Molloy bowed out this morning - a few hours before a noon cut-off, at which time candidates can no longer enter or pull out of the race.
The publican said a poll released last night wasn't as attractive as previous polls.
Molloy said he couldn't guarantee that if he had left his name in the ring, he wouldn't be "orchestrating a result" for the left.
The brash hospitality figure, who had defined his campaign by personal attacks on his rivals and a provocative and unrelenting social media presence, had dropped in the polls significantly from a showing of 23 per cent of the vote last month.
Molloy said he was mortified when he saw the poll result last night.
"We just didn't see it coming. I'm a fairly bullish person, I'm a blue sky person ... a front windscreen, not a rear-vision mirror ... and we just didn't see it coming.
"We were busy up until a week ago recruiting staff, amassing people around us, adding people to the team, getting advisers in. We're on the runway, we're about to press the thrusters and go for it ..."
He said he had hoped rival candidate from the right Viv Beck would have "waved the white flag" but she didn't "so we had to make a decision".
Meanwhile, he also reflected on the ill-fated television interview with Guy Williams.
"I wouldn't do Guy Williams again. Nothing against Guy."
Molloy said he would always support Williams and was good friends with his father.
"I think he's a fabulous guy, I've been supporting him."
He said the interview was a "comedy series" and he had asked for the swearing to be removed but it wasn't.
"There's no regrets there. It was filmed six months ago and I thought I was doing Guy a favour. But having said that, I think we agree, in the 2025 campaign, I probably won't do it again in case you're wondering."
On his fellow candidates, Molloy said "every one of them has some redeeming features".
"Is anyone of them the whole package? Probably not," he said.
Molloy's campaign is believed to have personally cost him a significant amount of money: with constant social media publicity, electronic billboards around the city and a campaign bus he emblazoned with a large picture of his face and the slogan "Leo Molloy Relentlessly Auckland".
Asked how much the campaign had cost him, Molloy answered: "A lot.
"Cold hard cash is always a factor. I don't think any responsible person will spend their money recklessly.
"We've already spent a considerable amount of money, productively, in a multitude of different ways to establish our profile and recognition."
Asked what he would do differently in his 2025 campaign, Molloy said he would try to talk in a "softer, approachable" way rather than being the "natural Leo".
"I can at times be a little bit obnoxious, and a little bit out there, a bit edgy ... It's a balance establishing recognition then pivoting into soft policy."
He said his team would be better resourced in 2025 and they would not "make the same mistakes again".
"Like everything you do in life, you learn. You think, you know what, 'I just got that slightly wrong ... shouldn't have said that' ... it's been a valuable learning exercise for me."
Earlier Molloy told the Herald some aspects of his polling had been strong but there were clear trends emerging suggesting he could not win.
"Cowboys don't cry. I'm getting on with my other life as a hospo legend.
"I won't be endorsing another mayoral candidate just yet, but I may do so once I scrutinise their policies in more detail. If I do endorse it'll be a fiscally responsible candidate - not a reckless spender."
Today at noon was the deadline for candidates to nominate themselves in New Zealand's local government elections in October.
It is unclear whether Molloy officially indicated he was pulling out of the Auckland mayoral race to council authorities - and thereby not be on the ballots - but his statement announcing his exit came at 11.30am today.
"I'm deciding to withdraw immediately and, in doing so, potentially help other candidates - who won't do as good a job as I would have – but at least will be better than the dispiriting status quo we've had under Phil Goff and this Labour mayoralty."
Molloy's decision came shortly after the latest Ratepayers' Alliance-Curia poll showed he had dropped to third place behind businessman Wayne Brown.
Brown is sitting on 18.6 per cent support in the latest poll - still behind frontrunner Efeso Collins on 22.3 per cent.
But Collins had still dipped in this latest poll of 500 Aucklanders - a five-point drop from last month's poll and way short of the 50 per cent support Labour-endorsed mayors Len Brown and Phil Goff secured in each of their two mayoral wins.
Other candidates are Viv Beck on 12.5 per cent and Craig Lord on 7.2 per cent.
Brown's rise in the poll comes after Molloy's expletive-ridden appearance on Williams' satirical show last month and the loss of two key figures from his campaign team - his chair June McCabe and director of communications Kate Gourdie.
Brown said today that Aucklanders now had a "clear choice" for their next mayor.
"Most Aucklanders know that their council has been underperforming and needs fixing," Brown said, without noting Molloy had dropped out.
"I am the only candidate in the race with the serious track record of running – and fixing – big multibillion-dollar organisations."
Collins also issued a short statement saying he appreciated the enthusiasm Molloy brought to the campaign.
"Regardless of the news today, we are going to continue to be focused on our campaign for creating a more just, sustainable Auckland. But I wish Leo Molloy well and I appreciate the energy and passion he has brought to this race," Collins said.
Beck, who polled fourth in today's poll on 12.5 per cent, said she had nothing to add to the news of Molloy's exit.
Auckland Ratepayers' Association spokesman Josh Van Veen claimed the poll confirmed for the third month in a row, most Aucklanders do not want a Labour-endorsed mayor.
"Collins still hasn't galvanised the left and is struggling to crack 25 per cent. Wayne Brown is now the leading anti-establishment candidate.
"Viv Beck [endorsed by National's de facto local government arm Communities and Residents] is really struggling to look viable. An eleventh-hour intervention by National Party power brokers would change the race dramatically. It's time they stepped up," Van Veen said.
In his exit statement, Molloy said "bring on 2025", further suggesting he would run again in the next local government elections.