Toyota to cut sales goal and outline cost cuts

By Chang-Ran Kim, Asia autos correspondent

TOKYO (Reuters) - Toyota Motor Corp (7203.T), the world's top automaker, is expected to slash its 2009 sales forecast by at least 1 million vehicles and outline plans to cut costs as the financial crisis threatens to cripple the industry.

A global slowdown and credit crunch have depressed consumer sentiment, forcing automakers from Fiat SpA (FIA.MI) to Ford Motor Co (F.N) to reduce production and forecast an even bleaker outlook for 2009.

General Motors Corp (GM.N) and Chrysler CBS.UL have said they risk bankruptcy without government support, a prospect with dire ramifications for auto parts suppliers, joint venture partners and the U.S. economy.

Toyota has said it will announce revised 2009 sales forecasts at its year-end news conference on December 22. It lowered forecasts in August before car demand started tanking as the global economy imploded with the failure of Lehman Brothers.

"We think further production cuts are unavoidable and believe Japanese branded carmakers should prepare for a deep retrenchment in demand," JPMorgan analyst Kohei Takahashi wrote in a report.

Japanese media have estimated Toyota's group-wide global vehicle sales for 2009 at between 8-8.7 million units, down from the record 9.37 million in 2007 and far from the company's most recent forecast of 9.7 million units.

In the first 10 months of 2008 the group, which includes Daihatsu Motor Co (7262.T) and Hino Motors Ltd (7205.T), sold 7.74 million vehicles, down 0.9 percent.

Toyota's rare decision to offer zero-percent financing in the United States has not helped, and it has resorted to more plant stoppages to prevent a further inventory buildup. Not even the gas-electric hybrid Prius has been spared, with sales down 48 percent last month.

Toyota built one-third fewer vehicles in North America in November than a year before, but that still wasn't enough to match a 34 percent plunge in sales. Toyota is still saddled with 92 days' worth of vehicle inventory in the United States.

PROFITS UNDER PRESSURE

That is certain to put pressure on profits, forecasts for which Toyota reduced by more than half last month.

Toyota said at the time that it would do everything it could to meet the new operating profit forecast of 600 billion yen ($6.6 billion) in the year to March 2009 -- down 1 trillion yen from initial forecasts.

Options included halving the number of temporary workers in Japan, delaying new factory launches and cutting research and development costs, it said. Reducing salaries and bonus payments for directors is also on the table.

Toyota has more than a dozen production projects in the pipeline, including plans to build the Prius at a new factory in Mississippi from 2010, expand vehicle capacity by more than 55 percent in China in the next few years, and build new car plants in India and Brazil. It also has a new joint venture factory for batteries due in early 2010 to power hybrid cars.

"It would be natural to expect a delay in new factories planned in China, Brazil, India and North America," said Tairiku Sakaguchi, auto analyst at Shinko Securities.