But Toyota declined to comment on the report, while Senior Managing Director Yoichiro Ichimaru said his company was sticking with its targets for now, including this year’s global vehicle sales goals.

He acknowledged, however, that the numbers were becoming increasingly tough to meet because of a drop in U.S. sales.

The Nikkei reported in its Wednesday’s editions Toyota’s operating profit for the fiscal year ending March 2009 may fall 40 percent. The report also said Toyota may not meet its sales targets for 2008, as growth in emerging markets aren’t likely to be enough to offset declines in the U.S. and Europe.

“When we look at our numbers, we see things are very critical,” Ichimaru said. “U.S. and Europe sales are getting seriously hit because of the economic conditions.”

Speculation has been growing Toyota may lower its global vehicle sales target of 9.5 million vehicles at a time when the Japanese manufacturer has been going neck-and-neck in global vehicle sales against General Motors Corp., the world’s top automaker.

Toyota stock slid 11.6 percent to close at 3,280 yen ($33) amid a more than 9 percent plunge in the benchmark Nikkei 225 index for the Tokyo stock market — the biggest slide in 21 years — as fears intensified about a global financial crisis.

Last week, Toyota offered an unprecedented zero-percent financing on models in the U.S. to woo buyers after Japan’s top automaker posted a 32 percent drop in September U.S. vehicle sales.

Ichimaru’s comments underline pessimism at Toyota, which had averted some of the problems at GM, which has posted billions of dollars in losses in recent months.

Toyota has been trying to make up for the plunging U.S. auto market by boosting sales in emerging markets. But the recent declines in Japan, the U.S. and Europe appear to be making that increasingly difficult.

Ichimaru was among the executives speaking at a Lexus showroom in Tokyo targeting foreign residents, set to open Friday. Although the Lexus was launched in the U.S. about 20 years ago, the brand and dealerships were introduced in Japan only in 2005. Since then, Lexus dealers here have grown to 165.

The new showroom offers foreign language services, including English, Chinese and Russian, to woo foreign residents, who still make up a tiny portion of Lexus buyers in Japan, according to Toyota.

Global Lexus sales are falling short of last year’s 518,000 vehicles, and that trend is likely to continue for the rest of the year, Toyota Managing Officer Toshio Furutani said.

Toyota lowered its global vehicle sales target in July from the initial 9.85 million, given in January. Toyota sold 9.37 million vehicles around the world last year.

Honda Motor Co. may price its new Insight gasoline-electric car lower than Toyota Motor Corp.’s Prius hybrid, as it tries to boost sales of hybrid cars by ninefold.

Honda aims to sell the Insight for about $18,970, President Takeo Fukui said at a recent press conference at the Paris Motor Show.

The Insight is the first of four new or revamped hybrids Tokyo-based Honda plans to introduce by the early part of the next decade to reduce Toyota Motor Corp.’s lead in the segment.

Higher gasoline prices are boosting demand for fuel-efficient and alternate-energy cars worldwide.

“There is a pretty good chance for Honda to be able to win customers from Toyota,” said Koichi Ogawa, chief portfolio manager, at Tokyo-based Daiwa SB investments Ltd., which manages $28 billion. “There is strong demand for hybrids globally.”

Honda aims to sell 200,000 units of the hybrid Insight automobile.

It will go on sale in Japan, North America and Europe next year.

The company’s other hybrid models to be introduced by early 2010s include the CR- Z and the Fit compact.

Honda will also redesign the Civic Hybrid.

The company aims to boost hybrid sales to 500,000 annually by early 2010s, compared with 55,420 hybrid vehicles last year.

In contrast, Toyota aims to double its hybrid sales to 1 million units a year early in the next decade.

But after the top Japanese automaker posted a 32 percent drop in September sales that only domestic competitors had experienced until now, the question is: Is it enough to get people to buy?

“I don’t think it’s going to just open the floodgates,” said Jessica Caldwell, an analyst at the auto Web site Edmunds.com. “But it’s going to help a lot of people who want a quality car, who don’t want to worry about it, and are now going to be able to afford it because of this deal.”

Toyota’s U.S. division said Thursday night it will offer the free financing on 11 models with terms ranging from 36 to 60 months. The incentive expires Nov. 3.

Toyota is offering the deal on a wide variety of vehicles, including the Matrix, Corolla, Camry, RAV 4, Highlander, FJ Cruiser, 4Runner, Sequoia, Sienna, Tacoma and Tundra. The automaker’s hybrids, along with some better-selling models like the Yaris subcompact, are excluded.

Although Toyota has cut financing rates and offered other deals in the past, zero-percent financing on such a wide scale is an unprecedented move for an automaker that has prided itself on its restraint with incentives. Its U.S. counterparts, meanwhile, have aggressively used cut-rate financing and big cash-back offers as a way to bolster sales in the flagging auto market.

Nearly all automakers said tighter credit standards knocked buyers from the market last month, when sales industrywide fell 27 percent from a year earlier, hitting less than 1 million for the first time in 15 years.

