Toyota Motor Corp. plans to produce more vehicles without increasing capital investments as Volkswagen AG attempts to surpass it as the world’s largest carmaker by 2018.

“We are challenging ourselves to produce more even as we restrain capital spending,” President Akio Toyoda said yesterday at the North American International Auto Show in Detroit.

The carmaker plans to keep annual capital spending at about 700 billion yen ($8.46 billion) for at least the next five years, Executive Vice President Atsushi Niimi said Dec. 24. With more efficient processes, the Toyota City, Japan-based carmaker seeks to be as productive as when it spent more than twice that three years ago, he said.

“There have been companies that have gone belly-up for carrying excess capacity, but no company has gone bankrupt for not being able to produce,” Niimi said. “We now realize humbly that we shouldn’t make cars until we’re absolutely certain they will sell.”

Toyota is spending less on expanding capacity after the global financial crisis caused its first loss in almost six decades and problems tied to unintended acceleration prompted a year of record recalls, reported Bloomberg. The company plans to invest 3.5 percent of revenue in new plant facilities this year ending in March, compared with 5.6 percent in the year ended March 2008.

From around 2003, Toyota’s pace of production growth was excessive as the company invested in new plants and facilities, Niimi said. “We’ve been admonished to never let this happen again,” he said.

Now, the company will shift focus to implementing leaner manufacturing methods, such as paint lines that are 25 percent shorter and engine production that is no costlier when output is half of earlier levels, Niimi said.

Shares in the automaker rose 0.1 percent to 3,460 yen as of the 11 a.m. trading break in Tokyo. The stock fell 17 percent in 2010.

Toyota said Dec. 21 it plans to increase global production 1 percent to 7.7 million units in 2011.

By limiting expansion, Toyota’s improved factory operating levels and lower depreciation costs will lead to higher earnings, said Edwin Merner, president of Tokyo-based Atlantis Investment Research Corp.

“Toyota is a very well-managed company,” he said. “You should see a very good improvement in profit margins.”

Volkswagen plans to spend 41.3 billion euros ($53.5 billion) in new property, plant and equipment in the next five years, $10 billion more than its Japanese rival. Wolfsburg, Germany-based Volkswagen’s capital spending will equal about 6 percent of sales during the period, according to the company.

“We want to make Volkswagen the world’s most future-proof automotive group,” Chief Executive Officer Martin Winterkorn said in November.

Volkswagen has a goal of surpassing Toyota in sales and profitability by 2018.

“Whether a certain company has the No. 1 volume position is not for us to decide,” Toyoda, the company’s president, said yesterday. “It’s up to the customer.”

Toyota isn’t restraining spending on research and development and will allocate 760 billion yen toward new models and technology for the fiscal year ending in March, Toyoda said.

That’s 4.7 percent higher than the 725.35 billion yen Toyota spent on research and development through March 2010, according to Bloomberg. The carmaker’s research and development spending budget peaked at 958.88 billion in the fiscal year ended March 2008.

While Toyota’s sales will recover in the U.S., the company will and should focus its expansion in emerging markets, Merner said.

Toyota will start building Corolla compacts at a new plant in Changchun, China, in the first half of 2012. The factory will build 100,000 Corollas a year.

In September, Toyota said it is spending $600 million on a third plant in Brazil. Production of 70,000 units a year of a new compact model will begin there in the second half of 2012.

The company also is investing $1.3 billion on a new plant in the U.S. to increase production of Corolla compacts. Toyota will begin installing assembly equipment at the facility in Blue Springs, Mississippi, with a goal of starting output by late 2011, the company said in June.

The Mississippi plant eventually may be used to produce the Prius, Toyoda said yesterday, without elaborating.

Toyota Motor Corp., the world’s largest automaker, reported U.S. sales declines for December and 2010 as the lingering impact of record recalls aided deliveries at smaller rivals including Hyundai Motor Co., reported Bloomberg.

The Japanese automaker’s sales fell 5.5 percent last month and 0.4 percent for the year, while industrywide December deliveries advanced 11 percent, according to Autodata Corp. Hyundai posted a 33 percent December gain and a full-year increase of 24 percent to a record 538,228 vehicles. Monthly sales rose 21 percent at Honda Motor Co. and 28 percent at Nissan Motor Co.

Toyota called back millions of U.S. vehicles last year, most for defects related to unintended acceleration, and paid a record $48.8 million in fines for how some of the recalls were conducted. The company temporarily halted U.S. production and sales of eight models, including its top-selling Camry and Corolla cars, in January to fix the flaws.

“The black clouds from Toyota’s recalls just don’t seem to go away,” said Jesse Toprak, vice president of industry trends for Santa Monica, California-based auto pricing website Truecar.com. “Hyundai, along with Ford, were the standouts.”

