Toyota Motor Corp., the world's largest automaker, will freeze wages and offer voluntary redundancy to plant workers in North America for the first time as it widens output cuts to adjust for slumping vehicle demand.

North America is Toyota's largest market, where it sold 521,000 vehicles in the October-December quarter, compared with 465,000 in its next-biggest market, Japan. As per its latest forecast, Toyota expects North American sales to drop to 2.07 million units during the current financial year ending 31 March, from 2.96 million units in the previous financial year.

Sales are also expected to drop in its home market to 1.94 million units this fiscal year from 2.19 million.

The company will cut pay for factory executives and eliminate bonuses for all salaried employees, Toyota said in an e-mailed statement late yesterday. The Toyota City, Japan-based carmaker is making further cuts in its assembly schedule for April, and creating a ''job-sharing'' programme to reduce work hours at some plants, spokesman Mike Goss said. Toyota also said it sees "no wage increases for the foreseeable future."

Toyota Motor Engineering & Manufacturing North America Inc, which employs roughly 25,000 workers, is offering all of them 10 weeks of pay, two weeks of additional pay for every year of service and $20,000 to leave the company. Goss said the company doesn't expect a significant number of workers to take the offer and that it didn't have any target for the "voluntary exit program."

Toyota said the moves were intended to keep as many of its North American workers on the payroll as possible. "We hope the new measures will help us adjust while protecting jobs," Toyota Motor Engineering and Manufacturing vice president Jim Wiseman said.

Since passing General Motors Corp. in global sales last year, Toyota has forecast its first operating loss in 71 years as the global recession cripples demand for its Camry sedans and Tundra pickups. Toyota posted a 32 per cent US sales drop in January and has already announced plans to reduce output at its plants in the US, Canada and Mexico. (See: Toyota overtakes GM's sales; emerges top auto seller in the world)

The automaker has cut North American production of top-selling cars such as the Camry and Corolla after sales dropped 15 percent in 2008 in the US. It has also suspended work on a new plant in Mississippi, slated to produce its Prius hybrid car beginning in 2010. Rivals Honda Motor Co Ltd and Nissan Motor Co Ltd have also been forced to cut output. (See: Japanese auto makers cut back on production, reduce workforce  / Nissan joins Toyota, Honda and Mitsubishi in predicting annual loss; to slash 20,000 positions )

Toyota's corporate culture generally involves trying to maintain jobs even during tough periods. However, according to a Wall Street Journal report yesterday, the company has been forced recently to pay workers to show up at two US plants that have been idle since August. "The company uses the time to try to hone the workers' skills," the report said.