Rial, founded in the 1970s as a producer of light alloy wheels and rims, was purchased by Günter Schmid in 1987. Schmid had previously owned ATS, a German wheel company that operated a Formula One team for eight years with a similar promotional logic: using motorsport to advertise the wheel brand on a global stage. Following the same strategy at Rial, Schmid established a Formula One operation at the company's factory in Fußgönheim, Rhineland-Palatinate.
Schmid engaged Gustav Brunner — who had designed cars for ATS — to produce the Rial ARC1. Brunner used a Cosworth DFZ engine, the naturally aspirated successor to the DFV that was becoming the standard choice for non-turbo runners as the turbo era ended. The ARC1 featured double wishbone pullrod suspension with shock absorbers mounted horizontally against the chassis, an innovative detail. The car's visual similarity to the Ferrari F1/87, also designed by Brunner, earned it the nickname the "Blue Ferrari." Andrea de Cesaris, carrying Marlboro sponsorship, was hired as the sole driver.
Rial's debut at the 1988 Brazilian Grand Prix in Rio was promising in parts but ultimately frustrating. De Cesaris qualified fourteenth and climbed to sixth place before running out of fuel with seven laps remaining. A fuel tank that was too small relative to race distance became a recurring problem. In Canada, de Cesaris again ran out of fuel, this time while running fifth. However at Detroit, in an attritional street race, he brought the Rial home in fourth place, scoring three championship points — the team's best result.
The season also included two regulatory breaches: once for working on the car on-track, and once because the driver's head was too far above the roll bar, requiring modification to the chassis. After the French Grand Prix, the team's competitiveness declined as rivals developed their cars. Brunner departed after the German Grand Prix, and a six-race string of retirements followed. De Cesaris finished the season classified eighth in Australia. Rial finished ninth in the Constructors' Championship with six points — a creditable result for a new entrant in its debut year. De Cesaris was placed fifteenth in the Drivers' Championship.
Rial expanded to two cars for 1989. De Cesaris left for Dallara; German drivers Christian Danner and Volker Weidler were hired. The ARC2, designed by new engineer Stefan Fober with revised aerodynamics by Bob Bell (a McLaren designer), used the improved Cosworth DFR engine. The context for the 1989 season was harder: with turbo engines banned, the entry list expanded from roughly 20 to 39 cars. A pre-qualifying system was introduced to reduce the field to 30 for qualifying and 26 for the race. Danner — as a returning driver — was exempt from pre-qualifying, but Weidler, driving the team's new second entry, had to pre-qualify.
Danner achieved a fourteenth place finish at the opening round in Brazil, but the improving pace of competitors forced him out of qualifying for the next two races. The fifth round, the United States Grand Prix on the Phoenix street circuit, produced another strong attritional result: Danner finished fourth, his best career result and Rial's equal-best finish after Detroit 1988. In Canada, Danner finished eighth in what proved to be Rial's final race start.
After Canada neither Danner nor Weidler qualified for the subsequent rounds. At the Hungarian Grand Prix, an illegal rear wing resulted in Weidler's qualifying times being deleted; both Fober and Weidler then left the team after Schmid publicly blamed them for the imposed fine. Pierre-Henri Raphanel replaced Weidler, arriving with designer Christian van der Pleyn. The new combination could not improve the ARC2's pace sufficiently to qualify. Danner quit after Portugal. Gregor Foitek was brought in for Spain but crashed during qualifying and immediately left. Bertrand Gachot took over for the final two rounds at Jerez and Adelaide but failed to qualify for either. Rial finished thirteenth in the 1989 Constructors' Championship. At the end of the year Schmid closed the racing division and Rial Racing ceased to exist as a Formula One entity.
Rial Racing operated for just two seasons, scored all of its championship points in its first year, and traced an arc from competitive surprise to non-qualification within eighteen months. The team is a representative example of the wheel-brand-as-racing-team model — where a manufacturer underwrote an F1 effort primarily for brand visibility rather than sporting ambition — that produced several comparable short-lived constructors in the 1980s. Rial continues to manufacture wheels and rims from its factory in Fußgönheim, the same site from which the Formula One operation ran.