TOKYO Reeling from a relentless sales slide, Toyota Motor Corp said on Wednesday it would stop all of its North American factories for two days next month, while rival Nissan Motor Co renewed its pessimism over the industry's near-term prospects.
Tight credit and worries over the spread of recession around the world have battered car sales in all major markets, forcing automakers to cut production to prevent inventories from ballooning further.
Toyota, the world's biggest automaker, had already canceled all U.S. production of slow-selling light trucks for three months this summer. A spokeswoman said production would be reduced further in 2009 at three U.S. assembly plants.
The worst economic crisis since the 1930s has hit healthy car makers hard and ailing rivals even harder, threatening the survival of Detroit's Big Three.
Chief executives of General Motors Corp, Ford Motor Co and Chrysler LLC warned Congress on Tuesday that their industry was teetering on the brink of disaster as they pleaded for a $25 billion aid package to ride out the storm.
Carlos Ghosn, chief executive of Nissan and Renault SA, speaking separately in Washington, chimed in with his own bleak view of the sector's short-term prospects with a reminder that Nissan was expecting virtually no profit in the October-March second half.
"We have to recognize 2009 will be one of the most challenging years for our industry and the whole economy in the last 50 years," Ghosn told the Wall Street Journal in an interview.
Ghosn told CNBC that U.S. industry-wide sales falling to 11-11.5 million vehicles next year was a "realistic" assessment. Sales totaled 16.15 million in 2007.
His deputy, Chief Operating Officer Toshiyuki Shiga, told reporters in Tokyo on Wednesday the company was sticking to its annual operating profit target of 270 billion yen ($2.8 billion). That would mean a second-half profit of just 78 billion yen -- less than a fifth of last year's 424 billion yen.
Shiga added that if the U.S. and European governments offered financial assistance to their automakers to help them fund development of cleaner and more efficient technologies, Japan should follow suit to provide a level playing field.
"I would want the Japanese government to consider the same," he said at the unveiling of the third-generation Cube, remodeled for sale globally for the first time as smaller, fuel-sipping vehicles gain traction.
In the latest sign that the demand slowdown has spread to previously healthy emerging markets, a Toyota official said the automaker was tracking toward Chinese sales of around 600,000 cars in 2008, instead of an official target of 700,000 units.
"We haven't given up on the target, but if the current pace continues, it looks like we'll end with 600,000," a spokesman said.
Sales of 600,000 units would still represent a 20 percent increase from last year.
In the more important U.S. market, Toyota's sales are down 12 percent in the year to date, prompting the roll-out of zero-percent financing and threatening to erase profits in the second half.
Toyota did not say how many vehicles' worth of production would be lost as a result of the two-day stoppage on December 22 and 23, on top of a scheduled break for Christmas and New Year.
The automaker has the capacity to build about 2 million vehicles a year in the United States and Canada.
It produces cars, trucks, engines and other parts at 11 factories in the two countries, including at a joint venture plant with GM and a factory belonging to Fuji Heavy Industries Ltd, the maker of Subaru cars.
Toyota said it would also slow the pace of production at its Kentucky plant, which builds the gasoline and hybrid Camrys, among others, and halve its temporary workforce of 500 by March.
Its Indiana factory and California joint venture plant will reduce production of the Sienna minivan and Tacoma pickup truck indefinitely from January.
Earlier this month Toyota cut its production plans outside Japan by 7 percent to 4.07 million vehicles for the business year to March 2009.
(Additional reporting by Sachi Izumi; Editing by Lincoln Feast)