In fact, it wasn't just the 911-GT1 that would threaten McLaren's dominance in sports car racing. The FIA-sanctioned International Touring Car series imploded at the end of 1996 with the withdrawal of Opel and Alfa Romeo. This left the ambitious Mercedes racing division without a program for 1997. To plug the gap, an advanced GT racing car - based very loosely on the production C Class Coupe - was quietly developed at the Mercedes/AMG factory with the BPR series in mind.

In the mean time, Porsche built a limited edition road car based on the GT1 and hence attained full type-approval for the production GT category. Back at McLaren, work was underway to revise the F1-GTR and, away from the shop-floor, changes were also being made to the structure of the BPR championship. During the closed season, the organisers reached an agreement to hand over the Global Endurance Series to the FIA. Henceforth, the series would be known as the FIA GT Championship.

The '97 F1 GTR was a radical departure from the earlier cars. Whilst the central monocoque remained unchanged, all of the external dimensions were altered. The wheelbase was increased and a stretched nose and tail were added, making the car half a metre longer. Weight was cut further down to 915 kg. The production gearbox was replaced with six-speed sequential transmission. Further development to the engine meant that it used 5% less fuel than the 95 and 96 cars. With the aerodynamic improvements, designer Gordon Murray claimed that at minimum downforce settings it still generated as much as the maximum settings in the previous years car.

Three road-legal 'homologation specials' featuring the new long-tail design were built to satisfy the rules on type-approval. These were designated as 'F1 GTs' and sold on to private customers. The factory also produced ten race-prepared '97 F1 GTRs for the forthcoming racing season. Four of these cars (chassis numbers 021R, 023R, 024R and 026R) were handed over to BMW Motorsport who fielded them as official BMW works entries with the Schnitzer team running the campaign. Of the remaining cars, four went to Gulf Team Davidoff and one each to Parabolica Motorsport and Hitotsuyama Racing.

A few weeks before the season opening race at Hockenheim in April, Mercedes press-launched the advanced CLK-GTR racer it had been building over the winter. Unlike the new Porsche and McLaren, there had been no time to build a road-legal version for type-approval. However, the FIA had no intention of excluding the prestigious German company from the new series and promptly waived the rules on homologation, much to McLaren and Porsches annoyance. In future, all constructors would be given a 12-month window in which full entry to the series was permitted, pending homologation.

Initially, the '97 McLaren seemed to have the CLK-GTR beaten but, as the season progressed, the Mercedes team conquered early reliability issues and began winning. Eventually, the AMG-Mercedes team took the championship from McLaren by 110 to 85 points or 6 overall wins against five for McLaren. The CLK-GTR had raised the bar by several degrees and the McLaren would need even greater work to remain competitive.

Sadly, this was not to be. BMW had been working on a new Le Mans prototype and decided to withdraw it's backing of the Schnitzer run F1 GTR program. Without factory assistance, there could be no more development of the car. In following years, a handful of '97-spec F1 GTRs raced on in National GT championships in the hands of private teams such as EMKA, AM Racing and Parabolica Motorsport.

The formation of the FIA GT Championship had spelt the demise of production-based GT racing for the next few seasons and the end of the line for the F1 GTR. Had the rules not have been altered, undoubtedly the car would have remained at the top for a few more years.