Dec. 2 (Bloomberg) -- Toyota Motor Corp., the world's second-largest automaker, cut winter bonuses for the first time for about 8,700 managers in Japan as a global recession cripples car demand.

The company lowered bonuses by about 10 percent, according to Shinji Miyatake, a Tokyo-based spokesman for the carmaker. It's the first reduction in bonuses since 1998 when the company introduced a new pay system. Miyatake declined to say how much the company will save. The company has about 69,000 employees in Japan.

Toyota slashed its profit forecast by 56 percent last month prompting President Katsuaki Watanabe to set up an emergency committee to cut costs and review all new projects. Toyota, Nissan Motor Co. and Honda Motor Co. are all cutting temporary jobs as industrywide auto sales in Japan fell most in 34 years last month.

``Toyota is curbing costs wherever it can,'' said Hitoshi Yamamoto, chief executive officer of Tokyo-based Fortis Asset Management Japan Co., which manages $5.5 billion in Japanese equities. ``A storm has engulfed the auto market.''

Toyota fell 4.1 percent to 2,825 yen at the 3 p.m. close on the Tokyo Stock Exchange. The stock has dropped 53 percent so far this year, set for the worst annual performance since at least 1975.

GM, Ford

Carmakers globally are cutting costs as the credit crunch makes getting car loans more difficult, driving down sales. Union leaders from General Motors Corp., Ford Motor Co. and Chrysler LLC will hold an emergency meeting in Detroit tomorrow to discuss reopening wage negotiations, according to a person familiar with the purpose of the forum.

Wages in Japan, the world's second-largest economy, dropped for the first time this year in October as companies cut overtime payments by the most in more than six years. Toyota plans to halve its contract workers to 3,000 by March 31.

``Everyone took the bonus increases for granted,'' said Yasuaki Iwamoto, who has an ``below average'' rating on the stock. ``Management showed bonuses are linked to the company's earnings with the cut.''

Labor unions negotiate with management for wages and working conditions in talks knows as ``shunto,'' or spring wage offensive, around March each year. Japanese companies usually pay bonuses twice a year around in June and December.

The company, based in central Japan's Toyota City, decides bonuses for managers, who are section chiefs or above, in accordance with the shunto result. Toyota in March agreed with its union for an annual bonus of 2.53 million yen for workers.

U.S. Sales

November industrywide auto sales in the U.S., the world's biggest auto market, may have marked the 13th straight monthly drop. Toyota traditionally gets about half of its operating profit in North America, according to Nomura Securities Co.

Toyota will shut down its factory in Kyushu and will also stop production on a line in Aichi for two days this month. Both plants make the company's Lexus luxury brand vehicles. Hino Motors Ltd., 50 percent owned by Toyota, will also halt production at its Hamura plant in Tokyo on Dec. 25, Yoshihiro Udagawa, a Tokyo-based spokesman, said today by phone. Hino builds FJ Cruiser sport-utility vehicles and other vehicles for Toyota.

The company forecasts net income of 550 billion yen ($5.7 billion) for the year ending March 31, compared with an earlier prediction of 1.25 trillion yen, Toyota said Nov. 7. The new forecast will be a 68 percent drop from the 1.72 trillion yen Toyota earned last year. Toyota cut its operating profit goal 63 percent to 600 billion yen.

Toyota also lowered its vehicle sales forecast 5.7 percent to 8.24 million from 8.74 million for the year ending March 31, as it slashed its North American sales goal by 8 percent to 2.42 million.

The yen's 20 percent gain against the dollar and 39 percent jump against the euro this year also squeeze profits at Toyota and other Japanese automakers. Toyota gets about half of its operating profit in North America, according to Nomura Securities Co. Every 1 yen rise to the U.S. currency cuts the carmaker's annual operating profit by 40 billion yen. The yen traded at 93.04 per dollar as of 3:34 p.m. in Tokyo.

The bonus reduction was reported by the Yomiuri newspaper earlier today.

To contact the reporter on this story: Tetsuya Komatsu in Tokyo at tekomatsu@bloomberg.net; Naoko Fujimura in Tokyo at nfujimura@bloomberg.net.

Last Updated: December 2, 2008 01:59 EST