As BMW announced its intention to officially withdraw at the end of 1986, Arrows team boss Jackie Oliver brokered a deal with support from its primary sponsor, USF&G, to continue the use of the upright 4cyl BMW engines under the name of USF&G subsidiary Megatron, Inc., founded by long-time F1 aficionado John J. Schmidt.

Without the resources and financial backing available to the likes of Ferrari or Honda, it would take Mader until the three quarters of the way through the 1988 season to solve the problem.

Englishman Derek Warwick scored 3 points for the year with a 5th in the British Grand Prix, and 6th in Hungary, while his American teammate Eddie Cheever managed to score 8 points from a 4th in Belgium, 6th in Detroit and Portugal and another 4th in Mexico, in what was his comeback year after missing most of the 1986 season when racing Sportscars for Tom Walkinshaw Racing's Silk Cut Jaguar team.

However, as with 1987, the FIA mandated pop-off valve had a habit of cutting in well before the turbo limit, which not only restricted power but frustratingly for the drivers often left the cars with plenty of fuel to spare at the end of a race.

It took until just before the Italian Grand Prix for Heini Mader to get on top of the pop-off valve problem, which turned out to be the FIA unit being located too high above the engine, resulting in less power, a problem that Honda and Ferrari engineers had long since solved thanks to the resources (money) available to them from their respective factories.

During qualifying for the German Grand Prix, Eddie Cheever, on a quick lap, had a close call at almost 180 mph (290 km/h) on the straight before the circuit's "Stadium" section.