Honda is leaving Formula One to focus more on making and selling cars instead of winning races.
Honda CEO Takeo Fukui said his company was unable to continue backing a team in the high-cost F1 competition and wanted to put it up for sale. The Honda team, with an operational budget of around $294 million, finished next-to-last in ninth place in the F1 constructors' standings last season.
"The automobile industry is experiencing very difficult times," Fukui said. "Demand started to dry up in November and we can't see the light at the end of the tunnel."
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The withdrawal of one of the world's biggest car manufacturers will send shock waves through F1, which is already under mounting pressure to put the brakes on spiraling costs and could start the season with only 18 cars on the grid.
On Thursday, Honda Motor Co. announced it is cutting jobs in Britain and Japan because of plunging vehicle demand. It has already reduced its annual production of consumer cars by more than 140,000 worldwide.