Toyota to cut production 28% as sales drop

Toyota Motor Corp., the world's biggest automaker, will slash global vehicle production by 28 percent in 2009 to the lowest in seven years as worldwide vehicle demand plummets.

Global output will fall to 6.68 million vehicles from 9.24 million in 2008, Hideaki Homma, a company spokesman, said today by phone. Sales will drop 18 percent to 7.34 million vehicles, he said. The figures include the carmaker's Daihatsu Motor Co. and Hino Motors Ltd. subsidiaries.

Toyota Prius assembly

Toyota, which has enough capacity to build 10 million vehicles a year, has slashed production as rising unemployment and falling wages push U.S. auto sales to near 30-year lows. The carmaker, which expects a second straight loss, has also cut its dividend and named a new president at it battles the sales plunge.

"The U.S. market slump is having a huge impact on Toyota," said Hitoshi Yamamoto, chief executive officer of Tokyo-based Fortis Asset Management Japan Co., which manages $5.5 billion in Japanese equities. "Toyota's forecast looks pessimistic."

The carmaker fell 2.1 percent to 3,660 yen, as of 1:42 p.m. on the Tokyo stock exchange. It has risen 27 percent this year.

Idled Production

The Toyota City, Japan-based automaker plans to build 5.8 million Toyota and Lexus-brand vehicles in 2009, down 29 percent from 2008, Homma said. Sales of the two brands may fall 19 percent to 6.5 million units. Tokyo Shimbun newspaper earlier today reported the production figures.

Incoming President Akio Toyoda, grandson of the company's founder, has been tapped to revive sales and cut costs to cope with falling sales. The company on May 8 cut its annual dividend for the first time and it aims to cut production-related costs by 340 billion yen and fixed costs by 460 billion yen this fiscal year.

Toyoda, who was named president on Jan. 20, will succeed Katsuaki Watanabe, who will become vice chairman, in June. Since being named, Toyoda has replaced some of Toyota's top executives to guide the company through the industry crisis.

Toyota forecast its net loss will widen to 550 billion yen ($5.7 billion) for the year ending March 31, from a loss of 436.9 billion yen a year earlier. The company's loss prediction was almost twice analysts' estimates at the time of the announcement.

Toyota will pay a second-half dividend of 35 yen a share, compared with 75 yen a year earlier. The cut ends a streak in which the annual dividend jumped sixfold in 10 years. Toyota pays dividends twice a year. In 2008, the payouts totaled 140 yen a share.

The carmaker also will idle three of 11 production lines at a domestic engine plant by the middle of the year, it said on May 12. The company has also curbed production at auto plants including in the U.S.