“What this is a response to is the misconception that getting a loan or leasing a car is difficult to do,” Toyota spokesman Xavier Dominicis said Friday. “At Toyota it’s not. Our finance arm … it’s in a position to loan money.”

Richard Howse, senior director of auto finance for J.D. Power and Associates, said Toyota’s offer is likely an attempt to kick-start its sales considering September’s disappointing results.

“I don’t want to read their minds, but I think they realize they need to move the cars they have now,” Howse said. “It’ll be interesting to see how many people are able to take it given today’s credit environment.”

Kerry Rivera, spokeswoman for Toyota’s finance arm, Toyota Financial Services, said the requirements to qualify for the offer include a FICO credit score of at least 650. The median FICO score is 720 on the scale that ranges from 300 to 850, according to a spokesman for Fair Isaac Corp.

“This is similar to how we’ve priced zero-percent deals in the past,” Rivera said.

Toyota’s incentives come at a time when banks are curtailing lending because of widespread mortgage defaults that have brought down investment banks and a major insurance company.

Automakers’ finance arms often raise capital by bundling auto loans and selling them as securities, and more of those loans have defaulted as the economy has deteriorated. Now that any collateralized debts like mortgages have fallen out of favor, the securities are more difficult to sell, making it harder for the finance companies to raise more money to lend.

However, Toyota is likely in a better position than its domestic competitors to offer zero-percent loans to a greater number of consumers, owing to its AAA credit ratings and strong cash flow, Edmunds.com’s Caldwell said.

“They have such deep pockets they’re able to weather the storm a little bit better. … I think Toyota will be able to offer more customers zero-percent APR financing than Chrysler or GM, where they have to be more picky with the customers that can receive,” she said.

Rivera said Toyota hasn’t been lending to subprime customers, which has insulated it from some of the credit troubles that other companies have experienced. She declined to release Toyota’s loan approval rates but said the automaker’s year-over-year rate “hasn’t dropped significantly.”

David Cole, chairman of the Center for Automotive Research in Ann Arbor, Mich., said Toyota may be among the best-positioned automakers to weather the credit storm.

“Toyota has absolutely gold-plated credit,” Cole said. “They’ve got $30 billion-plus in the bank. So whatever happens from a financial standpoint, they’re not going to be impacted too severely.”

That doesn’t mean other automakers aren’t offering zero-percent financing as well.

General Motors Corp. on Wednesday launched zero-percent financing on several models for up to 72 months, after more than a month of offering all buyers employee discounts, which generally knock 10 percent off the purchase price of a vehicle.

Chrysler LLC, meanwhile, has been offering 72-month zero-percent financing on a range of trucks and SUVs. Ford Motor Co. also offers zero-percent financing for up to 72 months on several models.

“There seems to be a feeling that people can’t get financing, but our credit criteria hasn’t changed in years,” said Meredith Libbey, spokeswoman for Ford Motor Credit. “We have financing available and we have money available to finance your contract and put you behind the wheel.”

At the same time, Libbey said, that doesn’t mean people’s credit scores haven’t dropped because of their economic troubles, making it harder for them to get loans. Ford doesn’t disclose its criteria for loan approval, she said.

U.S. new car sales are unlikely to reach 14 million in 2008 compared with 16.15 million last year as the financial crisis worsens, according to a report by Nikkei Business News citing Toyota Motor Corp’s (7203.T: Quote, Profile, Research, Stock Buzz) president Katsuaki Watanabe.

“We thought we had entered an extremely difficult time for the auto industry, but it has become even tougher,” Watanabe was quoted as saying in the report on Nikkei’s website.

According to the report, this was the first time a Toyota executive had mentioned the possibility of U.S. new car sales coming in below 14 million units. In early September, Watanabe estimated that the figure would be around 14 million, the report said.

Toyota had set a goal to introduce hybrid versions of all its car models by 2020, the report said, but added the target may be brought forward. The report quoted Watanabe as saying the company is considering revamping its plans. (Editing by Brad Dorfman)

Mitsuo Kinoshita said at the Paris auto show on Wednesday that Toyota had global sales targets of 9.5 million units in 2008 and 9.7 million in 2009.

The credit crunch was hurting consumer confidence and causing people to postpone decisions on buying cars, he said.

Toyota Europe Chief Executive Tadashi Arashima also had a cautious outlook on the automotive sector’s prospects.

He expected the western European car market to drop 8 percent in 2008 and added that the European market had “not seen a bottom yet.”

Chief Operating Officer Thierry Dombreval added: “I do not believe in a recovery. I think 2009 will be down again. I expect minus 10 percent for western Europe and plus 5 for Eastern Europe but that means a big drop for Russia where growth was much faster up to now.”

In August, Toyota posted a 28 percent drop in first-quarter net profit.

Auto sales in Canada rose 1.7 percent in September as an increase for Toyota Motor Corp. vehicles helped outweigh declines at General Motors Corp. and Ford Motor Co., according to figures compiled by a consulting firm.

