Despite being involved in Formula One racing for 40 years, Honda has been forced to pull its team out of the sport due to slumping car sales.

The Japanese manufacturer had the highest spending team last season with a budget of £148m (AUD$337m), which was not covered by sponsorship deals, but scored only 14 points from 18 races.

Instead of featuring sponsors, Honda decked out its cars in ‘Earth Dreams’, its campaign highlighting the company’s efforts to be a more environmentally sensitive manufacturer.

Honda’s decision leaves the sport reeling as the other teams work out their priorities ahead of the 2009 season.

In pulling out, Honda is attempting to sell the team it set up, which employs around 700 people but it will disband the team if it cannot find a buyer in the next three months.

There are also concerns about Toyota‘s commitment the sport after it elected not to hold a launch event for its 2009 car in a bid to save money, though the manufacturer said yesterday it had not changed its plans to participate next season.

Honda’s decision follows opposition to cost-cutting proposals from Max Mosley, the president of the Federation Internationale de l’Automobile, Formula One’s governing body.

Ferrari and Toyota are against the proposals, which call for a cap on team budgets and the introduction of standard engines – but opposition may dampen in the wake of Honda’s pull out.

As for Honda, it is a shame to see how badly the motoring industry is faring due to the global recession. The bigger players like GM and Ford are begging for money to stay afloat, while others like Mitsubishi are feeling the pinch.

Honda’s recent ‘The power of dreams’ was a great pitch by the company, but it seems that even its best efforts to retain it’s iconic motoring heritage has been dealt a serious blow.