TOKYO (Reuters) -- Toyota Motor Corp. said on Wednesday it will pull out of Formula One racing.

Toyota, the world's largest carmaker, was the last Japanese team left in the sport following Honda Motor Co.'s withdrawal last December to cut costs amid a severe market downturn.

BMW AG also has quit racing's premier series.

Toyota President Akio Toyoda apologized for the team's failure to record a single race victory since joining F1 in 2002. The poor record came despite an estimated annual budget of about $300 million.

"It was a very difficult but unavoidable decision," Toyoda told a news conference in Tokyo. "Since last year as the economic climate worsened we have been struggling with the question of whether to continue in F1.

"We are pulling out of Formula One completely. I offer my deepest apologies to Toyota's many fans for not being able to achieve the results we had targeted."

Toyota's F1 operations are based in Cologne, Germany.

The decision to quit the glamour sport comes as the auto industry starts to stabilize following a sales crunch in the wake of the financial crisis.

Toyota's decision continues the drain of Japanese companies from racing, which has seen Subaru and Suzuki withdraw from the world rallying championship.

Japanese tiremaker Bridgestone Inc. announced on Monday it would not renew its supply contract with F1 after the 2010 season.

Toyota, whose team principal Tadashi Yamashina was in tears at Wednesday's news conference, compiled 13 podium and 87 points finishes over its eight seasons in Formula One.

Toyota's exit leaves just three manufacturers in Formula One -- Ferrari, Mercedes-Benz and Renault.

Toyota signed the concorde agreement earlier this year committing to F1 until at least 2012, so a pullout could also have legal ramifications.

Toyota has forecast an operating loss of 750 billion yen ($8.3 billion) on revenues of 16 trillion yen. It is scheduled to report second-quarter results on Thursday.