Total sales of cars and light trucks climbed to 134,131 from 131,827 a year earlier, Richmond Hill, Ontario-based DesRosiers Automotive Consultants Inc. said today in an e-mailed statement. That included Toyota’s 14 percent gain as well as GM’s 6.5 percent drop and Ford’s 6.3 percent decline, the firm said.

The monthly increase, the second in five months, was buoyed by car sales, which climbed 5.1 percent. Light truck sales fell 2.2 percent.

Canada’s economy expanded at its fastest pace in four years in July, Statistics Canada said yesterday, as consumer confidence held up better than in the U.S. There, car and light truck sales probably fell for an 11th consecutive month in September, the longest slide in 17 years, as the financial crisis prompts lenders to tighten lending criteria and consumers to slow spending.

Drivers of gas-sipping hybrid vehicles are increasingly interested in converting their vehicles from gasoline powered to electric, according to garage owner and lead technician Carolyn Coquillette.

While drivers of conventional gasoline-powered vehicles complain about higher fuel prices, clients of the San Francisco garage are investing big bucks to make their green cars even greener.

That’s being done through plug-in conversions and adding more powerful batteries to currently available gasoline/electric hybrid cars, such as the Toyota Prius.

“The regular Prius is a gasoline dependent car; it doesn’t get energy from anywhere but the gas tank,” said Coquillette.

“What this [conversion] allows me to do is get energy through an [electric wall] outlet, so [the wall outlet] is like my electric gas tank,” she said.

Coquillette, who has degrees in physics and English, said she gets three or four calls or e-mails a day, asking about the conversion. And, she says, with gas prices at more than $4 per gallon, she expects even more interest.

A lot of the cars that pull in to Luscious Garage are Toyota Prius hybrids, which Coquillette calls, “the Volkswagen Beetle of our times.”

Coquillette showed off the garage’s psychedelically painted Prius, which has undergone the conversion. Video Watch how Luscious Garage converts hybrid vehicles »
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Its original nickel-metal-hydride battery packs have been replaced with lead acid batteries to extend the distance the car can travel on electricity. Coquillette expects to begin conversions to even more efficient lithium batteries soon.

The plug-in conversion costs about $7,500.

“Gas becomes optional,” with this conversion, Coquillette said. “Gas isn’t required to move this car anymore. If you want to drive a really long way, without recharging, yes, gas is required, but it gives you the flexibility of not having to burn gas anymore if you don’t want to. And that’s very liberating,” she said.

The garage itself strives to be green, with much of its power coming from solar panels.

And with gasoline approaching $5 per gallon in the San Francisco Bay area, “plugging in cars make a whole lot of sense right at the pocketbook,” said Korthof, who works for Energy Efficiency Solar.

What kind of people are converting to this conversion?

“We’ve seen such a diverse group of people,” said Coquillette. “We have some people who come in who are entrepreneurs, who are business people, there are some people who are diehard environmentalists, but there are some people who come in, they just want to burn less gas.”

The corporate folks at Toyota don’t have any official position on plug-in conversions. They don’t endorse or discourage it. iReport.com: Show us your first car

But for hybrid owners who demonstrate exuberant efforts to find more energy efficiency, “we really appreciate the fact that the Prius is the vehicle of choice,” said Jana Hartline, environmental communications manager for Toyota.

Hartline said the Prius was not designed with any conversion possibilities in mind, but she said the company welcomes any technology that pushes the envelope on plug-in batteries.

While the nickel metal hydride (Ni-MH) battery will remain the choice for Prius, Camry and Highlander hybrids, Toyota is doing some research and development with lithium ion batteries.

Hartline said Toyota will be using lithium ion batteries in some commercial fleets in late 2009, mostly to learn more about charging behaviors.

Although the current batteries are “durable and reliable,” Hartline said lithium ion batteries pack more energy into a smaller space.

Much more research is needed, she said, about how hybrid owners would use their vehicles. For example, how often and for how long owners would plug in to the electrical grid, or a solar supply.

Also, as more drivers become interested in alternative energy, they will need to learn more about infrastructure.

For example:

• Will companies, malls or fast-food joints provide charging stations?
• Will they charge for the charge?
• In what other ways will the energy infrastructure have to change?

While the 2004-2008 Prius is the most popular hybrid conversion, it is also possible on 2005-2008 Mercury Mariner and Ford Escape hybrids.

And, as Coquillette says on the Luscious Garage Web site, “Any car can become a plug-in hybrid, if you have enough money.”

And driven customers don’t seem to be letting cost discourage them from the conversion.

“Customers are not coming to me and saying, ‘I’ll do this if there is a rebate.’ People come to me and say, ‘I want to do this right away,’ ” said Coquillette.

Luscious Garage will soon open a second location for the growing number of really green hybrid owners.
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“Hybrid technology is one thing. Then there is plug-in hybrid technology, which is the next step, which genuinely removes your dependence on fossil fuel,” said Coquillette.

However, most U.S. electricity is created from burning fossil fuels — about 70 percent, according to the U.S. Energy Information Agency of the Department of Energy. Just under 49 percent comes from coal-burning power plants, about 20 percent from natural gas and about 1½ percent from burning oil.

