Toyota has reported a 69 per cent fall in profits between July and September and slashed its forecast for the full year as the combined force of the worldwide slowdown and strong yen hit sales.

Quarterly profits at Japan's biggest carmaker slid to Y139.8 billion (£900 million), as the company also announced a drastic cut in its full-year earnings forecast.

The company now expects earnings of Y550 billion for the year ending March 2009, roughly half its earlier forecast of Y1.25 billion, and a third of last year's Y1.72 trillion profit.

Mitsuo Kinoshita, executive vice president of Toyota, said the financial crisis was to blame for the difficulties at the company, and across the industry.

He said: "The auto market is in a very severe situation, the like of which we have never experienced before."

The company has set up an emercency committee, to be led by its president Katsuaki Watanabe, to look at cost cutting and review the timing and scale of new projects.

Toyota has been hit by waning demand for cars in the US. Overall American car sales are at their lowest level since 1983, and fell 32 per cent in October alone. Toyota's US sales fell 23 per cent and today it announced that it was lowering its sales forecast 5.7 per cent to 8.24 million.

It has already halted production of Tundra and Sequoia vehicles in the US for three months, and has also reduced production in western Europe.

Today's figures from Toyota follow pessimism from other leading carmakers in Japan. Honda, the second-largest carmaker, expects a 42 per cent drop in operating profit this year, and Nissan's operating profit may drop up to 51 per cent.

Shares in Toyota fell 10 per cent to Y3,810 yen at the close of trading on the Tokyo Stock Exchange, before it released earnings. Its shares have dropped 37 per cent this year.

The news from Japan comes as car sales in the UK showed their worst annual decline since 1991. October sales fell 23 per cent to 128,352.

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