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Mercedes Formula 1 boss Norbert Haug has defended the company’s decision to increase its involvement in the sport while making cutbacks in other parts of its business, saying its costs are much lower than in the past and that its drivers’ salaries are paid for almost entirely by sponsors.

The German carmaker has taken over Brawn GP at a time when other manufacturers such as BMW, Honda and Toyota are quitting F1, and seven-time world champion Michael Schumacher is coming out of retirement to drive for the new team this season on a reported 7 million Euros deal, alongside compatriot Nico Rosberg.

A member of parent company Daimler’s supervisory board and Corporate Works Council, Erich Klemm, argued that Mercedes had missed a “chance to completely leave the costly and controversial circus”, while another supervisory board member, Uwe Werner, said the Schumacher decision was “hard to justify” amid the automobile world’s current crisis.

But Haug hit back: “Both statements do not take into account that with its own team, Daimler will next year be spending about 60 per cent less compared to the peak in 2005. With our new approach, within five years our costs have more than halved.

“In our F1 team, the drivers’ salary comes only from our sponsor partners and the commercial rights holder FOM [Formula One Management], not from Mercedes-Benz.”