We knew the auto industry was in bad shape and it didn't take long to extend its poisoned-tipped tentacles into the world's automotive juggernaut. In August came news that the Japanese automaker had cut its sales forecast for 2008 from 10.4 million vehicles to 9.7 million. A Japanese newspaper, though, says it expects Toyota to only sell 8.3 million for the year. If true, it would be the company's first year over year sales decline in a decade.

The Nikkei Daily (subscription required) doesn't back up its prediction with any sources, but we'll know how close to the truth they get come in January when Toyota announces official sales numbers.

Last September we told you of Volkswagen's plan to overtake Toyota in global sales by 2015. Some Autoblog staffers giggled at the prospect. That was before Toyota reported a 39% drop in profit and began writing down leases, and long before today's news of the Japanese automaker reducing its sales goal for 2009 by almost 7%. Instead of the 10.4 million vehicle sales it predicted for 2009, Toyota says it now may only sell 9.7 million.

Toyota is not used to seeing its profit margins drop, as the Japanese auto giant has enjoyed increased profit for nine straight years. Expect that run to end this year, though, as Toyota is discovering that it is not immune to the downturn of the American auto market. For the year, Toyota has revised its sales forecast from 9.06 million units to an estimated 8.74 million.

Toyota posted a 10% sales decline for its bread-and-butter brand of over the month of June, with numbers that are even worse -- an 11.5% drop -- when the Scion and Lexus brands are added into the equation. In response to these very un-Toyota-like sales declines, the automaker is now revamping its vehicle production in the States. Though it has already introduced measures to slow the production of full-size Tundra trucks and Sequoia SUVs, reports indicate the further cuts will be made at the San Antonio truck plant. The Indiana plant, which also produces Tundras, will see workers transferred to other lines where more popular vehicles are assembled.

Toyota's bet that it could sell more vehicles in 2008 than in 2007 may not have been a wise one. Though Toyota's hybrid models and small cars are selling very well in the U.S., sales of pickups and SUVs have truly tanked, and Toyota had been counting on those sales just as much as its competitors. Of course, the giant automaker from Japan couldn't have known that far in advance just how high gasoline prices would go or the impact that it would have on auto sales and the economy in the United States in general.

The current economic environment in the United States is hurting all auto makers these days, even mighty Toyota, which was once considered immune to so-called market realities. Though its overall performance last year would be considered a stellar achievement for any other automaker, Toyota's 28% profit plunge in the fourth quarter of 2007 points to an expected 27% drop in annual profits in 2008. If Toyota's revised forecast proves accurate, 2008 would break a nine-year stretch of profit growth. In addition to the slowing U.S.

With Toyota reporting its daily average sales rate fell 6.6 percent last month, it might be easy to think the retirement of nine U.S. executives is a sign that the company is getting ready for a new start. But at least one analyst thinks something else might be happening. Head hunting.