Toyota Jamaica is currently testing a Prius. Hybrid technology, while fresh to the local new-car market, has been an easy sell in used-car circles for some time. “The switchboard at T-Jam has been besieged with Prius enquiries since the gas crunch,” one staffer said.

Marketing manager Howard Foster is playing his cards close to his chest, refusing to even hint at a roll-out date for their groundbreaking product. He was able to say, however, that it “… has the acceleration of a [new] 2.4 Camry.” Hybrids are cars that use both gasolene and electric power in a supplemental fashion, the electric motor used in low-power applications. Toyota’s venerable 1500 cc inline four provides additional power when it is needed.

unique charging system

The two power-trains are inter-connected. Prius uses a unique charging system to charge its battery under braking and in free-wheeling (coasting) conditions. With a combined 110 hp on tap, and the instant on effect of the electric motors, the 2.4 Camry comparison might not be far-fetched. Official Toyota websites have listed the Prius at 46 mpg, but according to Foster, the tests on some runs have returned 70 mpg!

The model tested does not sport the house adapter, and mum’s the word on whether the models for sale will have it. While Toyota Jamaica officials have zipped their lips on the asking price for their new baby, research by Automotives have indicated that Prius should sell for J$3.1 million. Testing on the gas-sipping mid-size should end next week.

Last year, organizers of the Targa rally added a new Hybrid division to the existing Classic and Modern categories. As leaders in hybrid powertrain technology, Lexus and parent company Toyota saw a chance to show that hybrids are not only for saving gas and slashing emissions. They can go, too, and there was no better venue than the tough Targa Newfoundland tarmac rally to prove it.

A brand new GS 450h sedan was stripped of most of its interior comforts and transformed into a Targaready racer with the addition of a full complement of safety equipment and some mechanical upgrades. The Hybrid Synergy powertrain, including a constantly variable transmission (CVT), remained stock with the exception of a cat-back stainless steel exhaust system with a pair of canister-size tailpipes. The claimed combined power of the car’s 3.5-litre V6 engine and electric drive motor is 339 horsepower, but only when the batteries are fully charged.

I drove the GS 450h in its maiden rally and we did well as a rookie team. By simply finishing, we grabbed the inaugural win in the Hybrid division but also placed 18th overall among the 57-strong Targa competition and were co-winners of the Churchill Motorsport trophy for the three best-placed teams from the same country.

This year, the decision was made to return to Targa with greater ambitions and the hope of a higher finish. To achieve them, the team first retained the services of Alan Ockwell, one of the country’s top young rally co-drivers. Ockwell and driver Pat Richard are currently only seven points away from clinching the National rally championship with two rounds to go.

Several key technical changes and upgrades were also made to the car. The most crucial was the addition of top-rung shock absorbers specifically tailored for the car’s regulated minimum weight of 1,950 kilograms. Highergrade brake pads were also installed. A full day of testing in early August brought out some brake cooling issues but confirmed the GS’s new-found poise and relative agility with its new limited-slip differential and the possibility of finally shutting off its electronic stability and control systems.

With the electronic controls off for the entire rally, I was now able to control the car’s cornering attitude to a much greater degree, especially in slow and tight city and village stages. In spite of the time it takes the variable-ratio transmission to respond to a floored accelerator — which I ended up calling CVT lag — the additional thrust, better distributed by the limited-slip differential, helped us save enormous time.

The three Prologue stages on Sunday helped us make vital first adjustments to our new suspension. We kept refining them through the week. The car is further unique at Targa by the fact that it accelerates, brakes and — yes — steers exclusively by wire. This combination made things quite interesting when the steering wheel firmed up noticeably as I braked from corners in the first high-speed stages of the rally. I learned to drive around this propensity and the handling tweaks made it easier.

Our biggest moment came on Tuesday’s Leg 2 when I clipped a cement curb while coming out of a 90-degree turn broadside on wet pavement, in the tight Lewisporte stage. The sharp impact broke the outside of the rim, but, luckily, the tire did not go flat and we were still able to clean the stage without a time penalty. Our crew changed the wheel within minutes. A new wheel was flown in for insurance and the tire was installed the next day in Clarenville.

With this exception, the GS 450h needed only regular brake service all week. This included replacing two sets of rotors in front and one in the rear, as well as a racing brake fluid change. The big sedan might not be perfectly cast for the part of rally racer, but it most certainly is fast and tough as bricks. And once properly set up, it can be driven hard, with great confidence, no matter how tight and treacherous the course. Its two biggest fans are the guys who sat in the racing seats all week.

On harbour in St. John’s, seconds after Frank Sprongl’s glorious, smoky and Wagnerian entrance in his superb 1983 Audi Quattro Group B rally classic, we rolled up to the finish line quietly, on electric power alone. We finished sixth in the final overall standings among the 65 cars that started the rally.

The next logical goal should be the overall win, which has eluded Modern cars to this day, including modified versions of rally-inspired, all-wheel-drive compacts with turbocharged, 350-plus-hp engines. With its mass, the GS 450h stands little chance in the tightest city stages. We can’t beat the laws of physics, but we definitely are much greener than all others while trying. Hybrid racers are a thing of the present, not the future.

