JAPAN'S auto maker Honda slashed its profit forecast for the fiscal year yesterday and announced that managers will take a 10-percent pay cut amid a global downturn in the auto industry.

President Takeo Fukui blamed the revisions on declining demand set off by the United States financial crisis and the nose-diving dollar, which has fallen to 13-year lows against the yen.

Japan's second-biggest auto maker now expects 185 billion yen (US$2.06 billion) in group net profit for the fiscal year ending March 31, 2009. That's less than a third of the 600 billion yen it earned last fiscal year.

Tokyo-based Honda has already twice revised its forecast, the latest in October when it said it expected 485 billion yen in profit.

'Every day, the hardships we face are getting worse and worse. And there are no signs of recovery,' Fukui said at a news conference that was hastily moved up two days from the initial schedule. He said the auto maker will focus on green technology, especially hybrids and small cars, to ride out the difficult times and prepare for recovery in the long run.

In recent years, the annual media event has usually been an occasion for Honda to disclose ambitious plans for growth in key global regions and outline its strategy in green technology.

But talk had been rife this year's news will be dismal as the industry gets hit by the global recession set off by the US financial crisis. Particularly damaging to Japanese auto makers has been the plunging dollar, which erodes their overseas earnings.