Carmaker Toyota today said it will slash global production to match lower sales as recession rumbles on.

The Japanese firm is thought to be planning to reduce capacity by 10%, or one million vehicles, as early as this year.

It could include halting a production line at a UK plant, according to a source.

Toyota, the world's biggest carmaker, has been hit by the global economic crisis, which has seen demand for new cars around the world crumble.

Many car plants around the world are idle or running below capacity as the industry tries to work out by how much sales will recover after the economic crisis passes and how US firms General Motors and Chrysler will emerge from their deep woes.

“The production cut is positive for its earnings, but there is room for further capacity cuts in the US and elsewhere,” said Yoshifumi Tabei, an auto analyst at Kazaka Securities.

Toyota has seen a recovery in sales of fuel-efficient cars, helped by government measures to promote such vehicles, with its Prius hybrid ranking as Japan's top-selling car in July for the second straight month.

However, the company has lagged behind its rivals in cost-cutting.

Toyota booked an operating loss for the third straight quarter between April and June, while Honda and Nissan turned profitable during the period.

This was thanks to cost-reduction measures including pulling out of some motor sports and cutting jobs.