Imagine you had relentlessly pursued perfection in some task and the very minute you had attained that transcendent state of competence, you were hit with the (almost inevitable) “So, what are you going to do for me next?” At home, you wash the dishes, change the diapers and make sure the object of your devotion gets breakfast in bed at least once a week only to be told you now need to take dancing lessons. You’re under budget at work, the projects are all running on time and you wear a blazer even on casual Fridays. But is that enough? No, you now also have to take sensitivity training. Even your best buds seem unsatisfied with your buying of multiple rounds and supplying the venue for poker night, complaining you aren’t digging the puck out of the corners quickly enough.

Welcome to Lexus’s world. Avid readers of anything automobile will recognize my first sentence as a blatant rip-off from a long-running Lexus tagline. It was an ideal slogan at an ideal time when the company shook up the world in 1990 with its total commitment to quality and customer satisfaction. Indeed, the company’s then unparalleled dedication to reliability was so extreme that one still meets owners of first-generation LS 400s (1990 to ‘94) who claim they have never suffered an unscheduled repair.

Back in 1990, that meant something. The Germans — BMW, Audi and Mercedes — had grown arrogant and complacent, at once dismissing the upstart Japanese brand as inconsequential and unworthy of their notice. That lasted, oh, about four weeks after which they spent the next decade scrambling to catch up. Indeed, one can still say they haven’t quite caught up.

But — and this is a fairly big but — it may no longer matter. Cars, including most that are not even remotely luxurious or expensive, are amazingly reliable these days. Well built, too. Even stolid old Buick can claim amazing customer satisfaction numbers with the gap between the best automaker and its competitors now so terribly narrow as to be inconsequential. Indeed, the difference between a class-leading Lexus and one of the perennial also-rans can be as simple as a windshield wiper not adept at shedding a downpour.

And this narrowing of the quality gap is not confined to the luxury set. If you want a concrete example of how incredibly competent and well built the common car is nowadays, just pop over to your local Hyundai dealer and take a test drive of the new Genesis V8. Leave your snootiness at home and I defy you to find even $5,000 of the almost $40,000 difference between it and a BMW 550.

So, like that poor, hard-done-by hubby, Lexus needs to learn to dance if it wants to continue the romance. More specifically, where quiet competence used to be enough to sell boatloads of Lexuses, I think the car company that used to pursue engineering perfection will now have to develop a little more personality.

There’s some evidence that Toyota’s luxury arm has already got the message. The IS-F (see comparison on Page DT15) is literally brimming with personality, all extremely throaty engine growl and sticky rubber. And it doesn’t really matter if that personality is not sporty, as long as it’s not bland. The LS 460 and 600 are hardly ultra-dynamic, but they are different. The LS 600 hL is the world’s only hybrid ultra-luxury sedan and it’s as opulent as Caesar’s boudoir. So what if it can’t corner with a BMW? Even the upcoming revision to the RX sport-ute is said to have butched it up a little and is no longer the shy, retiring type.

But that still leaves the ES and GS models, earnestly retaining Lexus’s traditional for-God’s-sake-don’t-let-me-stand-out-in-a-crowd mentality. I just finished testing the GS 350, finding it once again ultra-capable and without a doubt one of the finest crafted automobiles on the planet. But, my gosh, it’s dull. Despite three redesigns all claiming to make it look more dynamic, the GS still looks like a middle-of-the-road design despite the fact it was once touted as Lexus’s sportiest model. As for the entry-level ES 350, well, when you look up Buick in the Japanese dictionary …

Let’s hope Lexus doesn’t get gun-shy. This is a company that has the capacity to give us the sportiness of an M3 in a package as solid as, well, a Lexus. And though I’m guessing there might be something of a turf war going on back in corporate headquarters as to how much personality should accompany the already-accomplished perfection, let’s hope that fun wins out.

With that in mind, let’s take a closer look at Toyota’s business, and see what CAPS investors are saying about the stock right now.

Toyota facts

Headquarters (Founded)

Toyota City, Japan (1933)

Market Cap

$138.96 billion

Industry

Auto Manufacturing

TTM Revenue

$246.51 billion

Management

President Katsuaki Watanabe (since 2005)

CFO Takeshi Suzuki (since 2004)

Return on Equity (average last three years)

14.5%

Competitors

Honda Motor (NYSE: HMC),

Nissan Motor (Nasdaq: NSANY)

CAPS members bullish on TM also bullish on

General Electric (NYSE: GE),

Johnson & Johnson (NYSE: JNJ)

CAPS members bearish on TM also bearish on

General Motors (NYSE: GM),

Ford Motor (NYSE: F)

Sources: Capital IQ, a division of Standard & Poor’s, and Motley Fool CAPS. TTM = trailing 12 months.

Over on CAPS, some 96% of the 787 All-Star members who have rated Toyota believe the stock will outperform the S&P 500 going forward. These Foolish bulls include TepperJason and ResearchLover, both of whom are ranked in the top 15% of our community.

