Toyota and Honda, the two stalwarts of Japanese manufacturing, have decided to cut down on production to combat a dramatic slump in car sales.

While Toyota has decided to reduce output at several North American plants, its close competitor Honda has announced it will cut 3,100 jobs in Japan and reduce domestic production by 56,000 vehicles. These decisions follow smaller rival Nissan's declaration yesterday of cutting domestic production.

The Subaru maker, Fuji Heavy, meanwhile, became the latest auto company to forecast losses for its current financial year as a spreading global recession dampened demand in mature markets and hindered sales in emerging countries. The economic troubles are also affecting motorcycle demand, and Yamaha Motor said that it would halt production at 11 plants for as long as 10 days.

Honda's cost-cutting efforts are not restricted to home alone. It also said production will be halted at its British plant for 20 days in April and 15 days in May to reduce production by 17,000 vehicles there. Honda now expects vehicle production in Europe to fall to 175,000 vehicles for the fiscal year through March from the initial 228,000 vehicles.

The automaker, which employs 185,000 people globally, now plans to produce 1.168 million vehicles in Japan for the fiscal year ending March, down from its initial plan of 1.31 million vehicles.

Toyota, which has warned that it will record its first ever operating loss this year, said its inventory of cars built in North America was too high.

Toyota had previously said it would halt production at its Japanese plants for 11 days in February and March. It has already reduced North American production of its best-selling cars, including the Camry and Corolla sedans, and suspended work on a new plant in Mississippi that was due to start producing the popular Prius hybrid in  2010.

Slashing workforces is a rare occurrence in Japan, where the corporate culture encourages lifetime employment. Hence, Japanese automakers, in a bid to cut costs, have let the axe fall on temporary workers.

Toyota Motor Corp., Japan's top automaker, is cutting its temporary work force in Japan from 6,000 to about 3,000 in the aftermath of the global financial crisis. Nissan Motor Co. is also reducing its temporary work force to zero by the end of March from some 2,000 people last year.