Housing a drag on U.S. auto market: Toyota

DETROIT (Reuters) - The U.S. housing market remains a drag on auto sales, and the industry probably will not return to former peak levels until sometime next decade, the president of Toyota Motor Sales USA said on Tuesday.

Toyota (7203.T: Quote, Profile, Research, Stock Buzz) has maintained its baseline forecast for U.S. auto industry sales to come in at about 14.1 million units in 2008 after the credit market shocks following the Lehman Brothers Holdings Inc LEH.N bankruptcy, Jim Lentz said at the Reuters Autos Summit in Detroit.

Lentz said he still believes credit markets are on the mend, but going through turbulence. For Toyota, the key is the housing market, he said.

"In the case of housing, I don't think we have seen the bottom yet, especially in markets like California, Florida, Nevada and Arizona," Lentz said. "That still remains a drain on the economy as well as the auto industry."

Toyota, the world's largest automaker by sales, expects U.S. auto industry sales to be relatively flat in 2009 with the potential for an increase of about 200,000 vehicles, depending on the housing market, gas prices and credit market stability.

Lentz said Toyota has seen consumers show as strong an intent to buy a new vehicle within the next year as ever, but a record percentage of potential buyers are delaying the decision because of the U.S. economy.

"There are a lot of different indicators that are pointing there is pent-up demand building and we believe that when the market does pick up as we go into this next decade, we will see markets at or above 17 million again," Lentz said.

Parts and service operations are up double digits from last year and the average age of cars and trucks on the road is at record levels, Lentz said.

Toyota has been undergoing an uncharacteristic sales decline in 2008, including severe pressure on sales of its full-size Tundra pickup truck as U.S. consumers shifted toward cars and away from trucks and SUVs.

The company has shut production at its Tundra plant in San Antonio for three months to reduce an inventory that had risen to as high as a 150-day supply earlier in 2008.

Toyota remains on plan to reduce inventory of its Tundra full-size pickup truck to about a 45-day supply at 20,000 vehicles by the end of the year, he said. Toyota had a 70-day supply at 44,000 vehicles on Tuesday, he said.

Lentz also said Toyota planned to keep its leasing programs in the United States stable at about 15 percent of sales. The company has not seen an appreciable increase in leasing since Detroit-based automakers trimmed or eliminated leasing in recent weeks, he said.

(Reporting by David Bailey, Kevin Krolicki and Nick Zieminski; Editing by Brian Moss and Lisa Von Ahn)