Speaking to Reuters, president Katsuaki Watanabe said he expected the company to exceed what it had achieved in the previous savings plan.

Watanabe said the $2.7bn saving would rise each year, alongside a rise in sales, as cost reductions would be made on an individual vehicle basis.\

For the past two years Toyota has worked on its cost saving strategy, which aims to package some of the tens of thousands of components that go into producing a car into modules and systems.

The full impact of the latest plan is not expected to be realised until 2010.

Cost-cutting measures, or lean manufacturing as it is also known, have been a forte of Toyota in recent years, allowing it to plough money back into developing better cars.

US giants General Motors and Ford are attempting to introduce similar measures as they implement their business turnaround plans and return to greater profitability.