Kennard announced in March he would conclude his competitive career alongside Paddon at Rally Finland. But the Blenheim-based co-driver needed to step aside from his co-driving duties for the recent Rally of Portugal due to a hip injury.
Marshall, who has worked with Hyundai Motorsport for several years, was named as Kennard's replacement not long after.
Kennard's hip has not had enough time to recover in time for the next event in Sardinia. And with just two more rallies - Poland and Finland - before Marshall is in the car full-time with Paddon, Kennard said he felt it was best for Paddon to continue with Marshall to build the new partnership for the future.
''Unfortunately my hip's condition still won't allow me to take on the rough gravel of Sardinia and, while I'd dearly love to get back in the car to finish my WRC career with Hayden in Poland and Finland, it really wouldn't make any sense,'' he said.
''We've had a terrible start to the year, so it's most important to grab some positivity and move forward in the last half of the season.
''We've already seen a spark of that with Hayden and Seb in Portugal, so I'm sure by staying together they can keep it going and they'll be back on the podium very soon, where I'll be with them in spirit.''
Paddon and Marshall line up for their next WRC event on the Italian island of Sardinia, running from June 8-11.
