Toyota China JV slows output pace on soft demand

TOKYO -(Dow Jones)- Toyota Motor Corp. (7203.TO) said Monday that it has started slowing production in China, even as the company sticks to its current sales projection for the country for this year

The move suggests it may be tough for Toyota to meet the target in the world's second-biggest auto market.

Japan's biggest car maker by sales volume is turning out vehicles at its Guangzhou Toyota Motor Co. joint venture at a slower pace to reflect softening automobile demand in the nation's overall market, a Toyota spokeswoman said. She declined to elaborate.

The adjustment in production comes as industrywide auto sales in this key emerging market fell from a year earlier in August for the first time since February 2005.

The decision also comes at a time when concerns are growing over whether booming markets like China will continue to offset sluggish sales in developed markets like the U.S., as the global economy will likely slow in the aftermath of financial sector turmoil.

Earlier this month, General Motors Corp. (GM) Asia Pacific President Nick Reilly downgraded his forecast for China's auto market to a rise of 11%-12% this year from his March estimate of 12%-15% growth.

Mazda Motor Co. (7261.TO), the Japanese affiliate of Ford Motor Co., said last month that its joint venture in China trimmed its sales projection for this fiscal year amid slowing auto demand in the key growth market.

Still, Toyota continues to expect sales of 700,000 vehicles for this year in China, up 40% on year.

But the rise of 26% to 379,000 vehicles for the first eight months of this year in China fell short of the projected sales growth for the full year.

Toyota recently slashed its global sales projections for this year and 2009, as soaring gasoline prices and the subprime crisis have encouraged consumers to hold off purchasing new cars.

The output adjustment in China follows similar steps it has already taken in the U.S., Japan, Taiwan and European countries such as the U.K. and Poland in response to dwindling demand.