Mercedes: F1 cost cap hassles compounded by inflation pressures

Toto Wolff says Mercedes struggled to "structure" its organization for this year due to F1's cost cap but also on the account of increasing inflation.

F1 introduced its budget limit measure last season, with a threshold set at $145 million. But in conformity with the sport's regulations, teams were forced to shave off $5 million from their budgets which now sit at $140 million for the 2022 season.

But global inflationary pressures which have pushed the UK's Producer Price Index - a monthly survey that measures the price changes of goods bought and sold by manufacturers - up to a 30-year high have added to Mercedes' difficulties in properly structuring its team and finanaces.

"It has been very, very difficult to structure the company and the organisation in the right way to meet the cost cap at $140m," Wolff explained at the recent launch of Mercedes' 2022 car.

"Also in a high inflation environment, we are not only reducing by $5m, but we have a situation where you’re not able to really increase the costs and the payroll. So that is extremely painful.

"And on the other side, you have to decide very carefully where you invest your dollar in R&D. In the past, it was a little bit easier because you could follow various avenues in chasing performance.

"Today you have to decide which one has the highest potential and then embark on it. It’s a totally different way of operating for the big teams."

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F1 teams have invested heavily in their 2022 designs which cater to F1's new technical regulations. Wolff warns that any team who has got its concept wrong – including Mercedes – will struggle to steer itself back in the right direction due to F1's budget constraints.

"It’s one side where actually you can really change concepts technically, because sometimes you embark on a direction, that’s it," he said.

"And then the added pressure of the cost cap makes it very difficult to then change the car fundamentally.

"Because everything is planned, every upgrade and their related costs are planned, and therefore we are much more restricted with the budget cap in our ability to implement the creative process onto the car."

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