Toyota's US unit plans no further production cutbacks despite a recent sales slump that industry observers predict may not end until 2010.

Toyota Motor Sales USA president Jim Lentz told local media that vehicle inventories currently are around the optimal 45-day supply and, though truck inventories are higher, he expected a reduction by the end of 2008.

Last July, Toyota said that Toyota Motor Manufacturing, Mississippi, (TMMMS), currently being built and originally scheduled to produce the Highlander SUV [called Kluger elsewhere], would instead build the Prius hybrid from the second half of 2010. Highlander output would transfer to Toyota Motor Manufacturing, Indiana, (TMMI) from autumn 2009. That plant currently makes the Tundra truck, Sequoia large SUV and Sienna minivan.

Tundra full-size pickup truck at Indiana would be axed from next spring and "consolidated" at Toyota Motor Manufacturing, Texas, in San Antonio - opened in 2006.

TMC has suspended Tundra and Sequoia production in Indiana, Tundra output at San Antonio and associated V6 and V8 petrol engine output at its plant in Alabama for about three months beginning early last August until next month.

"During this non-production period, employees are to mainly be assigned to participate in 'continuous improvement' activities and training," TMC said in July.

Bloomberg News this week reported that some furloughed assembly line workers in San Antonio were spending two weeks cleaning city parks, removing graffiti, painting benches and fixing fences instead of building trucks. Others have been in training, or working at other Toyota plants in the US, including a JV plant operated with Subaru maker Fuji Heavy Industries in Indiana.

Lentz said the furloughed Texas workers would return to work as scheduled in November.

According to WardsAuto.com, Toyota's sales in September were down 29.5% to 144,260 last month and down 10.4% to 1,793,303 units in the first three quarters.

The day after the gloomy sales announcement, the automaker introduced a variety of zero percent interest rate offers on 11 models at terms of 36 to 60 months - the deals end on 3 November.

Taking aim at the credit squeeze which has sidelined many of today's new-car buyers, the attractive offer was unprecedented for Toyota, the automaker said last week.

"Not only do we have the inventory of today's sought after fuel-efficient models, but we have the capacity through Toyota Financial Services to finance or lease them," said Toyota division general manager Bob Carter in an announcement statement.

In 2007 Toyota built 1,671,009 vehicles, up 8%, and 1,571,872 engines, a 10% increase, in North America, attributing the rise largely to the Tundra production ramp-up in Texas and Camry production in Indiana.

Its output had increased 39% over the previous five years and it had been preparing to increase vehicle capacity to approximately 2.2m units by 2010.

Despite the truck/SUV production hiatus, Toyota, known for taking long-term rather, than quarter-by-quarter view, when decision-making, is to start building its new Venza crossover sedan in Kentucky this autumn while a new Canadian factory in Woodstock, Ontario will open in November, though the planned capacity for 150,000 RAV4 SUVs was last month changed indefinitely to single shift operation using 1,200 workers to build 75,000 units a year. The plant originally would have employed 2,000 working two shifts - local media reported Toyota had planned to start the second shift next spring.

Toyota had earlier lowered its 2010 forecast for North America, now excluding Mexico but still the world's biggest market, to 2.7m vehicles from 3m.

None of this has been without effect on the automaker's profitability.

On Wednesday, its shares fell 10% after Japanese media said it might cut its annual profit forecast as global demand fell and the yen firmed.

The Nikkei business daily reported TMC would likely record a 40% plunge in annual profit, missing its own estimates and analysts' forecasts. The automaker has cut its global sales volume forecasts for both 2008 and 2009 in recent months.

The Nikkei said Toyota's operating profit would likely be around 1.3 trillion yen (US$12.8bn), short of its current forecast of a 30% fall to 1.6 trillion yen.

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