Toyota will raise production in Japan for the first time in 16 months in November because of recovering car sales around the world driven by government incentives, according to the Asahi newspaper.

The report added, however, that the move was likely to be temporary and Toyota was expected to reduce output again early next year when incentive programmes end. Analysts also think the company still needs to reduce its capacity in Japan.

Yoshihiko Tabei, auto analyst at KAZAKA Securities, told Reuters: “The effects of the incentives won’t last long. Toyota has yet to reduce capacity in Japan and the US. So from now we may see employment conditions put under more pressure.”

Toyota has seen growth in sales of its fuel-efficient cars following the government measures to promote such cars. The Prius hybrid was Japan’s best selling car in July for the second month running but customers placing orders now have to wait about eight months for delivery due to strong demand and a battery shortage.

Asahi said Toyota plans to make 14,500 vehicles per day in November, the first year-on-year rise since July 2008, but the company has not confirmed or denied the report.

The newspaper added that the carmaker remains cautious about the outlook, as it is expected to cut its daily production back to around 12,000 vehicles, its break-even level, next spring.

Last month, Toyota raised its annual global vehicle sales target 100,000 units to 6.6m on the back of demand in Japan, and also forecast a slightly smaller operating loss.