BERLIN (Reuters) - Volkswagen will pull out of the world rally championship at the end of the current season as part of a strategic shift to help overcome its emissions scandal, the company announced on Wednesday.
"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 labor leaders are aiming to agree a cost-cutting plan and strategy for the VW brand's operations inGermany in time for a meeting of the carmaker's supervisory board on Nov. 18 to ratify future spending plans.
Europe's biggest automaker 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 Nov. 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.
It will also offer a Golf GTI for touring car racing and a Beetle model for rallycross.
"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," said rally team director Sven Smeets in a statement.
"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."
(Reporting by Andreas Cremer/Alan Baldwin in London; Editing by Christoph Steitz and Ken Ferris)