But Fukui predicted the company's full-year profit would be down by two-thirds, to $2.06 billion (185 billion yen), a little more than half of what Honda earned in the first half of its fiscal year.

The profit warning is Honda's third this year and suggests a rapid deterioration. Just two months ago, it expected to make money in the second half of the year.

'Given the current upheaval in the global automotive market, it is no surprise that Honda has had to make this announcement,' said Ian Fletcher, London-based auto analyst at IHS Global Insight.

'The plight facing Honda is affecting all automakers at present, and its pessimism is shared by many others in the industry. Indeed, Toyota will make a similar announcement at the beginning of next week, and it is unlikely to be any more optimistic,' he said.

Toyota will hold its press conference on Monday.

Nissan Motor Co. added to the gloom Wednesday, announcing plans to shed 500 temporary workers and cut production in Japan by 78,000 vehicles. This brings its output cuts to 225,000 vehicles, a 16 percent reduction from its original production schedule of 1.4 million vehicles.

Japan's automakers are faring better than their cash-strapped U.S. rivals, but they are also suffering from the extreme weakness of the American market. U.S. sales normally account for half or more of the Japanese carmakers' profits, but their U.S. sales are now falling almost as steeply as those of Detroit's Big Three.

Fukui said he hoped the U.S. automakers would get some kind of assistance, as their troubles threaten the entire industry.

'A collapse of any of the Big Three would be a negative for all the automakers in the world, including Honda,' he said.

'It is best that they return to sound health.'

In addition to weakening sales in most major markets, the Japanese are struggling with a surge in the yen that has cut the value of their export earnings. On Wednesday, the dollar sank to a 13-year low of 88.15 yen.

Japan's automakers have been slashing expenses and canceling nonessential projects in anticipation of a long and deep downturn.

Honda already was cutting 760 temporary workers in Japan, or nearly 18 percent of its temporary work force. On Wednesday, it said it would shed another 450 during the next 2 1/2 months.

Honda also announced 10 percent pay cuts and likely bonus reductions for its directors. The company recently said it was withdrawing from Formula One racing. On Wednesday it said it would halt plans to launch the Acura brand in Japan and develop a successor to the NSX sports car.

It will continue to focus on developing gas-electric hybrid vehicles, such as the new Insight it will unveil next month in Detroit.

Honda said Wednesday that it had formed a joint venture with Japanese battery maker GS Yuasa Corp. to develop next-generation batteries for hybrids.

But it is delaying plant constructions and expansions in an effort to reduce annual investment spending by 8 percent, to $7.3 billion (650 billion yen).

Toyota also has been scaling back production and announced this week that it was indefinitely postponing production of its Prius hybrid at a plant under construction in Mississippi.

Standard & Poor's Ratings Services lowered its outlook on Toyota's long-term credit rating, now AAA, citing growing pressure on its earnings this year and next.

Toyota previously forecast a 73.6 percent drop in operating profit for the current year.

'Standard & Poor's believes that Toyota is highly likely to report operating losses during the second half of the current fiscal year, due to weakening global sales and the recent rapid appreciation of the Japanese yen against other major currencies,' the rating agency said in a statement.

But in light of Toyota's strong cash position and cost competitiveness, 'we view Toyota as being better able than other global auto manufacturers to cope with the market deterioration,' it said.