Ford Performance Vehicles will be pulled back under the wing of Ford Australia by the end of the year, costing 32 FPV staff their jobs.
FPV, a joint venture between the Australian office of the car manufacturing giant and renowned motorsport and tuning specialist Prodrive, produces high-performance versions of Ford's Falcon, similar to Holden Special Vehicles' efforts with the Commodore range. ProDrive owned 51 per cent of the brand.
Under a memorandum of understanding, Ford Australia will buy the assets of FPV in order to continue with the struggling brand.
With the Falcon likely to be discontinued in a few years' time, and replaced by a front-wheel Taurus, the FPV's future has looked quite bleak.
This week's change was a result of the two companies agreeing that the current approach was unsustainable.
Ford New Zealand sold 111 FPVs last year, while HSV sold 230 cars.
"We recognise the passion and dedication of FPV enthusiasts and their desire to see Ford high-performance vehicles available in the market," said Ford Australia president and CEO Bob Graziano in a statement.
"Although this segment of the market is relatively niche, it is an important part of Ford's performance history and DNA. Both partners have worked hard to ensure the FPV brand can continue to thrive post the change to our current arrangements.
"Our current and future customers should experience little, if any, change to the way they interact with the FPV brand, said Graziano. We look forward to continue providing them with the outstanding performance and specialist service they have enjoyed to date."
Prodrive boss Bryan Mears, who just two weeks ago was optimistic about the company's future, said: "As a result of the business review, Prodrive has made the decision to exit the performance car market at the end of 2012," he said. "We have enjoyed great success through our partnership with Ford Australia and look forward to watching the FPV brand continue to thrive in the future."
There has been debate over whether the FPV range would be extended to include worked-over versions of other vehicles in the Ford range.
An FPV Territory was once offered, complete with a legendary thirst for fuel, but Ford has been adamant that it would not be resurrected.
Both the Focus and tiny Fiesta have been given factory performance upgrades, with an ST version of the Focus set to release in New Zealand soon and a piping-hot RS version sold in limited numbers last year.
Whether the 'ST' spec Fiesta will be sold here has not been confirmed. Both of these cars use Ford's new EcoBoost technology, essentially small capacity turbocharged engines that put out similar power to larger engines of the past. Even the Falcon was given an EcoBoost engine this year, with the same two-litre turbo as will be fitted to the Focus ST.