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By Kae Inoue

June 23 (Bloomberg) -- Toyota Motor Corp., the world’s largest carmaker, named Akio Toyoda, grandson of the company’s founder, president as his predecessor warned that demand in the U.S. showed no signs of improving.

“Right now, we can see recovery in some markets, but in the U.S., it’s still not transparent,” former President Katsuaki Watanabe told shareholders at the company’s annual general meeting today.

Toyoda, 53, takes over as head of the carmaker as it expects a record loss of 550 billion yen ($5.76 billion) this year because of a stronger yen and 39 percent drop in U.S. sales through May. Plunging demand in the U.S. forced General Motors Corp. and Chrysler LLC into bankruptcy protection this year.

“We don’t know yet what’s going to happen in the U.S.,” said Edwin Merner, who helps manage about $3 billion at Atlantis Investment Research Corp. in Tokyo. “But if GM and Chrysler’s production goes way down, which I think will happen, that means someone else will be selling more cars.”

The carmaker dropped 2.2 percent to 3,600 yen as of 2:12 p.m. on the Tokyo Stock Exchange.

No Recovery

The company posted its first annual loss in 59 years last fiscal year. It is slashing costs by at least 800 billion yen this year to make up for an estimated sales drop of 1.07 million units, or 14 percent, to 6.5 million vehicles this fiscal year.

Nissan Motor Co. Chief Executive Officer Carlos Ghosn also said today that the U.S. market is not recovering. Nissan is cutting 20,000 jobs in an effort to return to profit next fiscal year.

“What Toyota needs now is strong leadership to conduct a restructuring,” said Masayuki Kubota, who oversees about $1.9 billion at Daiwa SB Investments Ltd. “Toyoda and the new management will have to quickly fix what’s not working.”

Fluent in English, Toyoda graduated from Tokyo’s Keio University with a law degree in 1979. In 1982, he received a master’s degree in business administration from Babson College in Wellesley, Massachusetts. He joined Toyota two years later.

After factory and finance jobs in Japan, he was assigned to make Toyota’s Japanese sales office more efficient. In 1996, Toyoda was the project leader for a service called G-Book that provides traffic updates.

As president, Toyoda may cut costs including slashing the automaker’s domestic capacity and workforce by at least 10 percent, reducing its 20 platforms and 70 model types by 10 percent and consolidating its rural dealer network in Japan, according to Koji Endo, an analyst at Credit Suisse Securities (Japan) Ltd.

This may help trim Toyota’s fixed cost of 6 trillion yen by 10 percent, according to Endo.

Lower Dividend

Toyota slashed its annual dividend by 40 yen to 100 yen in the year ended March ending a decade-long streak in which the dividend jumped sixfold.

“We expect Toyota to cut dividends this year, given their earnings forecast,” said Yoshihiro Okumura, who helps oversee the equivalent of $365 million at Tokyo-based Chiba-gin Asset Management Co.

Toyoda has called back former Toyota executives including Central Japan International Airport Co. President Yoshimi Inaba and Toyota Transportation Co. President Yasumori Ihara. Nanpachi Hayashi, Toyota’s chief engineer, is also being appointed as director. Hayashi trained under Taiichi Ohno, the founder of Toyota’s production system.

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