updated 8/28/2008 8:10:04 AM ET 2008-08-28T12:10:04

Toyota lowered its global sales target for 2009 by 700,000 vehicles to 9.7 million Thursday, showing that even one of the world’s most durable automakers is being hurt by rising material costs, a slowing U.S. market and soaring gas prices.

“We have been going at top speed up to now,” President Katsuaki Watanabe told reporters at a Tokyo hotel after announcing the numbers. “It is time to set more cautious targets.”

Toyota Motor Corp had previously set a 2009 global sales goal of 10.4 million vehicles.

The lower target would still be a 2 percent increase from the company’s 2008 sales goal of 9.5 million. But even that figure was reduced last month from an initial 9.85 million units.

Toyota has been on such a potent growth track in recent years it is getting closer to ending General Motors Corp.’s 77-year run as the world’s top automaker by sales.

Japan’s top automaker sold more than 4.8 million vehicles worldwide in the first half this year, more than its U.S. rival’s 4.5 million vehicles. The sales tallies for this year are too close to call, as GM is also struggling with the same industry problems and restructuring its operations.

What is clear from these sales revisions is that Toyota, which had so far averted the serious problems of its money-losing American rivals, is now grappling with the same industry woes.

Watanabe said he saw as “fundamental” the slowdown in the U.S. market as soaring gas prices not only crimps car purchases but drives an unprecedented shift in consumer demand from trucks to smaller fuel-efficient models.

By region, Toyota is projecting stagnant sales next year for both North America at 2.7 million vehicles and Japan at 2.25 million, unchanged from projected sales figures for this year.

Other markets were expected to grow modestly.

In Europe, Toyota plans to sell 1.3 million vehicles, up 4 percent from a projected 1.25 million vehicles this year. In Asia, it aims for 1.75 million vehicles, up 6 percent from 1.65 million this year. Sales in other regions are expected at 1.7 million vehicles next year, up from 1.65 million this year.

In his annual outlining of the company’s business plan, Watanabe tried to sound an upbeat note by promising green vehicles. He said Toyota will speed up the delivery of a plug-in hybrid — which can be plugged into regular household electrical sockets — initially promised for sometime in 2010, to the end of 2009.

Gas-electric hybrids like the Prius deliver better mileage by switching between a gas engine and electric motor, and a plug-in hybrid can travel longer as an electric vehicle, using less gasoline than a regular hybrid.

Watanabe said Toyota is also planning to produce a next-generation electric vehicle in the early 2010s.

Toyota will also start making the Prius hybrid in the U.S., at its Mississippi plant, to meet growing demand for fuel-efficient models, while scaling down production of trucks and other gas-guzzlers there, he said.

The automaker now makes the Prius in Japan and China, though it makes the hybrid Camry sedan in the United States. Toyota has said it is also starting Camry hybrid production in Thailand and Australia in the next couple of years.

Hybrids still make up a small portion of any automaker’s sales.

And the latest revisions underline how Toyota’s momentum of growth has been shifting to lower gear.

Toyota, which makes Lexus luxury models and the Corolla subcompact, reported a 28 percent drop in its April-June quarterly net profit. It is forecasting its first full-year profit decline in seven years as it faces more problems from the weakening U.S. market.

Watanabe acknowledged Toyota may be going through a period in which its sales growth momentum was slowing, but he insisted that provided different opportunities for the company.

“It is sad. We had hoped that more people would be buying our cars,” he said. “But improving the quality of our cars is our utmost priority. This kind of time can prove important.”

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