Toyota Motor Corp. led a 56 percent decline in February vehicle production by Japanese automakers because of slumping demand in the U.S. and Europe, the Japan Automobile Manufacturers Association said Monday.

It was the biggest drop since 1967.

Domestic production at the 12 automakers fell to 481,396 vehicles from a year earlier, the association said. Exports dropped 64 percent to 212,107 vehicles as the carmakers reduced shipments to North America by 66 percent.

Toyota, Nissan Motor Co., Mazda Motor Corp. and Mitsubishi Motors Corp. each cut domestic production by at least 60 percent last month to trim inventory. The worst economic crisis since the Great Depression has sapped demand worldwide, sending February U.S. car sales to their lowest level since December 1981.

"There are now signs that after the large-scale cuts in production in the first quarter, inventory levels are coming down," said Ashvin Chotai, managing director of Intelligence Automotive Asia Ltd., an automotive consulting company in London. "This will take pressure off further cuts, and hopefully (lead) to a slow recovery in the second half of the year."

Toyota and Mazda, Japan's two biggest car exporters, plan to ease domestic production cuts that started last year after adjusting inventory. Toyota will relax the cutbacks from May, President Katsuaki Watanabe said last week. Mazda will resume production on Fridays at two of its four domestic plants for the first time in three months in April, it said in early March.

Cars and light trucks sold at an annual pace of 9.12 million units last month in the U.S., the biggest market for Japanese carmakers, a drop from 15.4 million a year earlier, according to Autodata Corp.

Toyota's domestic production last month plunged 64 percent to 141,127, the lowest level since the company began taking a tally in 1976, it said March 24. Exports from Japan plunged 69 percent to 72,595.

Honda said production in Japan fell 48 percent to 54,748 vehicles. The drop was the biggest since it began releasing the figure in August 1996. Nissan reported a 69 percent fall in domestic production after exports slumped 78 percent. Nissan cut output by 64,000 vehicles in February and March.

Mazda built 60 percent fewer vehicles in Japan. MMC, maker of the Pajero sport utility vehicle, cut domestic production by 77 percent.

January output by the country's carmakers declined 41 percent, the most on record, as slowing economies and rising unemployment in their largest markets deterred customers from buying new vehicles.

Toyota, Honda upped

Nikko Citigroup Ltd. raised on Monday its stock ratings for Toyota Motor Corp. and Honda Motor Co. in anticipation of improved earnings as the yen weakens and government incentives spur auto sales worldwide.

Nikko Citi analyst Noriyuki Matsushima also boosted his ratings on Suzuki Motor Corp., Fuji Heavy Industries Ltd. and Yamaha Motor Co., betting the automakers' earnings will start to recover from the fiscal third quarter.

"Finally it's time to start buying in anticipation of an earnings recovery" in the three months ending Dec. 31, he said in a report to clients. "Caution is still needed as risks have naturally not completely evaporated, but negatives have ebbed."