For the 1998 season, Porsche developed the all-new 911 GT1-98. This car was designed to match new competitors like the Toyota GT-One and the Mercedes-Benz CLK LM. The 911 GT1-98 featured bodywork that bore more of a resemblance to traditional sports-prototypes than its predecessors, the 911 GT1 and 911 GT1 Evo. A new sequential gearbox was installed to reduce shift time, and engine control moved to a TAG Electronic Systems TAG 3.8 ECU. The car featured a carbon fibre chassis, the first used by Porsche. It is powered by a 3.2L twin-turbo flat-6 engine producing over 600 hp in race specification and 536 hp in road trim, with a top speed of 310 km/h and a 6-speed sequential transmission.
During the 1998 FIA International GT season, the 911 GT1-98 struggled to match the pace of the improved Mercedes. This was primarily due to air-restrictor rules, which were considered unfavorable to its turbocharged engine, unlike the naturally aspirated V8 engine of the Mercedes. The Michelin tyres used by the factory team and the Pirelli tyres of the private Zakspeed team were also deemed inferior to the Bridgestone tyres on the Mercedes.
At the 1998 Le Mans 24 Hours, the 911 GT1-98 had a different outcome. The BMW V12 LM retired with wheel bearing trouble, and the Mercedes CLK-LM cars experienced oil pump issues in their new V8 engines. The Toyota GT-One, considered the fastest car, suffered gearbox reliability problems. Despite being slower than the Toyota or Mercedes, the 911 GT1-98 secured both first and second place overall due to its reliability. This victory marked Porsche's record-breaking 16th overall win at Le Mans.
At the Petit Le Mans race in Road Atlanta, the 911 GT1-98 driven by Yannick Dalmas performed a spectacular backward flip, landing rear first before hitting the side barriers. This incident was similar to what later occurred with a BMW V12 LMR at the same race in 2000 and the Mercedes-Benz CLR at Le Mans in 1999.
Following Mercedes' dominance in FIA GT1 in 1998, all other entries, including Porsche, withdrew for the 1999 season. The GT1 class was subsequently cancelled. Porsche opted not to defend their 1998 Le Mans victory against new entrants from other manufacturers.
Regulations for the GT1 category stipulated that a total of 25 cars must be built for road use. Porsche developed two prototype cars, both fully road-legal versions, which featured 993 style front headlights. The production car, dubbed "911 GT1 Straßenversion", was a run of approximately 20 units built in 1997, featuring 996 style front headlights. A single car, the 911 GT1-98 Straßenversion, was built in 1998 to homologate the all-new racing version under new FIA regulations. The engine was de-tuned to meet European emissions laws, producing 544 hp and 600 N⋅m of torque, allowing acceleration to 100 km/h in 3.9 seconds and a top speed of 308 km/h.
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