Toyota is expected to drastically prune its sales forecast for next year by at least 1m units and detail cost cuts next week.

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“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 cited by Reuters.


The news agency said Japanese media have estimated Toyota’s group-wide global vehicle sales for 2009 at between 8-8.7m units, down from the record 9.37m in 2007 and far from the company’s most recent (August) forecast of 9.7m.


Group sales to the end of October, including Daihatsu and Hino were off 0.9% to 7.74m.


Reuters said though Toyota built one-third fewer vehicles in North America in November than a year earlier [it furloughed some truck and SUV plants for up to three months], sales still fell 34% and it has 92 days’ worth of vehicle inventory in the United States, which is sure to dent its profits.

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Toyota said then it would do everything possible to achieve the new operating profit forecast of JPY600bn yen (US$6.6bn) for the year ending 31 March 2009 – down 1 trillion yen from initial forecasts, Reuters noted. Options included halving the number of temporary workers in Japan, delaying new factory launches and cutting R&D costs while reducing salaries and bonus payments for directors is also likely.


“It would be natural to expect a delay in new factories planned in China, Brazil, India and North America,” Shinko Securities auto analyst Tairiku Sakaguchi told Reuters.


Credit Suisse analyst Koji Endo expects Toyota to reduce capital spending to slightly below 1 trillion yen next business year, compared with its estimate of 1.4 trillion yen for 2008/09, the report said.


“They earned quite a bit in the first half so there’s little danger of falling into the red for the full year,” Goldman Sachs auto analyst Kota Yuzawa, who lowered his 2008/09 operating profit forecast for Toyota to from JPY624bn to JPY208bn.

“I expect both Toyota and Honda to reduce production significantly in the January-March quarter, so the negative impact will come this business year, allowing them to start 2009/10 on a healthier note.”


Reuters said two other brokerages that updated their forecasts this month put Toyota’s operating profit at JPY330bn this year.