The slump in US auto sales is now having a negative impact beyond the American shores. Japanese automaker Toyota has laid off 800 people at a plant in southwestern Japan, or about 10 per cent of the plant's work force, in response to declining sales in North America, a company official said today.

All the job cuts - carried out in June and August at Toyota Motor Corp.'s wholly owned subsidiary Toyota Motor Kyushu - applied to workers sent by job-referral agencies. Japanese companies are increasingly relying on such agencies for temporary workers called "haken" to be flexible to market demand.

Prior to the layoffs, Toyota Motor Kyushu, which makes Lexus luxury models, had employed 8,200 workers, 1,950 of them haken. The present workforce reduction is the largest in the unit's history.

This announcement comes in the wake of Toyota forecasting output at the subsidiary, which produces the Lexus IS and Lexus ES sedans, as well as the RX and the Highlander sport utility vehicle, dropping about 10 per cent this year to 400,000 vehicles. About 60 per cent of them are exported to North America – a market that has lately seen sales slump to 16-year lows. (See: US auto sales limp at 16-year lows)

Toyota has avoided the losses of its American counterparts like General Motors and Ford Motor Co. But it is projecting its first full-year profit drop in seven years for this fiscal year through March 2009. Toyota reports first fiscal quarter earnings Thursday.

Last month, Toyota lowered its global vehicle sales plan for this year by 350,000 vehicles to 9.5 million vehicles, blaming the sluggish North American market. The pace of Toyota's growth has been slowing to a 1 per cent gain this year in contrast to a 6 per cent climb in 2007. (See: Toyota to invest $700 million in Brazil; reportedly cuts global sales target)

Toyota saw its US vehicle sales plunge 12 per cent in July on year as it struggled to keep up with consumers' growing demand for smaller, more fuel-efficient vehicles.