VOLKSWAGEN has announced it is pulling out of the World Rally Championship only days after it claimed victory in the Rally Great Britain in Wales and secured its fourth consecutive WRC manufacturers' title.
The announcement comes less than a week after Audi revealed it was to curtail its motorsport activities and is quitting the Le Mans endurance series to concentrate on developing electric racing cars.
VW says it will be switching its attention to customer sport and will be developing a series of new models for privateers and individual teams.
"The Volkswagen brand is facing enormous challenges," said Frank Welsch, member of the VW board of management responsible for technical development.
He told the company's 200 motorsport employees in Hanover: "With the upcoming expansion in electrification of our vehicle range we must focus all our efforts on important future technologies. We far exceeded our sporting goals in the WRC, now we are realigning Volkswagen Motorsport and moving the vehicle technology of the future more starkly into focus."
He said that for 2017 onwards the company would focus on customer racing with the Golf GTI TCR in touring car series racing and the Beetle GRC in rallycross.
Volkswagen will also begin development of a new rally vehicle in the R5-category based on the next generation Polo and will offer the car to customers to buy from 2018 onwards.
The company, hit by the 'dieselgate' emissions cheating scandal last year, said no jobs would be affected as a result of the decision.
Since 2013 Volkswagen has dominated the world rally scene with the Polo R WRC where the factory teams of Sebastien Ogier/Julien Ingrassia, Jari-Matti Latvala/Miikka Anttila and Andreas Mikkelsen/Anders Jæger competed in 51 rallies with 42 wins and 621 best special stage times.
No other car in the history of the World Rally Championship has had a better success rate culminating in last weekend's victory for Ogier and Ingrassia in the Rally Great Britain.
VW is now ranked fourth in the overall list of WRC manufacturer champions behind Lancia which has secured 10 titles, Citroen with eight and Peugeot with five.
Sven Smeets, director of Volkswagen Motorsport said: "Of course, we regret the departure from the WRC very much - as this was the most successful chapter in the Volkswagen brand's motorsport history.
"The team has done great things. At the same time, our vision is firmly ahead, because we are aware of the great challenges facing the entire company. We want our realignment to contribute to the success of the Volkswagen brand. From now on, the focus is on upcoming technologies in motorsport and on our customer sports range, where we will position ourselves more broadly and attractively."