Late last year rival Japanese brand Honda pulled out. There are now no Japanese car makers in the sport.
Toyota has been involved with F1 since 2002. This year it finished in fifth place in the constructors' championship, but has never won a Grand Prix.
In a statement issued by the company yesterday, it said: "Toyota Motor Corporation, which had viewed its participation in F1 as contributing to the prosperity of automotive culture, remained dedicated to competing at the pinnacle of motor sports, even in the face of the abrupt economic changes that started last year. However, when considering Toyota Motor Corporation's motor-sports activities next year and beyond from a comprehensive midterm viewpoint reflecting the current severe economic realities, Toyota decided to withdraw from F1."
According to Dan Parr, senior account director for Asia-Pacific at brandRapport, Toyota's pullout will be a "real problem" for F1.
"It goes to show how Toyota and Honda beforehand have had to bow to the financial pressures involved with being associated with the sport and also public pressure of both companies’ mandate toward green motoring. F1 is certainly not in line with that."
Parr added that the bright spot for F1 is that the pullouts will show that smaller teams now have the opportunity and ability to take over. "Brawn has shown that it can be done without a big budget and I'm sure Toyota would be looking for someone to take over," he said.
The withdrawals come at a time when F1 is trying to push into Asia.
However, Parr noted that organisers have shown that they can come up with new ways to drive interest for the sport in emerging markets, as evident by recent races in Singapore and Abu Dhabi. "Despite its problems this season, F1's popularity here is definitely growing."
BMW, which said that Formula 1 did not fit in with its environmentally sustainable branding, has also withdrawn in the past 12 months. Tyre maker Bridgestone has also said it will not renew its F1 sponsorship deal after it ends in 2010. And Renault is also thought to be considering its future in the sport.
