Jan. 7 (Bloomberg) -- Toyota Motor Corp., Japan’s biggest automaker, is asking workers to accept lower pay while it extends a domestic production halt to cope with plummeting demand for new automobiles.

The company needs to pay at least 60 percent of the average full salary, as provided in the law, Toyota spokesman Keisuke Kirimoto said in a telephone interview. Nikkei English News earlier reported the possible pay reduction.

“The management and union are in negotiation about the size of the pay cut, in accordance with labor law,” he said.

Toyota, which expects its first operating loss in 71 years, is cutting production, as its sales last month plunged 37 percent in the U.S. and 18 percent in Japan. The Toyota City, Japan-based company said yesterday it will suspend production at 12 domestic factories for 11 days in February and March, as the global recession saps car demand.

The company last month cut its sales forecast by 8.5 percent to 7.54 million vehicles for the year ending March 31. The extended production cut may reduce Toyota’s production by about 200,000 units, according to Koji Endo, an analyst at Credit Suisse Securities (Japan) Ltd.

Toyota, maker of the Prius hybrid, in November cut its domestic production forecast by 8.6 percent to 3.85 million vehicles for the year ending March 31.

To contact the reporter on this story: Mari Murayama in Tokyo at mmurayama@bloomberg.net

Last Updated: January 7, 2009 06:15 EST