Honda will pull out of Formula One unless a new buyer can be found within three months.

The Japanese car manufacturer has the operating budget to keep the team running into early 2009, but escalating operational costs amid the worldwide financial crisis have the Brackley-based outfit in danger of shutting down if a new sponsor is not found quickly.

Takeo Fukui, CEO of Honda Motors, was due to hold a news conference regarding the F1 team in Tokyo at 1:30 pm local time (0430 GMT) today. A person familiar with the decision told The AP that team bosses Ross Brawn and Nick Fry informed the near 700-member team late yesterday.

"Their intention is to pull out entirely -- as an engine supplier and sponsor," the Honda team member said on condition of anonymity because the person was not authorized to discuss it. "It's a shock. I think this came as a total surprise to everyone. No one in the UK was aware of this decision before Thursday night."

Brawn and Fry had returned from a FOTA meeting in Geneva, Switzerland, where they informed the other F1 teams of the manufacturer's decision.

A pullout by one of the world's biggest car manufacturers will send shockwaves through F1, which could start the season with only 18 cars on the grid. Japanese team Super Aguri, which was backed by Honda, pulled out of F1 this year.

The season opens at the Australian Grand Prix on March 29.

Earlier Thursday, Honda announced it was cutting jobs in Britain and Japan because of plunging vehicle demand. It has already reduced its annual production of consumer cars by more than 140,000 worldwide.

If Honda does withdraw from F1, Jenson Button will be without a car seat for next season along with promising rookie Bruno Senna, who was trying out for the No. 2 seat at winter testing last month.

Honda, with an operational budget of around 200 million pounds (230 million euros; US$294 million), finished ninth in the constructors' standings last season with Button 18th out of 20 drivers with three points. Rubens Barichello, who was dropped by the team going into 2009, was 14th with the remaining points.

Honda, which originally entered F1 as a constructor for a stint in the 1960s before returning as an engine supplier in the 1980s, bought out BAR Racing in 2005.

FIA president Max Mosley had described F1's combined US$1.6 billion (1.25 billion euros) spending in 2008 as "unsustainable," saying the teams were relying too heavily on the goodwill of rich individuals and corporate sponsors. Mosley has vowed to push through cost-cutting measures by 2010 in a bid to make the sport more feasible.

The governing body has already reached a deal with F1 to cap the cost of engines supplied to smaller teams as part of a plan to save money during the global financial crisis.

Over recent months, the 10 teams have been meeting regularly with F1 boss Bernie Ecclestone to discuss reducing costs, including streamlining engines.

(Agencies via Shanghai Daily December 5, 2008)