Subaru pulls out of WRC

The exit leaves just world champions Citroen, owned by PSA Peugeot Citroen, and cash-strapped Ford Motor Co chasing the manufacturers' title next year.

"Our business environment has changed dramatically due to the rapid deterioration of the global economy," Fuji Heavy chief executive Ikuo Mori said in Tokyo.

"In order to optimise the management resources and to strengthen the Subaru brand further, Fuji Heavy decided to withdraw from WRC activities at the earliest time," a tearful Mori said, briefly losing his composure at one point.

Automakers all over the world are under severe pressure to find ways to reduce spending as a sudden downturn in global car demand knocks profitability.

Honda Motor Co, Japan's number two automaker, this month quit Formula One racing for similar reasons, saying it needed the cash for its core auto-making business.

Rallying does not have anything like the budgets of Formula One, where a team like Honda can burn through $500 million a year, and the sport also has a long-standing tradition of private entrants.

"Subaru's departure from the World Rally Championship is a great loss as it is one of the sport's icons," said David Richards, whose British-based Prodrive company ran the team.

"The Subaru World Rally Team has created true champions such as Colin McRae and Richard Burns and its absence will be felt by many the world over."

Still, Subaru's decision will deal a blow to fans, and possibly to its brand image, which the automaker said had helped it expand sales around the world.

Established in 1989, the team won manufacturers' titles in 1995, 1996 and 1997 and had boasted some of the best drivers in the sport, including Carlos Sainz, Colin McRae and Richard Burns.

Subaru finished in third place of six teams in the manufacturers' championship this year.