Toyota was expected to report a decline of as much as 10 percent for December, the average of three analyst estimates compiled by Bloomberg News.

‘Coming Back Significantly’

The Toyota City, Japan-based carmaker rose 0.9 percent to close at 3,295 yen as of the 3 p.m. close of Tokyo trading. Hyundai rose 6.2 percent in Seoul.

As Toyota worked to restore its image, Hyundai, Nissan and U.S. rivals Ford Motor Co. and General Motors Co. lured buyers with new models. Ford regained the No. 2 sales spot from Toyota for the year.

“This is a market that’s coming back significantly,” said Rebecca Lindland, an analyst at IHS Automotive, a research firm based in Lexington, Massachusetts.

Industrywide sales rose to 1.14 million in December from 1.03 million a year earlier, Autodata said yesterday. The annual total increased to 11.6 million cars and light trucks from 10.4 million in 2009, according to the research firm.

Asia-based brands accounted for 46.5 percent of U.S. sales in December, an increase from 45.7 percent a year earlier, Woodcliff Lake, New Jersey-based Autodata said. Toyota’s sales decline pulled down full-year market share for the Japanese and South Korean carmakers to 46.3 percent, from 47.4 percent.

Among U.S.-based companies, December sales grew 7.5 percent at GM, 3.5 percent at Ford and 16 percent for Chrysler Group LLC.

‘Challenging Year’

“We’re coming off what was arguably the most challenging time in our 53-year history,” Don Esmond, Toyota’s senior vice president for U.S. sales, said on a conference call yesterday.

The company’s market-share decline of 1.8 percentage points was the industry’s biggest, according to Autodata.

For Toyota, “you simply can’t ignore the impact on their sales the recalls had in 2010,” said Aaron Bragman, an analyst at IHS Automotive. “It’s not hard to figure out why Camry was down and Hyundai’s Sonata was up: It looks better, has a better warranty. Style-wise, it really stands out in the segment.”

Toyota sold 177,488 vehicles last month and 1.76 million for the year, down from 1.77 million in 2009. The decline came from lower volume for midsize Camry and compact Corolla cars. Toyota’s top-sellers had respective annual declines of 8 percent and 6 percent. Prius sales surged 33 percent last month, pushing annual deliveries of the hybrid model up 0.9 percent to 140,928.

‘11-Month Year’

“Let’s not forget that 2010 was essentially an 11-month year for us, as we stopped sales and production last January on some of our core models to focus all of our company’s efforts on servicing customer vehicles,” Esmond said.

The Camry remained the top-selling passenger car in the U.S., and Lexus retained the luxury-segment lead for an 11th consecutive year.

U.S. auto sales may rise to 12.5 million this year, 7.8 percent more than 2010’s tally, Esmond said. “And at Toyota, we expect to outperform the industry,” he said.

Honda, Japan’s second-biggest automaker, sold 129,616 Honda and Acura-brand vehicles in December and 1.23 million for the year, a 6.9 percent increase. The company’s compact CR-V remained the top-selling U.S. model in the sport-utility vehicle/crossover segment last year, with 203,714 deliveries.

Honda, Nissan

Market share for Honda, fourth in the U.S. behind GM, Ford and Toyota, was 11.3 percent in December, up 0.9 percentage point from a year ago, according to Autodata. The Tokyo-based company’s share fell 0.4 percentage point to 10.6 percent last year.

Nissan, the third-largest Japanese automaker, delivered 93,730 cars and light trucks in December, including 19 all- electric Leaf hatchbacks. The Yokohama-based company’s deliveries grew 18 percent to 908,570 last year.

“This is the third straight month the industry selling rate is at 12 million units, so we’re recovering,” said Al Castignetti, U.S. vice president of sales for Nissan. “In 2011 I don’t think we’ll have a rapid recovery in sales, but it will be a steady recovery.”

Nissan’s market share rose to 8.2 percent last month, from 7.1 percent, and increased 0.4 percentage points to 7.8 percent in 2010.

Hyundai Sonata

Hyundai’s December sales growth was led by the Sonata sedan, which rose 52 percent, and a 127 percent increase for the Elantra small car. Its annual sales of 538,228 vehicles compared with 435,064 a year ago.

Hyundai’s annual market share rose 0.4 percentage point to 4.6 percent.

Hyundai did “everything right last year,” Bragman said. “It’s not just marketing. The quality of the products has gone up dramatically, and people are becoming aware of that.”

Kia Motors Corp., Hyundai’s affiliate, reported a 45 percent increase in December and a 19 percent gain to a record 356,268 in 2010.

Among other brands, Fuji Heavy Industries Ltd.’s Subaru raised sales 16 percent in December and 22 percent for the year. Mazda Motor Corp. said U.S. sales grew 18 percent last month and 10 percent for the year.

