Toyota has denied a report in the Japanese business newspaper Nikkei that the automaker has halted planned investments in Brazil. The paper had also said projects in China, India and Japan would be put on hold.

Toyota of Brazil and the city of Sorocaba, State of São Paulo, had said earlier the report concerning Brazil was wrong and that was followed a day later by confirmation from Japan that investments were being maintained and were on schedule.

The new small car plant with initial capacity of 100,000 units a year, should be ready in the second half of 2010.

Meanwhile, domestic market sales recovered well in the first week following tax breaks announced by the central government. Average daily sales have so far risen over 30% compared with November.

December sales, in spite of the Christmas season, are expected to almost top 200,000 units a 13% month on month rise.

Higher sales combined with extended holidays at automakers and suppliers should see vehicle inventory levels satisfactory in the first half of 2009.

Yet it remains difficult to foresee when a strong recovery will start.

Trade group Anfavea normally announces production, sales and exports forecasts for the new year in December but has postponed this to January.

President Jackson Schneider said a repeat of forecast 2008 domestic sales of about 2.8m units "will be good enough".

He said production may rise because the higher US dollar versus the Brazilian real would reduce imports and boost exports.

Fernando Calmon