File photo.

The Mercedes Formula 1 team, which has signed Britain’s Lewis Hamilton to replaces Michael Schumacher as lead driver, spent a record £242.1million (R3.4-billion) on its title challenge in 2011, according to its latest accounts.

The German car giant, which launches its 2013 F1 car on Monday, hopes that Hamilton will boost the performance of the team, which finished fifth last year despite having one of the biggest budgets in the sport.

The bulk of development work on F1 cars is done in the year before they are launched so Mercedes’ performance last year was fuelled by its 2011 spending.

Though the costs of the Mercedes team fell 0.2 per cent to 125.7 million, accounts show it spent £116.4 million on its engine division, a 54.2 per cent increase.

Spending was driven by investment in F1 energy-recovery devices, new V6 engines that will be introduced to the sport next year and an electric supercar.

Research and development costs on the engines alone jumped by £17.3 million to £52.4 million.

Across both divisions 78 staff were hired, taking the head-count to 989 and giving Mercedes an overall wage bill of £60.1 million.

While the engine arm made a £4.9 million net profit, the team lost £10.6 million after tax.

Meanwhile, the 200 000-plus enthusiasts preparing their beloved cars for the start of the track racing season next month face a shock rise in insurance costs, writes Sarah Bridge.

Premiums have increased by as much as ten per cent due to last year’s wet weather, which led to a sharp rise in the number of accidents and insurance claims.

As 2012 was the second wettest year ever, about 40 per cent of races were in the rain. Anthony Gardiner, head of motorsports insurance at Bluefin Insurance, said: “It’s a high-contact sport and accidents do happen, particularly last year which was a testing one.” -Mail on Sunday