LOS ANGELES  - Seven automobile insurance firms have followed Allstate Insurance Co. in suing Toyota Motor Corp. to recover money they paid in claims for car crashes blamed on unintended acceleration of Toyota vehicles.

The insurers’ court action has opened a new front in U.S. civil litigation mounting against the Japanese automaker as the company battles to move beyond an auto safety crisis sparked by wide-ranging complaints of Toyotas speeding out of control, reported Automotive News.

Acceleration problems in Toyotas led to renewed scrutiny from federal regulators, several congressional hearings and a series of worldwide recalls that damaged Toyota’s reputation for quality.

The National Highway Traffic Safety Administration is investigating reports that as many as 89 crash deaths since 2000 may be linked to unintended acceleration in Toyotas and the company’s luxury-line Lexus vehicles.

Toyota also faces an estimated $10 billion in potential civil liability in U.S. courts for consumer fraud, personal injury and wrongful death claims stemming from acceleration complaints.

The latest lawsuits, filed Thursday in Los Angeles County Superior Court, echo claims in separate cases pending elsewhere that Toyota long ignored and hid a defect that causes some of its engines to surge out of control, and failed to install a brake-override system that would have prevented accidents.

The seven insurers are collectively seeking compensatory damages of at least $188,000, a fraction of the $3 million in losses sought by Allstate in its own filing in October for itself and affiliates.

The seven latest companies to bring such subrogation actions against Toyota are: American Automobile Insurance Co., Fireman’s Fund Insurance Co., National Surety Corp., Ameriprise Insurance Co., IDS Property Casualty Insurance Co., Motorists Mutual Insurance Co. and American Hardware Mutual Insurance Co.

Their suits, brought in three separate filings, come nearly two weeks after it was disclosed that Toyota agreed to pay $10 million to settle legal claims from the family of a California state trooper and three relatives whose fatal car wreck in 2009 helped trigger the automaker’s recalls.

Those recalls, encompassing 5.4 million U.S. vehicles, were ordered by Toyota for repairs of ill-fitting floor mats that can jam the accelerator and for gas pedals that did not spring back as designed.

Toyota has steadfastly denied allegations raised in much of the litigation it faces, including the latest insurer claims, that an as-yet unidentified electronic glitch is to blame for its acceleration problems.

The automaker did not immediately respond to a Reuters request for comment on the insurers’ lawsuits.

According to the Los Angeles Times, Toyota issued a statement this week saying that the latest lawsuits are without merit and that such disputes “are common between insurers and automakers.”

Toyota Motor Corp.’s U.S. vehicle sales fell in 2010 while industrywide sales rose 11 percent and every other major automaker reported gains. Ford Motor Co. moved up to second place behind only General Motors Co.

Ford displaced Toyota as No. 2 in the U.S. with 1.97 million vehicles sold in the year, up 17 percent from 2009, compared with Toyota’s sales of 1.76 million cars and trucks. GM retained the top spot with U.S. sales of 2.22 million vehicles, an increase of 7 percent. Deliveries in December accelerated to the fastest pace of the year, reported Bloomberg.

Toyota recalled more than 8 million vehicles worldwide last year, mostly for flaws related to unintended acceleration, with the majority occurring in the U.S. The company temporarily halted U.S. production and sales of eight models, including its top-selling Camry and Corolla cars in January to fix the flaws. Meanwhile, GM, Ford,Nissan Motor Co. and Hyundai Motor Co. lured buyers away with new models.

“The black clouds from Toyota’s recalls just don’t seem to go away,” said Jesse Toprak, vice president of industry trends for Santa Monica, California-based auto pricing website Truecar.com. “We saw Ford, GM and Hyundai-Kia come on strong. Brand loyalty isn’t what it used to be.”

Industrywide sales in 2010 totaled 11.6 million, according to Autodata Corp., based in Woodcliff Lake, New Jersey. That’s up from 10.4 million the previous year for the first gain since 2005 and the largest percentage increase since 1984.

Toyota’s incentive spending rose in December to $2,253 a vehicle, up 37 percent from last year, Toprak said. Toyota’s incentives were below the industry average of $2,721 a vehicle. The rising deals are a sign that Toyota will fight to hold market share, Toprak said.

GM’s Increase

GM’s deliveries in the month rose 7.5 percent from December 2009 to 224,185, the Detroit-based automaker said today in a statement. The largest U.S. automaker was expected to post a 4.3 percent sales increase, the average of four analysts’ estimates compiled by Bloomberg. Ford’s sales gained 3.5 percent, topping the 3.3 percent average estimate of five analysts.

“This is a market that’s coming back significantly,” said Rebecca Lindland, an analyst with IHS Automotive, a researcher in Lexington, Massachusetts. “And with really strong products coming from GM, Ford and Chrysler, there’s a lot of opportunity for change in the marketplace.”

