While no official announcement from VW has yet been made, sources say the decision to quit the WRC was taken at a meeting of the VW board in the company’s Wolfsburg headquarters on November 1.

News of VW's exit from the WRC comes hot on the heels of the decision by sister company Audi to axe its highly-successful and long-standing - 18 years in total - World Endurance Championship programme.

Both decisions are part of a sweeping set of cost-cutting measures taken the VW group in the wake of the 2015 diesel emissions scandal that has decimated the company’s share price. In the US alone, the buy-back agreement on affected vehicles will cost VW some $15 billion.

Rally Australia, to be held in Coffs Harbour on November 17-20, will be the final event for VW in the WRC after four highly successful seasons.

Since 2013, VW has claimed more than 40 rally victories in the WRC, as well as four manufacturers' and four drivers' titles.

Volkswagen’s withdrawal means next season's WRC will be a battle between Hyundai and M-Sport (Ford) and returning manufacturers Citroen and Toyota.

It also has significant ramifications for the driver market, with VW’s reigning champion Sebastien Ogier along with rally winners Jari-Matti Latvala and Andreas Mikkelsen now without a drive.

As for Audi, it will remain in the sport despite its withdrawal from the WEC, switching instead to the burgeoning Formula E championship for electric-powered openwheelers.