Toyota's new boss warns of two more tough years

Chang-Ran Kim; Asia Autos Correspondent

TOKYO (Reuters) - Toyota Motor Corp's new president, the grandson of the group's founder, warned on Thursday the auto industry faces another two tough years as he outlined his strategy to return the world's No.1 car company to profit.

Toyota aims to build more autonomous operations in North America and shift its focus to marketing a region-specific vehicle line-up, rather than offering a full line-up in every region, Akio Toyoda told his first media conference in the job.

Most of Toyota's factories around the world are underused as a global recession hammers car sales, sending two of America's three big car makers into receivership.

Facing a second year of record losses, Toyota aims to cut costs from its already lean operations so it can be profitable using just 70 percent of its factory capacity.

"We want to do everything possible to avoid a third consecutive year of losses," Toyoda told reporters.

Toyoda said European efforts would focus on hybrid models.

Its remodeled Prius hybrid, launched last month, has been a rare bright spot, winning more than 180,000 orders in Japan.

Production has been limited to two plants so far, creating a bottleneck for delivery, while analysts say the fuel-sipping model could eat into sales of Toyota's other more profitable cars.

Toyoda has said he aims to steer the company "back to basics" -- a promise also made by his predecessor, Katsuaki Watanabe, when he took over in 2005 as Toyota's factories scrambled to meet soaring demand.

The push for profits would not involve plant closures, Executive Vice President Atsushi Niimi told the news conference.

"Right now, the market is very tough. But in two years, or at most three years, it will recover so we want to make sure we have the means to meet demand then," said Niimi, who heads manufacturing operations in Toyoda's new-look executive team.

At the annual meeting this week, Toyota promised shareholders to do better to recover from a 461 billion yen ($4.8 billion) operating loss.

For the year to March 2010, it has forecast an even bigger loss, of 850 billion yen, although consensus forecasts are for a much smaller loss of 495 billion yen.

Unlike bankrupt U.S. rivals Chrysler and General Motors, Toyota has said it plans to ride out the downturn without slashing full-time jobs.

Many industry executives have said recent sales trends in major markets such as the United States and Japan indicate that demand has bottomed, but opinion is divided over when it will recover convincingly.

"The company will have to learn to adjust to this new paradigm of lower sales growth and higher technology spending. But they are definitely in a better position than U.S. companies to do so," said Yoji Takeda, a Hong Kong-based vice-president with RBC Investment Management (Asia) Ltd.

"Under the new management it will have to make continuous and rapid moves to cut costs. There could be some restructuring to cut down excess capacity. Toyoda's position as a member of the founder family may help push through changes faster. In two years it will be a much stronger company."

In the United States, Toyota's biggest and until recently most profitable market, its sales have dropped 38 percent year to date.

Data issued on Thursday showed Toyota's global production, including units Daihatsu Motor Co and Hino Motors Ltd, fell 38 percent last month, to 501,685 vehicles.

Market share in Japan fell 1.3 percentage points despite a mid-month launch of the Prius.

($1=95.72 Yen)

(Writing by Rodney Joyce)