Deliveries of GM’s Chevrolet Cruze small car rose 35 percent from November to 10,865 in December, and Ford’s sales of the new Fiesta subcompact increased to 5,212, a 50 percent gain from a month earlier. Deliveries of Chrysler’s redesigned Jeep Grand Cherokee more than tripled from a year earlier.

Topping Estimates

Industrywide light-vehicle sales rose to a seasonally adjusted annual rate of 12.6 million, according to Autodata. That exceeded the 12.3 million average of eight analysts’ estimates that would have matched the October and November paces that were the fastest since the U.S. government’s “cash for clunkers” program in 2009.

Ford was the best-selling make in the U.S. in 2010, displacing Toyota’s namesake brand, which fell to third behind GM’s Chevrolet. Ford sold 1.76 million Ford-brand vehicles last year, while GM sold 1.57 million Chevrolets and Toyota sold 1.49 million Toyota cars and trucks.

Chevrolet deliveries gained 9.1 percent to 147,960 vehicles in December, GM said today. Buick sales climbed 40 percent to 17,095, led by the Enclave sport-utility vehicle. GMC sales gained 35 percent to 42,159. Cadillac deliveries rose 13 percent to 16,718.

Sales of the Chevy Equinox SUV gained 79 percent, while the Cadillac SRX climbed 18 percent, GM said.

‘On A Roll’

Since filing for bankruptcy in 2009, GM has closed Hummer, Pontiac and Saturn and sold Saab to focus on Buick, Cadillac, Chevrolet and GMC. Sales of GM’s four remaining brands rose 16 percent compared with December 2009, the company said.

“GM is on a bit of a roll,” said Jeremy Anwyl, chief executive officer of auto researcher Edmunds.com. “Incentive spending was down, market share should be up. They’re doing it with nice products. The Cruze is doing pretty well.”

For the year, GM sales rose 6.3 percent from the 2009 performance for the company’s eight brands. Full-year sales of GM’s four remaining brands rose 21 percent, the company said.

GM gained 84 cents, or 2.3 percent, to $37.90 at 4:15 p.m. in New York Stock Exchange composite trading. The shares gained 15 percent from their $33 sale price in an initial public offering in November. Dearborn, Michigan-based Ford added 13 cents to $17.38. The shares gained 68 percent in 2010.

Rising consumer confidence and retail spending bode well for car sales and may help boost 2011 industrywide sales, including heavy-duty trucks, to 13 million to 13.5 million vehicles, Don Johnson, GM’s vice president of U.S. sales operations, said today on a conference call.

Credit Eases

Banks are starting to lend more freely, giving buyers with weaker credit an opportunity to purchase new cars, he said. Subprime borrowers account for about 5 percent of GM’s sales right now, he said.

Ford sold 190,976 vehicles in December, and deliveries of its namesake brand gained 9.6 percent to 174,523, the company said today in a statement. Lincoln sales fell 23 percent to 8,060, and the discontinued Mercury marque dropped 11 percent to 8,393.

Deliveries of the Fusion sedan gained 20 percent in December and reached a record 219,219 for the year, the first Ford car to top 200,000 since 2004. Sales of the redesigned Explorer, introduced last month, rose 53 percent.

Ford’s light-vehicle sales in 2010 rose 17 percent to 1,968,500, including sales of Volvo, which the automaker sold last year.

Chrysler Up

Chrysler, based in Auburn Hills, Michigan, boosted sales 16 percent last month, topping the 9.3 percent average estimate of four analysts. Deliveries of the Grand Cherokee climbed to 12,753 from 4,097 a year earlier.

Sales of Chrysler’s namesake brand dropped 28 percent, and Dodge deliveries fell 6.4 percent, while Jeep deliveries gained 49 percent and Ram brand truck sales increased 87 percent, the company said in a statement.

Toyota’s U.S. deliveries fell 5.5 percent to 177,488, according to a statement on the company’s website. The average estimate of three analysts was for the Toyota City, Japan-based company to report a decline of 10 percent. Its full-year U.S. sales fell 0.4 percent to 1.76 million, the sole annual decline among major carmakers.

Nissan, Honda

Nissan Motor Co.’s U.S. sales in December increased 28 percent, Al Castignetti, the company’s U.S. vice president, said in an interview. The average estimate of analysts surveyed by Bloomberg was for a gain of 20 percent. Deliveries for all of 2010 gained 18 percent, he said.

Honda Motor Co.’s sales rose 21 percent, according to a tally of 2010 sales the Tokyo-based company released. The average estimate of analysts surveyed by Bloomberg was for an increase of 7.2 percent.

Hyundai Motor Co., based Seoul, boosted deliveries 33 percent to 44,802 in December, the company said in a statement. South Korea’s largest automaker sold a record 538,228 vehicles in the U.S. last year, a 24 percent gain.