TOKYO: Pummelled by the global financial meltdown, collapsing global car markets and an army of angry shareholders, Honda yesterday pulled out of Formula One.
It dealt a huge symbolic blow to the company's image and could plunge one of the world's most glamorous sports into crisis.
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The dramatic exit from F1 - a sport that has throbbed in the corporate veins of Honda since the 1960s - was announced by the company's president, himself a passionate fan of motor racing.
Visibly shaken, and with his head slumped low, Mr Takeo Fukui said this year would be Honda's last season. The Japanese carmaker will not supply its engines to any other team.
'Not only sales of our automobiles, but also sales of motorcycles and power products nosedived at an accelerated speed in North America and around the world in October and November,' he said. 'This was absolutely beyond our imagination. We had absolutely no idea what was coming.
'This is a complete withdrawal from F1. Five years from now, I think history will show we made the right decision.'
As well as abandoning one of the company's biggest brand-building tools, the pullout from F1 could do significant damage to the company's entire business model, said analysts.
The decision leaves the team's drivers, Jenson Button and Rubens Barrichello, without seats for next season.
It also means some 600 staff at the team's headquarters in Brackley, Britain, face unemployment in the new year.
Despite the huge £200 million (S$444million) a year costs of maintaining its F1 team, Honda has always maintained that the money was worth it. It believed being in motor sport at the highest level attracts the best engineers to the company.
But investors in Honda told The Times of London that the company's decision may have been based on the rising ferocity of complaints from shareholders, who believe that the money lavished on F1 participation could be better deployed.
In contrast with Toyota, the only other Japanese team on the grid, Honda's participation in F1 was not financially assisted by large sponsorship deals.
The team's livery bore the names of no major advertisers, with Honda preferring to tout a link to environmental issues on its own company website.
Shareholders doubtful of the true value of F1 to the company have pointed to the fact that the team's performance in the most recent season has been dire, despite their long and impressive history in F1. The team finished second-last in the constructors' championship and scored no wins for several seasons.
The pullout follows a flood of terrible signals from the global auto industry. Detroit's 'Big Three' - General Motors, Chrysler and Ford - remain in a last-ditch battle for financial survival, and even the once bulletproof Japanese giants have begun to feel the pain of slowing growth in all major markets.
Last month, Japanese domestic vehicle sales crashed to levels last seen in the early 1970s and exports were also down heavily. Business has even turned sour in Russia, Asia and Latin America, suggesting that the US and European downturns will not be offset by any near-term growth in emerging markets.
There were fears that Honda's move would prompt other teams to follow suit and leave F1.
F1 supremo Bernie Ecclestone yesterday admitted Honda's withdrawal provides a 'wake-up call' to overspending teams.
Asked whether F1 was in crisis, he replied: 'Formula One is in no bigger a crisis than any other company throughout the world - the world is in crisis at the moment. But the world won't stop, that's for sure.'
Mr Max Mosley, the head of the International Automobile Federation (FIA), motorsport's world governing body, said he would push on with planned cost-cutting measures.
'Honda's announcement confirmed the FIA's longstanding concern that the cost of competing in the world championship is unsustainable,' he said.
Despite the bleak outlook, Honda Racing's chief executive officer Nick Fry was hopeful that new owners would be found in time for the team to be on the grid for the start of the next season in Australia on March 29.
'In the last 12 hours, we've had three serious people come to us and suggest they would like to buy the team, so we're still hoping to be there in Melbourne,' he said.
