Jan. 23 (Bloomberg) -- Toyota Motor Corp., the world's largest carmaker, will replace most of its top executives later this year as incoming President Akio Toyoda aims to return the company to profit, people familiar with the matter said.

Toyoda, who will succeed Katsuaki Watanabe in June, will replace the company's other four executive vice presidents and ``many'' of the 19 senior managing directors, said the people, who asked not to be identified because the changes haven't yet been announced. The carmaker lost more than half its market value last year.

Toyoda, the 52-year-old grandson of founder Kiichiro Toyoda, will have to stanch the carmaker's sales slump as it forecasts the first operating loss in 71 years. He may curb the expansion strategy that allowed the company to top General Motors Corp. in sales for the first time last year.

``This kind of move is rare for an old-line company like Toyota and very refreshing,'' said Koichi Ogawa, who helps oversee $28 billion at Daiwa SB Investments Ltd. in Tokyo. ``The new management is going to break the past hierarchies.''

Toyota's American depositary receipts fell $4.96, or 7.3 percent, to $62.56 in New York Stock Exchange composite trading yesterday, the biggest drop since Nov. 6.

Honorary Chairman Shoichiro Toyoda, Akio's 83-year-old father, and Adviser Hiroshi Okuda, 76, may step down from Toyota's board, Chairman Fujio Cho said on Jan. 20. Paul Nolasco, a Toyota spokesman, declined to comment on any changes in management.

`His Own Team'

``It's not that different than what would happen with a big company in the U.S.,'' said Maryann Keller, an independent auto analyst and consultant in Greenwich, Connecticut. ``A new CEO wants to put together his own team.''

Toyoda's challenges include reversing last year's 15 percent sales drop in the U.S., for decades the automaker's main source of profit, even as companies and analysts cut their 2009 outlooks. Auto sales may fall to between 10 million and 10.5 million this year, the lowest level in 27 years, from 13.2 million in 2008, according to IHS Global Insight, a Lexington, Massachusetts-based market forecaster.

Toyota's total sales last year fell for the first time in 10 as the global recession and tighter credit decimated vehicle demand worldwide. The economic slowdown has prompted the company and Japanese rivals including Honda Motor Co. and Nissan Motor Co. to cut jobs and production and driven Detroit automakers GM and Chrysler LLC to seek government aid to stay in business.

Production Cuts

Toyoda also must find ways to utilize plants opened in North America since 2006 that have given the company too much production capacity in the region as overseas sales declined 4 percent to 6.82 million last year.

Toyota last week announced broad production cuts affecting all U.S. and Canadian auto-assembly and engine factories through the end of the current quarter. Last month, the company indefinitely suspended construction of a plant in Blue Springs, Mississippi, that was to start making Prius hybrids in 2010.

The company's sales slipped by 4 percent to total 8.97 million vehicles in 2008. That compared with GM's 8.35 million.

Toyota in December forecast an operating loss of 150 billion yen ($1.7 billion) in the year ending March 31. That compares with a previous profit forecast of 600 billion yen. Next fiscal year will be worse, as the yen strengthens against the dollar and the U.S. market continues to shrink, analysts said.

Focus on Customers

The company's operating loss may widen to 395 billion yen for the year ending in March 2010, according to the median estimate of 12 analysts compiled by Bloomberg. Every 1 yen gain against the dollar cuts Toyota's annual operating profit by 40 billion yen.

Toyoda will focus on customers and spend as much time as possible on the company's production and sales, he said earlier this month.

``I want to be president closest to the site,'' Toyoda said in Tokyo on Jan. 20. ``I'll try to make changes without being tied down by the past.''

To contact the reporters on this story: Alan Ohnsman in Los Angeles at aohnsman@bloomberg.net; Naoko Fujimura in Tokyo at nfujimura@bloomberg.net.

Last Updated: January 22, 2009 18:30 EST