In yet another sign of the challenges facing the auto industry, Japanese firm Honda Motor (HMC: sentiment, chart, options) said today it will withdraw from Formula One racing, effective immediately. "This difficult decision was taken recently and was made in light of the quickly deteriorating operating environment facing the global auto industry," said Chief Executive Takeo Fukui. "We will enter into consultation with associates of Honda Racing F1 and its engine supplier Honda Racing Development regarding the future of the two companies. This will include offering the team for sale."

The Formula One team has an estimated annual budget of $500 million, and Fukui observed that Honda's withdrawal "will have a big impact in terms of cutting overall costs." Although the CEO and former amateur racer admitted that his company's exit from the sport is a personal disappointment, he told reporters that Honda could still win in another race -- "the challenge to develop new technology" in the auto industry.

At last check, HMC is down 3.7%. The shares have rebounded only fractionally from their early morning nadir of $17.35, which marked the stock's lowest price in more than 5 years.