Toyota is pulling out of Formula One racing.

The world's largest automaker announced Wednesday it needs to cut costs and focus on its core business.

"Based on the current economic environment, we realize we have no choice but to withdraw from Formula One," Toyota president Akio Toyoda said at a news conference. "This has been a very painful decision for the company."

Toyota follows Honda Motor Co. as the second major Japanese automaker to withdraw from the sport in the last 11 months. Honda pulled out last December amid worsening economic conditions. Brawn GP, which took over the old Honda team, won the 2009 F1 championship.

Toyota officials called the withdrawal from F1 complete, making a return to the sport when and if conditions improve unlikely.

Toyota is seeking to cut costs as it expects to post an operating loss for the six months ending on Sept. 30. It is due to report earnings Thursday.

The company posted its worst-ever loss in the financial year at the end of March.

Formula One's governing body will review the legality Toyota's pullout from the sport.

FIA says that since the Japanese team's announcement comes only weeks after it committed to the sport through 2012. It will seek "urgent clarification" as to the team's "legal position" in the F1 championship.

Like other Japanese exporters, Toyota has been hurt by a strong yen. The dollar has recently hovered around 90 yen. Toyoda, grandson of the company's founder who became president this year, has vowed to avoid a third straight year of losses.

On Monday, Japanese tire manufacturer Bridgestone Corp. announced it would not renew its exclusive deal to supply tires for F1 when its contract expires in 2010.

That announcement came one day after the 2009 F1 season concluded with the Abu Dhabi GP.

In July, Toyota-owned Fuji International Speedway announced it would not host the Japanese F1 GP from 2010 and beyond amid the faltering global economy.

F1 is not the only motor sport to be affected by the economic crisis. Citing similar concerns to Toyota and Honda, fellow Japanese automakers Subaru and Suzuki pulled out of the World Rally Championship ahead of the 2009 season.

Ferrari said the fraught relationship between the FIA and the F1 teams was part of the reason for why teams are quitting the sport.

"The reality is that this gradual defection from the F1 fold has more to do with a war waged against the major car manufacturers by those who managed Formula 1 over the past few years, than the result of any economic crisis," Ferrari said in a statement

Toyota made its F1 debut in 2002 but never won a grand prix. The team's best result was in 2005 when Jarno Trulli finished second in Malaysia and Bahrain.

Toyoda said the team's poor results were not a factor in the decision to leave the sport. Continued...