Last month, TepperJason noted that Toyota “continues to sell cars at a good pace. The recession will hurt, of course, but Toyota is much more prepared than Ford or [General Motors] to weather the storm. Prius is still selling well.”

An earlier pitch by ResearchLover in late July agrees with that bullish sentiment, further stressing Toyota’s advantages over its American counterparts:

They have superior advertising and customer loyalty, which translates into word of mouth sales. Car value over time holds up better than [General Motors']. Heck, the cars hold up better. Dollar will rebound with interest rate increases by Ben, and this will help US sales on top of the above factors. In short, I’m predicting a flight to quality, even in a tough market for new car sales.

What do you think about Toyota, or any other stock for that matter? Make your voice heard on Motley Fool CAPS today. More than 115,000 investors are waiting to hear what you have to say. CAPS is 100% free, so simply click here to get started.

Brazil’s petrochemical company Braskem (BRKM5.SA: Quote, Profile, Research, Stock Buzz) and Japan’s Toyota Tsusho Corp (8015.T: Quote, Profile, Research, Stock Buzz) said they have signed an agreement to sell green polyethylene, produced from Brazil sugar cane, in Japan and other Asian countries.

The commercial contract, which was signed two years before the planned startup of Braskem’s green plastics plant, involves about one-quarter of its initial output.

“The market for green resin has been very promising, and the deal with Toyota is a sign of this,” Manoel Carnauba, Braskem’s vice-president, told Reuters late on Wednesday.

Latin America’s largest petrochemical company, Braskem, has started to build the green polyethylene plant at its existing industrial complex in Triunfo, in the southern state of Rio Grande do Sul.

The facility is expected to become operational in 2010 with an initial capacity to produce 200,000 tonnes of plastic and reach industrial scale by 2011.

It will make High Density Polyethylene (HDPE) and Low Density Polyethylene (LDPE) from cane-based ethanol.

The contract with Toyota is for the marketing of 50,000 tonnes of the green plastic, Carnauba said, adding that in other markets like Europe and the United States, Braskem will likely sell its product directly to clients.

In Japan, some potential clients are already testing the resin to produce auto parts and packaging, he said.

Braskem has said the world trend for CO2 emission reduction has boosted public demand toward bio-based plastics recently.

Green polyethylene has the same characteristics as traditional petroleum-based polyethylene but its production contributes to the reduction of CO2 emission, according to the company.

The plastic can be applied to products such as bottles, film, plastic bags, containers and personal-hygiene articles.

Toyota Tsusho said in August it was conducting a feasibility study with Brazil’s state-run energy company, Petrobras (PETR4.SA: Quote, Profile, Research, Stock Buzz), into the possibility of building an ethanol plant in the Latin American country.

Dow Chemical Co (DOW.N: Quote, Profile, Research, Stock Buzz) and Brazilian ethanol trading company Crystalsev are also investing in a joint venture to produce plastic from sugar cane in Brazil. (Reporting by Tais Fuoco and Inae Riveras; editing by Reese Ewing and Matthew Lewis)

The automaker, speaking at a Sustainable Mobility Seminar in Portland, said it would put four of its RAV4 electric vehicles into operation in Portland. Portland State University will develop a program to use the vehicles to shuttle people from transit terminals to downtown and suburban locations, Toyota said in a news release.

The news comes as Portland General Electric Co. continues to roll out a series of electric car-charging stations across the metro area where the cars can refuel.

“It’s obvious that the next several years will see a growing number of low-emission and no-emission vehicle options, particularly electric and hybrid vehicles,” George Beard of PSU’s Mark O. Hatfield School of Government, said in the news release. “Our region’s position in renewable energy and its leadership reputation in urban sustainability make this partnership a natural for all involved.”

Toyota also announced a series of other announcements at the event Wednesday, including its plans to display a Camry hybrid powered by compressed natural gas at the Los Angeles Auto Show, and that the company is studying the business case for remanufacturing hybrid vehicle batters in North America as a way of lowering replacement costs.

Toyota is taking a fresh look at compressed natural gas as a power source for U.S. automobiles, and plans to unveil a Camry Hybrid concept car powered by the fuel at the Los Angeles Auto Show in November.

Toyota officials made the announcement Tuesday at a sustainability forum in Portland, where they said the abundance, pricing and clean-burning properties of natural gas could make it an attractive fuel in an era of tightening oil supplies and increased regulation of automotive emissions.

Irv Miller, a Toyota Motor Sales group vice president, said compressed natural gas could become a “prime energy source for the future.”

Back in 1999, Toyota marketed a CNG-powered four-cylinder Camry as a fleet vehicle to some California customers. But the program — at a time of much lower oil prices — did not catch on and was discontinued later.

The United States now has about 1,000 CNG refueling stations, with about half of them open to the public, according to Toyota officials.

The new concept car will mix the Toyota’s electric hybrid technology with the CNG technology, but no details of the range of the vehicle were released Tuesday.

In Portland, Toyota officials discussed other research efforts as well, including work to increase the efficiency of the electric-gasoline hybrids that propel the popular Prius and other models.

