BMW is pulling out of Formula One at the end of this season, the second carmaker to leave the series within a year as a severe global economic downturn hits new car sales and forces manufacturers to cut costs.
The German company announced the decision at a news conference Wednesday, saying it wanted to use the significant F1 budget in other areas. It will remain involved in other forms of motor sport.
"Of course, this was a difficult decision for us. But it's a resolute step in view of our company's strategic realignment," BMW chairman Norbert Reithofer said at the news conference.
He said the Munich-based carmaker would use the resources previously spent on the F1 team to advance "sustainability and environmental compatibility."
Since entering F1 as a team by taking over the Sauber operation ahead of the 2006 season — it had previously acted as an engine supplier — BMW had posted just one race win, at last year's Canadian Grand Prix.
Touted as a championship contender for the 2009 season, BMW had been very disappointing, lagging well off the pace of the leading teams.
Klaus Draeger, the board member responsible for development, said the team was "unable to meet expectations in the current season."
The decision came before the signing of the new Concorde Agreement, the document that governs the sport, expected this week.
BMW's withdrawal followed that of Japanese carmaker Honda ahead of the 2009 season, illustrating the growing pressure upon carmakers to cut costs amid the economic downturn.
Their withdrawal lent credence to efforts by the FIA to significantly reduce F1 costs in order to retain existing teams and attract new entrants.
The FIA, motor racing's world governing body, said it hoped BMW was the last manufacturer to leave the series.
"The FIA regrets the announcement of BMW's intended withdrawal from Formula One, but is not surprised by it," it said in a statement.
"It has been clear for some time that motor sport cannot ignore the world economic crisis. Car manufacturers cannot be expected to continue to pour large sums of money into Formula One when their survival depends on redundancies, plant closures and the support of the taxpayer. This is why the FIA prepared regulations to reduce costs drastically."
The FIA also blamed the teams for failing to heed its warnings about the need to cut costs.
"Had these regulations not been so strongly opposed by a number of team principals, the withdrawal of BMW and further such announcements in the future might have been avoided," the governing body's statement added.
The decision to end its involvement on Formula One only came Tuesday and BMW was still considering what to do with the staff involved with the team, Draeger said.
"Of course ... would all have liked to continue this ambitious campaign and show that this season was just a hiccup following three successful years," BMW motor sport director Mario Theissen said.
"But I can understand why this decision was made from a corporate perspective. We will now focus sharply on the remaining races and demonstrate our fighting spirit and put in a good result as we bid farewell to Formula One racing."
Mercedes, the other major German carmaker involved in Formula One, said it regretted BMW's pullout, "but it will have no influence on our F1 engagement."
The decision by BMW comes at a time when automakers worldwide are reporting lower sales amid the global economic slowdown. Consumers are reluctant to spend on big-ticket items, forcing companies to trim costs.
Georg Stuerzer, an automotive analyst with UniCredit in Munich who follows BMW, told the Associated Press that he estimated the company was spending approximately $282 million (euro200 million) a year on its Formula One involvement.
Draeger said it was not yet clear if the decision would result in job losses in Munich and Hinwil, Switzerland. The operation employs about 700 workers.
"Since we only made this decision yesterday, we cannot provide any more precise information," he said. "We will develop and assess various scenarios and do our best to find a solution for the employees in Hinwil and the staff members involved in the Formula One project in Munich."
BMW's withdrawal will prompt speculation about the future of drivers Robert Kubica and Nick Heidfeld. Kubica will be in strong demand for next season and will likely remain involved in F1.
The future for Heidfeld is less certain, though his long stint in the sport could make him an attractive option for the new entrant teams, who will be looking for an experienced driver next season.
BMW achieved eight Formula One victories from 1982 to 1985 as an engine supplier to Brabham. In 1983, Brabham won the drivers' championship with Nelson Piquet. The last win with the famed turbo engine followed with Benetton in 1986.
After quitting the series in 1987, BMW returned to F1 as engine supplier to the Williams team in 2000 and scored 10 victories until 2005, when it took over the Sauber team.
In its debut season in 2006, BMW Sauber wound up fifth in the constructors' championship. In 2007, the German-Swiss team came in second after McLaren-Mercedes' exclusion from the points standings.
The 2008 season saw the team in the hunt for the world championship until the end of the season, winding up third. Kubica had the only GP victory in Canada.
So far, the BMW Sauber F1 Team has taken one pole position (Kubica in Bahrain in 2008) and 16 podium finishes. It is eighth in the constructors' standings this season.