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In modern F1, race neutralization via Safety Car is done in two variations, the traditional SC Period, where the Safety Car actually goes out on track and collects the entire field to form a slow-running queue; and the new Virtual Safety Car where the drivers are simply required to run sector times that are over a specified Delta, effectively slowing them down as well.

I understand that the VSC is meant to neutralize the race, slowing down the pace without bunching up the field, but still maintaining the gaps between the cars on track. Something similar to how Full Course Yellow works in WEC, only with the delta time replacing the speed limit.

In case of on-track incidents that exceeds Yellow Flag conditions, how does the FIA decide which Safety Car procedure to use?

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From Formula 1 Official Website.

The VSC will primarily be used when double waved yellow flags are needed on any section of the track, but the circumstances are not such to warrant the safety car itself.

In the event of a more serious incident, particularly if competitors or officials are in immediate physical danger, which is not severe enough to warrant suspending the race but cannot be dealt with under the VSC, then the safety car will be called.

(double waved yellow flags: Great danger. Slow down considerably. Be prepared to suddenly change from the projected racing line, or take other evasive action including stopping if necessary. No overtaking. (This signal may be supplemented or replaced by flashing yellow light(s), as an added warning). For more on flags.)

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In my humble opinion working as Track Marshal for more than a decade, the use of VSC is to keep the leader's (and other participants) gap to the rest of the field and for safety reasons.

The VSC was implemented in F1 by the FIA after something similar was used in other series. Specially in Endurance Racing (series like the 24H Series use something called Code 60 that limits the cars speed to 60kms/h).

The idea is that by limiting the cars speed to the same one, they will keep the gap between them and so nobody sees its position in risk due to a SC period.

Also the Code 60 (and the VSC) was implemented to help Track Marshal's work and be safe by limiting the cars on track speed. It used to be very common (still is) that in a SC period there's always some car not staying out of gas and going full throtle.

As VSC periods are implemented when something happened close to the track or in track action needs to be implemented by track marshals, cars need to be significantly slower than before. Specially because it means a double yellow period in most of the cases (and double yellow flags mean: get ready to stop, may be an obstacle in the middle of the track).

So adding a VSC to a double yellow sector to help recover the vehicle helps the Marshals work safer as the cars are going slower than previously and also Race Direction know exactly the gaps between cars so can indicate by radio to the marshals when to jump in or out of track.

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In addition to the other answers, I would like to add that a full safety car does have a few benefits when compared with a VSC, and this is one of the main factors in determining when this should be deployed.

The benefits of a full safety car include;

  1. The field all form into a "crocodile", so this leaves a large time window each lap where there will be no cars passing a specific point on track, which gives the marshals more time to work safely without any cars going by.
  2. The safety car can have more control of the field than a VSC. For example, the safety car driver can speed up or slow down the field depending on the situation which once again adds to the safety of the marshals. Likewise, the safety car can lead the field through the pitlane or lead them across a run-off area to avoid debris and/or allow the marshals to work in a safer environment.
  3. The safety car generally allows the drivers to go faster than under a VSC, so they can keep their tyres and brakes warmer.

Of course, a full safety car has drawbacks too, including that it generally takes longer than a VSC period, and some view it as unfair, as it brings the pack together even if someone had built up a big gap. Having said that, the VSC does also have some fairness issues in the sense that it allows drivers to get a "free pit-stop", which could be advantageous/disadvantageous to some drivers.

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