Is this the end for Formula One?

If the first big loser in the current recession is the motor industry, then Formula One cannot expect to escape the consequences. Honda may have been merely the first to pull the trigger, writes Richard Williams.

Amessage arrived from the Honda Formula One team recently, cancelling an annual lunch for the British media due to have been held on December 4 at Le Manoir aux Quat'Saisons, a restaurant with two Michelin stars in Oxfordshire, a short drive from the team's headquarters. The abrupt disappearance of a blow-out for the hacks turned out to be a straw in the wind; three days later a hurricane tore through the 100-year-old sport.

Around the time the well-fed journalists would have been making their way home, the 650 Honda personnel were hearing of the company's decision to withdraw from Grand Prix racing. With sales of its road cars down by more than 30%, the Japanese company is no longer prepared to subsidise a team capable of spending ï¿½25,000 - the cost of a good family saloon - on a gadget- encrusted steering wheel for Jenson Button's car. Now Formula One fears the departure of other major companies looking for ways to withstand the recession.

This is a sport in which excess and luxury have become a way of life. Commercial sponsorship, introduced in the late 1960s, has been exploited to shape not just the stratospheric technology of Formula One but the lifestyles of those who have grown rich from it, from veterans such as Bernie Ecclestone, with a ï¿½2bn fortune from his role as the sport's ringmaster, to Lewis Hamilton, Britain's new world champion, who is already earning more than ï¿½10m a year in salary, endorsements and sponsorships. The confirmation of the Honda withdrawal indicates that the era of conspicuous consumption is coming to a shuddering, tyre-squealing halt.

If the first big loser in the current recession is the motor industry - and the signs are everywhere, with BMW's Mini factory in Oxford starting its Christmas shut-down two weeks early, Aston Martin laying off 600 workers and, across the Atlantic, Detroit's Big Three automobile manufacturers asking their government for a $34bn (ï¿½23bn) handout in order to stave off imminent bankruptcy - then Formula One cannot expect to escape the consequences. Honda may have been merely the first to pull the trigger.

Their Japanese rivals Toyota, the most lavishly funded team in the paddock with an annual budget of more than ï¿½300m, may well follow suit after seven seasons without a win, and there must be questions about the participation of other major manufacturers - Renault, BMW and Mercedes-Benz (suppliers of the engine that powers Hamilton's McLaren) - who were lured into the sport by the promise of exposure to massive TV audiences. On the most pessimistic reading of recent events, only Ferrari, the most profitable arm of the Fiat empire as well as the biggest name in Formula One, appears immune to an epidemic of boardroom panic that could put Formula One back in the hands of private teams, as it was in the days of Jim Clark and Graham Hill.

Ecclestone was bullish. "I think Formula One is in no bigger crisis than any other company," he told the BBC. However, Max Mosley appears to have got it right. Having spent part of the summer convincing the high court that his orgies in a Chelsea basement were not Nazithemed, now the 68-year-old president of the FIA, motor sport's governing body, has the hard evidence to back his warnings that Formula One must slash its costs or face dire consequences. The problem, he says, is getting the teams to listen.

"It's as if we're all on an ocean liner, sinking," he said, "and these people are talking about the colour of the wallpaper in their cabins, whereas anybody sensible would be looking for a seat on the lifeboat."

This week mosley told the teams of his plan to cut costs "not by 20 or 30%, but by 80% or more" from 2010, enabling them to compete for the World Championship with budgets in the ï¿½30m-ï¿½40m range. His proposals start with the use of a standard engine and transmission which teams could either build themselves to preserve their image as car constructors, or buy from a supplier for less than ï¿½6m a season.

The search for a performance advantage measured in hundredths of a second has produced fascinating but esoteric technology of little significance to the spectator, and even less to the design of road cars. In place of the current Formula One gearbox, a marvel of exotic metals costing 10m euros, Mosley's new standard gearbox will cost a tenth of that. "The only people who can really appreciate a 10m euro gearbox are the people who build it and take it apart. The public will notice no difference."

Before that could happen, he suggested, other major teams might follow Honda out of the sport "unless we demonstrate to them that this level of expenditure is going to cease".

Were the Grand Prix field to drop below the minimum of 16 guaranteed to broadcasters, the FIA would consider adding cars from other formulae.

Another way of cutting costs would be to reduce the top drivers' salaries. "That's much easier," he said. "You just tell them, `We can't give you ï¿½20m. We can only give you ï¿½1m.' That's an awful lot more money than they'd earn from doing anything else."