Toyota Motor Corp. said Monday that it will report the first operating loss in 70 years, acknowledging that after a decade of rapid growth it can no longer escape the slowdown plaguing the global auto industry.

The Japanese auto giant also lowered its global vehicle sales forecast for the second time this year and said it was putting expansion plans on hold, in large part because of a drop in demand in the U.S. market.

"The tough times are hitting us far faster, wider and deeper than expected," Toyota President Katsuaki Watanabe said at the company's headquarters in Nagoya. "This is an unprecedented crisis requiring urgent action."

Toyota had reported strong growth in recent years, boosted by demand for its fuel-efficient models such as the Cam- ry sedan and Prius gas-electric hybrid.

But Watanabe said a drop in demand, especially in the U.S., which accounts for one-third of vehicle sales, and profit erosion from a surging yen were too much for Japan's No. 1 automaker.

Overall U.S. auto sales fell to their lowest level in 26 years last month. Toyota's sales in the U.S. plunged 34 percent in November.

"The change that has hit the world economy is of a critical scale that comes once in 100 years," Watanabe said.

Watanabe has cut contract jobs, production and executive pay this fiscal year to offset slumping demand and a strong yen.

"Toyota's cost-cutting can't match plummeting sales," said Koichi Ogawa, chief portfolio manager at Tokyo-based Daiwa SB Investments Ltd. "Everyone is getting hurt with this situation."

Toyota said it expects an operating loss of $1.66 billion for the fiscal year ending in March, compared with an operating profit of $25.2 billion a year earlier.

Toyota said it would still post a net profit of $555 million, thanks to outside dividend income, down from year-earlier earnings of $18.89 billion. But operating income is seen as the best reflection of its core business.

The outlook was a change of fortune for the company, which in recent years had outlined ambitious expansion plans and weathered an industry slowdown much better than its U.S. rivals.

Toyota, which started in business as a loom maker, began making trucks and passenger cars in 1937. Its first and only operating loss came the next year, before it started reporting formal results in 1941.

At the time, Toyota was still far behind the American automakers. With World War II, Toyota started a side business making aircraft engines, but that group company switched to making auto parts and sewing machines after the war.

In its forecast, Toyota reduced the number of vehicles it expects to sell globally this calendar year to 8.96 million, down 4 percent from last year. Earlier this year, Toyota had projected worldwide sales of 9.5 million vehicles.

Initially, it had an even more aggressive target of 9.85 million, and expectations had been growing that the tally would reach 10 million in coming years - allowing Toyota to dethrone General Motors Corp. as the world's top automaker.

Tsuyoshi Mochimaru, auto analyst for Barclays Capital in Tokyo, warned worse times may be ahead.

U.S. auto sales aren't expected to start recovering until late 2009, and the dollar - already at a 13-year low against the yen - could lag further, he said. A strong yen hurts results because overseas profits must be converted into the Japanese currency.

"The problem is next year," said Mochimaru. "It's unmistakable that things are extremely tough for Toyota."

Watanabe and other Toyota executives repeated a recent announcement that expansion plans will be on hold, including a new plant near Tupelo, Miss., and projects in India.

Construction of the Toyota plant in Blue Springs, Miss., is about 90 percent complete, and Toyota will finish the building, a company spokesman said. But the installation of the factory's equipment and machinery has been delayed indefinitely.

Toyota said there were no plans to lay off any full-time employees, though it plans to cut the number of temporary workers at its Japanese plants in half to about 3,000.

Toyota is a relatively oldstyle Japanese company that offers lifetime employment, and only in recent years has hired and let go of temporary workers to adjust production. It said it was reviewing overseas jobs but had not reached a decision.

Watanabe vowed Toyota would grow so lean it would realize profitability even if its worldwide sales fall as low as 7 million vehicles - what he called the basic "bottom line" for Toyota.

"We must change to become more slim, muscular and flexible," he said.

The automaker will focus on hybrids and small cars, and invest in technology to prepare for long-term growth, officials said.

While Japan's automakers are in far better financial shape than their cash-strapped American counterparts, the global slowdown is hitting them hard. Last week, Japan's No. 2 automaker, Honda Motor Co., also lowered profit and sales forecasts and declined to give a vehicle sales goal for 2009.

Automakers worldwide are cutting back as sales plummet. General Motors Corp., Ford Motor Co. and Chrysler LLC, the three biggest U.S. automakers, will shutter about 59 factories over the next month, and GM and Chrysler are getting federal aid to avoid collapse.

Toyota this year halted production of Tundra pickups at its San Antonio plant for more than three months. Suzuki Motor Corp., Japan's second largest minicar maker, said Monday that it will cut domestic production by an additional 30,000 units to 1.16 million vehicles for the year ending March 31.

Declining demand for cars and electronics reduced Japan's November exports 26.7 percent from a year ago, the most on record, the Finance Ministry said Monday. Shipments to the U.S. slid an unprecedented 34 percent.

"Japan's economy has never weaned itself off of the overbearing reliance on exports, and especially to the U.S.," said Kirby Daley, senior strategist and head of capital introductions at Newedge Group. "Japan did nothing to prepare itself" for the collapse in demand from abroad.

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