Volkswagen have confirmed they will pull out of the World Rally Championship at the end of the season as part of a strategic shift to help overcome its emissions scandal.
"The VW brand is facing tremendous challenges," said VW brand R&D chief Frank Welsch, citing the carmaker's push into zero-emission technology.
"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."
Top executives and labour leaders are aiming to agree a cost-cutting plan and strategy for the VW brand's operations in Germany in time for a meeting of the carmaker's supervisory board on November 18 to ratify future spending plans.
Europe's biggest carmaker is battling to recover from a scandal involving illegal software installed to mask toxic emissions on about 11 million diesel vehicles worldwide.
The scandal is set to cost it billions of dollars in compensation and vehicle refits.
The decision to quit rallying follows a similar move by VW's luxury flagship brand Audi, which last week announced it was pulling out of the World Endurance Championship and the Le Mans 24 Hours sportscar race to focus on the electric Formula E series.
The World Rally Championship ends in Australia on November 20 and Volkswagen, with French driver Sebastien Ogier, have won the manufacturers' and drivers' world rally titles for the past four years.
Ogier, Finnish team-mate Jari-Matti Latvala and Norwegian Andreas Mikkelsen have won 42 of 51 rallies between them.
Volkswagen said it would develop a new Polo rally car for customers to purchase and enter in the WRC2 category, a tier below the full world championship, from 2018.