Toyota also is planning a limited rollout in 2009 of a plug-in Prius that would operate on a lithium ion battery rather than the nickel-metal hydride batteries used in the current Prius. The plug-in could operate for a limited distance solely on the battery, and then could be plugged in to an outlet to be recharged.

Toyota also is researching all-electric cars, and on Tuesday announced it would place four of these vehicles — a version of the RAV4 — in Portland. Those cars, with a range of about 80 miles between charges, are intended to help the city and Oregon develop an electric-charging infrastructure, and will be used by Portland State University to carry people from mass-transit terminals to downtown and suburban locations.

But a fight is brewing between heavyweights Toyota and General Motors over the way the government should support plug-in hybrid electric vehicles.

Robert Wimmer, a Toyota research manager, told a Senate committee last week that proposed legislation “redefines plug-in electric vehicles to seemingly eliminate consumer tax credits for all but one plug-in vehicle design. Toyota believes this approach is counterproductive.”

He didn’t identify the Chevrolet Volt by name. But the GM hybrid would be the main beneficiary of the bill, which would provide tax credits of up to $7,500. A plug-in hybrid being developed by Toyota might not qualify for a tax credit.

The difference? The bill, as written, bases the credit on a vehicle’s range in the electric-only mode. The Toyota design is expected to rely, more than the Volt does, on an alternating combination of electric and gasoline engine power.

Said Wimmer: “We believe consumer incentives should encourage all plug-in designs and allow the consumer market to select winners, not legislation.”

GM spokesman Greg Martin challenged the assertion that only the Volt would benefit but said it is understandable that Toyota’s testimony “would reflect their competitive interests.”

Asian stocks fell in U.S. trading as oil rose more than $25 a barrel, threatening to curb consumer spending in the region, a net importer of the commodity. Toyota Motor Corp. and airline shares led the retreat.

The Bank of New York Mellon Asia ADR Price Index, which tracks the region’s American depositary receipts, slipped 2.3 percent to 128.70 at 4 p.m. in New York. Nikkei 225 Stock Average futures expiring in December were at 11,865 in Chicago, compared with 12,045 in Singapore and 12,130 in Osaka.

Toyota, the largest automaker in Japan, declined $2.83, or 3.1 percent, to $88.52. Korea Electric Power Corp., supplier of almost all of the country’s power, slid $1.03, or 7.1 percent, to $13.53. Japan and South Korea buy almost all their oil supplies from overseas.

Crude oil for October delivery rose 17 percent to settle at $120.92 a barrel in New York at traders scrambled to unwind positions on the October contract’s last day of trading.

China Southern Airlines Co. slumped $1.64, or 10 percent, to $14.45. China Eastern Airlines Corp. retreated $1.32, or 7.2 percent, to $17.

Mitsubishi UFJ Financial Group Inc., which has offered $3.5 billion to take full control of California’s UnionBanCal Corp., lost 11 cents, or 1.3 percent, to $8.25. Japan’s largest bank plans to pay up to $8.4 billion for as much as a 20 percent stake in Morgan Stanley, less than a week after Chairman Ryosuke Tamakoshi said the company will avoid further investments in U.S. banks.

Nomura Holdings Inc. added 5 cents to $13.05. Japan’s biggest investment bank agreed to buy Lehman Brothers Holdings Inc.’s Asian unit for at least 20 billion yen ($190 million) and closed in on purchasing two of the firm’s European divisions.

“It was a pretty flawless day for us,” Busch said. “We made it look easy.”

Starting from the pole in the Joe Gibbs Racing No. 18 Toyota, Busch was never challenged and pulled ahead by a couple of car lengths on the final restart late in an overtime race that stretched to 207 laps.

Mike Bliss was second, Brad Keselowski of Rochester Hills third.

Points leader Clint Bowyer’s No. 2 Chevrolet suffered severe damage in a pit-road accident at the halfway mark, but he rallied to finish 10th and maintained his lead over Edwards.

NOTEBOOK: Mike Skinner raced to his first NASCAR Craftsman Truck Series victory of the year, beating Erik Darnell by two-hundredths of a second in the Qwik Liner Las Vegas 350 on a green-white-checker restart. Matt Crafton finished third, John Andretti was fourth and Ron Hornaday followed to move within a point of leader Johnny Benson in the season standings. … NASCAR joined the ranks of other professional sports, announcing it would adopt a random drug-testing policy for its drivers, over-the-wall pit crew members and race officials beginning next season. Current rules mandate testing only when there is “reasonable suspicion.” … Steve Hallam is leaving McLaren Racing in Formula One and moving to NASCAR, where he will join Michael Waltrip Racing as director of race engineering for the second-year Toyota team.

“It was a pretty flawless day for us,” Busch said. “We made it look easy.”

That was win No. 19 this season for Busch in the Nationwide, Trucks and Sprint Cup races. No one is having a season like Busch, even though his 34th-place finish in the Cup race last week dropped him from first to eighth in the points standings.

“I think we’re all tired of hearing about Kyle Busch,” said runner-up Mike Bliss, chuckling. “I’d boo, too.”

