Toyota has pulled out of Formula One motor racing in a move that deals yet another blow to the scandal-hit sport and leaves it entirely without participation by Japanese automakers, tyremakers or big corporate sponsors.

The decision highlights a rising sense of panic both in the world’s second biggest economy and on the board of the world’s biggest car manufacturer, which told a hastily-convened press conference that its decision “reflected the current severe economic realities”.

Sources close to the company believe the decision may also arise from embarrassment at having scored such limited success despite having the backing of the iconic Japanese automotive company. The Toyota Formula One team, which is based in Cologne in Germany, has never achieved a race win in eight seasons in the sport but was regarded as one of the biggest spenders in the paddock.

Since its Formula One debut in 2002, the team has managed only three pole positions and three fastest laps, giving it one of the worst returns on its investment in the paddock, which is thought to amount to a total of nearly two billion pounds. This season it again under-performed with its team finishing fifth in the constructors' championship and its leading driver, Jarno Trulli, finishing eighth in the drivers' standings.

Bowing to the cameras in Tokyo, Akio Toyoda, the president of Toyota and scion of the founding Toyoda family, apologised for the miserable performance of the team. "This was a difficult but inevitable decision," said Mr Toyoda. “Since last year with the worsening economic climate, we have been wrestling with the question of whether to press on in Formula One. Now we are exiting Formula One completely. I apologise to Toyota's many fans for not being able to achieve the results we had intended to achieve."

Toyota said that it was intending to “do its best to find a solution” and is already rumoured to be scouting around for an Asian or Middle Eastern buyer for the team. Toyota also apologised publicly to its sponsors: it is understood that the company did not warn them in advance that it was about to quit. A spokesman for Panasonic, the largest sponsor of Toyota’s F1 team, said that it “respected” Toyota’s decision.

Toyota’s pullout follows a similar move by Bridgestone, the Tokyo-based company that announced three days ago that it would stop providing tyres to all the Formula One teams after the 2010 season. Bridgestone’s decision, combined with Honda’s abrupt and emotional exit from the sport last year, completes the exodus from Formula One by Japanese companies: cost is understood to be the prime concern behind all three decisions, though industry insiders said that the sport’s image is increasingly out of synch with the Japanese firms’ corporate emphasis on “green” technologies.

Toyota had previously asserted that it would continue to field a team until 2012 but the ongoing misery in its mainstream car business has made the Formula One team too heavy a cost burden. Toyota is due to report financial results for the half year tomorrow, with the outlook for global car markets still uncertain. Nissan, which reported results today, upgraded its forecasts for the full year and told investors to expect a profit of Y120 billion rather than the previously forecast loss of Y100 billion. Toyota, which has not penetrated the Chinese market as effectively as Nissan, may not be able to match that upgrade and is expected to predict heavy losses for the full year.

Toyota’s move away from Formula One comes despite Honda’s visible regret at its own decision to quit the sport. When Honda sold its team last year, its new owners, led by Ross Brawn, delivered constructors’ championship victory for the former Honda car and the drivers' championship for Jenson Button. Analysts have estimated that Honda may have missed out on $255 million worth of brand exposure via its absence from Formula One.

Toyota’s dwindling interest in the sport was apparent last month when the company withdrew its sponsorship of the Japanese Grand Prix, which was held on the Fuji Speedway circuit that the company itself owns.