Tough times loom for new Toyota chief

By Chang-Ran Kim, Asia autos correspondent

TOKYO (Reuters) - Akio Toyoda takes charge at Toyota Motor Corp this week with the company facing its biggest ever loss, but few expect his appointment to bring about the changes needed to drive the world's No.1 automaker back into the black.

Amid a global recession that has hammered car sales, Toyota's factories are severely underused. Making matters worse, Toyota builds about half of its vehicles in Japan, which works against it with the dollar squarely below 100 yen.

But unlike bankrupt U.S. rivals Chrysler and General Motors, which have closed plants, slashed jobs and shuttered dealerships in an effort to survive, Toyota has said it plans to ride out the downturn with its production capacity intact, arguing global vehicle demand will eventually recover.

"Erasing the losses is an urgent task but fundamentally, this company does things with a medium-term vision," said Tsuyoshi Mochimaru, an auto analyst at Barclays Capital.

"They're not going to suddenly change the way they do things to satisfy the short term. I expect the new management's strategy to be an extension of the previous one's," he said.

Shunning Western-style restructuring, Toyota has chosen to use the down-time to train workers. Already known as a lean operator, it is trying to squeeze costs further so it can be profitable using just 70 percent of its production capacity.

"A V-shaped recovery is actually not that difficult if you slash capex and jobs, for instance. Toyota could probably get a restructuring impact of close to 1 trillion yen. It's not that they can't do it -- they won't do it," Mochimaru said.

WITHER THE "DRASTIC MEASURES?"

Toyoda, long seen as a candidate to head the company founded by his grandfather in 1937, is set to be confirmed as Toyota president following the annual shareholders' meeting on Tuesday.

Toyoda has said he will steer the company "back to the basics" from a run of expansion in the past decade that outgoing President Katsuaki Watanabe conceded may have been too fast.

Chairman Fujio Cho admitted in January that there was some hesitation about handing the baton to the relatively young Toyoda at such turbulent times, but said ultimately that a younger leader and the Toyoda name were the best hope for taking the "drastic measures" needed during the crisis.

But neither Cho nor Toyoda specified what those measures would entail, and analysts said they could be elusive anyway.

"A drastic reform at Toyota would involve cutting back its domestic production base," said Kurt Sanger, a Tokyo-based auto analyst at Deutsche Securities.

"But that probability is low. And with 50 percent of its production in Japan and the dollar at 95 yen, even if the U.S. market returns to 16 million units tomorrow, they'll still be making less profit than before."

Facing annual U.S. industry sales of around 10 million units, Toyota is expecting last year's first-ever operating loss to balloon to 850 billion yen ($8.8 billion) in the year to March 2010.