Toyota Motor is to ask Japan’s new government to extend the deadline for subsidies on purchases of new environmentally friendly cars by two years from the original schedule of March 2010, a Toyota executive said.

The Democratic Party of Japan has begun a transition to power after trouncing the long-ruling Liberal Democratic Party in an election on Sunday and is expected to form a new cabinet by around the middle of this month.

The government subsidies on new environmentally friendly cars, launched in June to revive sagging car demand, have helped along with tax cuts to put a brake on slumping car sales in Japan. The Toyota executive, who spoke to Reuters on condition of anonymity, said the carmaker would also ask the new government to keep tax cuts on purchases of environmental cars in place until the current deadline of March 2012.

Toyota is concerned the Democratic Party may seek an early end to these temporary tax cuts and subsidies in lieu of scrapping additional taxes on petrol, he said.

On the proposal by the Democratic Party to remove all highway tolls, Toyota is cautious and uncertain about the feasibility of such a generous step, because of the challenges the government faces over fiscal revenues, the executive said. Some analysts have questioned how the party will fund its various bold economic policy proposals.