F1 supremo Bernie Ecclestone says Jaguar's departure proves that cutting the cost of racing is a top priority.
Ecclestone believes Jaguar did not have enough money to be competitive and they should have quit last year.
"It was inevitable and it wasn't really a shock to me," he said after Jaguar owners Ford announced on Friday that they are to sell the team.
"They couldn't afford to run around at the back of the grid and in my opinion shouldn't have run this year at all."
Ford announced the sale of the team as part of a wider cost-cutting exercise which will also see 1,150 jobs lost in the UK as part of a reorganisation of the Jaguar car group.
Ecclestone added: "They obviously have problems and they're closing a factory so it would have been a bit cheeky to keep the F1 factory going in those circumstances."
Ecclestone said he thought there was a chance a buyer could now be found for the team but admitted that until the costs of competing in the sport were reduced, potential investors may be put off.
"I know there are people interested but I don't know whether they will be able to make the necessary financial investment any more than Ford could," he said.
"F1 is a very expensive business these days and we need to reduce the amount of money it takes to be competitive.
"Teams could still spend whatever they wanted, but the
amount of money needed to compete would be less."
He also admitted Ford's decision to cease backing Cosworth could leave Jordan and Minardi facing an uncertain future, although their contracts have been assured at least until the end of the season.
Cosworth supplies discounted engines to the F1 minnows.
Ecclestone said: "Cosworth supply two series in America as well as the teams in F1 so hopefully there will be a buyer and everything will be okay.
"But if no one buys Cosworth and it goes out of business then
Jordan and Minardi are in serious trouble."
That scenario raises the prospect of as few as seven or eight teams battling for F1 honours in 2005 - but Ecclestone insisted that could be a good thing.
Theissen has threatened to pull BMW out of F1 if costs are not reduced
"I'm sorry that it's happened because we don't need to lose the Ford Motor Company, but there could be an upside," he said.
"There are provisions for the teams to run three cars and that would perhaps give us 20 competitive cars on the grid next season."
Meanwhile, BMW motorsport director
Mario Theissen said Ford's decision to quit proves F1 must make cost-cutting a priority.
BMW, partners to former champions Williams, are at
loggerheads with the International Automobile Federation (FIA) over new engine regulations the sport's governing body plans to introduce in 2005.
The FIA is determined to switch to a 2.4 litre V8 format
that lasts for two races while BMW, who have made veiled threats in the past about pulling out if F1 no longer fulfils their aims, want to retain the three litre V10s.
"Jaguar's decision and the discussions of the past month show the goal must be to avoid increased costs through the new rules and to cut the cost of racing and testing," Theissen said.