid-1990s to help cash in on the exploding U.S. light truck market. No longer were pickups the sole domain of farmers, rednecks or the bastion of transients with those weird campers that sit in the back of the bed. Instead, Trucks were ruggedly handsome, useful, and came in rear-wheel and four-wheel drive. With V-8 power and in extended cab guise, they offered much more than any car had to offer.

Pickup trucks were the original sport utility vehicle.

The conception of the series, however, also came at a time when gas was less than $1.00 a gallon and everybody wanted to get a haircut like their favorite character on Friends. My, how times have changed. Gas now fluctuates between $2.00 and $5.00 a gallon depending on whatever doom some Third World despot is promising, and friends don’t let friends get Friends haircuts.

If you want an expert’s opinion, Eric Fedewa, Vice President of global powertrain forecasting for the auto consulting firm CSM Worldwide in Northville, Mich., recently stated in an interview that the changes will make pickup trucks so much more expensive that they will be used almost exclusively for work, not as popular consumer items. While I don’t know if Fedewa has a Friends haircut, what I do know is that if trucks are going to be relegated back to being the stripped out lumbering Clydesdales of hardhats, you can probably say goodbye to the series that promotes their sale in short order. Unless they start racing around on dirt lots and have a bunch of trailers populating the infield area to resemble a job site, manufacturers are not going to be putting forth any effort to sell trucks to the general public.

This, of course, is assuming that the U.S. government will allow any money to be directed towards motorsports at all. If fuel economy standards and greenhouse gas emissions are going to be risen so drastically and so quickly, where do unmuffled, carbureted racecars that get six mpg fit into this Red… I mean, “Green”… equation? Taking all of these radical transformations that have been set forth into consideration, government funded stock car racing could not possibly be considered a constructive or socially responsible exercise.

Or a fiscally sound one, either.

Some may say that these are simply knee-jerk responses and the over-reactions of your resident flag waver who wields a hot-rodded Mustang GT and a 14-mpg Jeep with an NRA sticker plastered on it. Far from it. This is a fairly straightforward nuts and bolts, dollars and sense arrangement. To develop these radically higher standards for fuel economy and emissions regulations, automakers – who are by definition broke and will be owned in part by the government (i.e., you and me, the vaunted tax payer) – will need to invest heavily in a Manhattan Project crash course to research and develop new vehicles, likely revamping and scrapping parts of their product assortment that is already in the pipeline. It will also likely mark the second death of the American muscle car, who, after it’s first brush with mortality in 1971, was resurrected in the mid-1980s – about the same time NASCAR began its meteoric rise to national prominence.

Coincidence? Hardly.

So what we will have are boring, underpowered, expensive cars forced upon a public that can’t afford them – with one proven and effective tool used to market them likely removed or so restricted its impact would be ineffective at best. Automakers will have to direct funds and resources elsewhere away from NASCAR and racing in general, either by necessity or government edict, as two of the Big Three no longer control their own purse strings.

While Dodge will likely fade into the distance with a whimper as they did in the late 1970s, the reduced financial investment of General Motors will have an even greater impact. Might this cause a domino effect where even Ford and Toyota axe sponsorship and investment in NASCAR? It’s like watching somebody play Jenga with the future of motorsports… and it isn’t very pretty.

In the meantime, will the last person leaving Detroit please turn out the lights? And you thought the ’70s were bad….

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