Brad Keselowski finished third, followed by Scott Wimmer and Carl Edwards. Hamlin [driving the No. 32 Braun Racing Toyota this week], Jason Leffler, Jamie McMurray, David Ragan and series leader Clint Bowyer completed the top 10.

FIN    CAR    DRIVER    MAKE
1    18    Kyle Busch     Toyota
2    1    Mike Bliss     Chevrolet
3    88    Brad Keselowski     Chevrolet
4    29    Scott Wimmer     Chevrolet
5    60    Carl Edwards     Ford
6    32    Denny Hamlin     Toyota
7    38    Jason Leffler     Toyota
8    17    Jamie McMurray     Ford
9    6    David Ragan     Ford
10    2    Clint Bowyer     Chevrolet
11    64    David Stremme     Chevrolet
12    7    Mike Wallace     Toyota
13    22    Josh Wise     Dodge
14    20    Joey Logano     Toyota
15    25    Bobby Hamilton Jr.     Ford
16    59    Marcos Ambrose     Ford
17    99    David Reutimann     Toyota
18    66    Steve Wallace     Chevrolet
19    27    Jason Keller     Ford
20    9    Patrick Carpentier *    Dodge
21    81    Kevin Hamlin     Dodge
22    89    Morgan Shepherd     Dodge
23    161    Brandon Whitt     Ford
24    24    Eric McClure     Chevrolet
25    5    Landon Cassill *    Chevrolet
26    1    Danny Efland     Chevrolet
27    30    Stanton Barrett     Chevrolet
28    33    Kevin Harvick     Chevrolet
29    28    Kenny Wallace     Chevrolet
30    209    John Wes Townley    Ford
31    111    Scott Lagasse Jr.     Chevrolet
32    4    Derrike Cope     Chevrolet
33    40    Bryan Clauson *    Dodge
34    47    Kelly Bires     Ford
35    5    Burney Lamar     Ford
36    0    Larry Gunselman     Chevrolet
37    149    Kertus Davis     Chevrolet
38    90    Johnny Chapman     Chevrolet
39    173    Kevin Lepage     Dodge
40    178    Johnny Sauter     Dodge
41    331    Kenny Hendrick     Chevrolet
42    91    Justin Hobgood     Chevrolet
43    52    Donnie Neuenberger     Dodge

Busch was followed by fellow Cup Series regulars Kevin Harvick in the No. 33 Camping World Chevrolet and Denny Hamlin in the Braun Racing No. 32 Haas Avocados from Mexico Toyota. Joey Logano drove his No. 20 GameStop Toyota to the fourth fastest time, while Nationwide Series regular Mike Bliss rounded out the top-5.

The Nationwide cars will hit the track again Friday afternoon at 1:50 p.m. ET for their final seventy minute practice session. Qualifying for the Camping World RV Sales 200 Supporting the Childress Institute for Pediatric Trauma is scheduled for 11:05 a.m. ET on Saturday, while the race is scheduled for a 3:30 p.m. ET start.

Kyle Busch won another Nationwide Series race, but it was Clint Bowyer’s comeback from a pit road incident that provided the biggest drama Saturday.

Busch held off Mike Bliss in a two-lap overtime to win the Camping World 200 at Dover International Speedway, his eighth series win of the season and 19th in NASCAR’s top three series – Sprint Cup, Nationwide and Trucks.
NASCAR Nationwide Dover Auto Racing
AP - Kyle Busch celebrates after winning the Camping World RV Sales 200 NASCAR Nationwide Series race at Dover International Speedway in Dover, Del., Saturday, Sept. 20, 2008. (AP Photo/Russ Hamilton)

* Link: Results | Unofficial finishing order

Busch came out second behind Scott Wimmer following a pit stop on Lap 143, but quickly retook the lead on the next lap. He held on it firmly through three more cautions.

“It was a great effort by this whole team,” said Busch. “It wasn’t easy, but it was a pretty flawless day and it may have looked easy.

“I felt like our car was a great race car and it was great coming up through traffic, and we proved it wasn’t just an ‘out front’ car. It would go anywhere on the track, high, low, wherever.”

Bowyer, the series points leader, was involved in a pit road accident with Carl Edwards and David Reutimann on Lap 100. Bowyer and Edwards were exiting side-by-side when Reutimann pulled out of his pit and shoved Edwards into Bowyer, who then hit the pit road wall.

Bowyer’s car suffered the most extensive damage in the incident and at one point was running 20th, last on the lead lap.

By the end of the race, following extensive repairs, Bowyer rallied to finish 10th and lost little of his series points lead over Edwards, who finished fifth. Bowyer leads Edwards by 186 with six races remaining. He entered the race with a 207-point advantage.

“This pit road is just tight. I was on the outside and got in the wall. It’s tight quarters,” Bowyer said. “That’s what this team is about. We didn’t give up. This is how you win championships.”

Brad Keselowski finished third and Scott Wimmer was fourth. Busch led the most laps (157) and the race was slowed seven times for 34 of the 207 laps.