But in an interview with Germany's Bild daily, he denied reports he is being made a scapegoat.
"No, I'm not," said Haug, who served as the German marque's motor sport vice president for more than two decades.
"If I had nothing to do with our failures in the last three years, then I would have nothing to do with our victory in China this year," said the 60-year-old, "and I wouldn't like that."
But why has Haug been axed, and not the Brackley based team's British principal, Ross Brawn?
"Because over 22 years I have borne the overall responsibility for motor sport at Mercedes, not Ross Brawn. I am ultimately his superior," he insisted.
Haug said he accepts that he must take the responsibility.
"The basis of our car was good, but the development was poor to very poor," he admitted.
Haug denied rumours he is actually quitting for health reasons.
"Thank god not," the German insisted. "Almost three years ago to the day I had thyroid surgery, but since then I'm doing very well. I'm totally healthy," he added.
He said he doesn't know if his job will now be split into two roles -- DTM and F1.
"I have no information. Maybe there is a very capable professional who can do much more than I can," said Haug.
He played down suggestions ex-drivers like Michael and Ralf Schumacher, or Mika Hakkinen, can fill his shoes.
"Honestly, I don't think they were born to be in the office," laughed Haug.