TRAVERSE CITY, Michigan (AP) -- Toyota Motor Corp. will produce a fun but affordable sports car as the world's largest automaker seeks a return to profitability with vehicles that meet customers' desire for fuel efficiency without sacrificing style.

Company president Akio Toyoda on Wednesday announced plans for the new car -- a joint venture with Subaru -- while outlining his strategy for reversing the company's sales and income slide and charting a long-term course designed to appeal to new generations of motorists.

He also said the company has not decided the future of a California manufacturing plant that it operated jointly with General Motors, which announced in June it was abandoning the 50-50 venture as it emerges from bankruptcy protection.

"We are back where we were 100 years ago, at a point where we must reinvent the automobile," Toyoda said during an industry conference at a Lake Michigan resort. It was his first speech in North America since becoming president in June of the company founded by his grandfather.

Earlier this week, Toyota reported a smaller-than-expected loss of 77.82 billion yen ($819 million) for the quarter ending June 30 and said it expected less red ink for the full year than initially projected. Still, it suffered a 38.3 percent global sales drop during the quarter as the recession took its toll on the industry.

Despite its reputation for high quality and fuel efficiency, company officials acknowledge a need for more stylish vehicles to attract U.S. buyers -- especially younger ones.

"You're going to have to have passion in your products" while retaining quality and value, Jim Lentz, president of Toyota Motor Sales, USA, Inc., told reporters after Toyoda spoke.

Toyoda, 53, described himself as a "car nut" and race driver who loves the feel of a car on the open road.

"I want to see Toyota build cars that are fun and exciting to drive," he said.

Without offering details, he said the planned sports car would fit the bill without being too expensive.

"I am very excited about it and I plan to fast-track it," Toyoda said, adding that it would be launched within a few years.

He also emphasized fuel efficiency, saying rising oil prices and dwindling supplies have left the industry at a "once-in-a-century crossroads" where excelling at making gas-sippers and alternative-power vehicles will be a matter of survival.

Toyota has sold 2 million of its Prius hybrids and will launch a plug-in hybrid for fleet customers this year. A pure electric car is planned for 2012 and the company is making progress on hydrogen fuel cell vehicles, Toyoda said.

Lentz acknowledged the planned sports car might seem at odds with the goal of saving energy, but said the company needs products that will appeal to a cross-section of U.S. consumers. He declined comment on where the vehicle would be built.

Toyoda made only a passing reference to the New United Motor Manufacturing Inc. plant in Fremont, Calif., which makes the Pontiac Vibe station wagon for GM and the Corolla compact car and Tacoma pickup truck for Toyota.

Toyoda once was vice president of NUMMI, which was established in 1984 and employs 4,600 workers. Company officials have said they might liquidate Toyota's stake.

GM's withdrawal "has created some extremely difficult issues for us to resolve," Toyoda said. "We are still studying the situation and hope to make a decision soon."

Responding to an audience question, Toyoda said it was unlikely the company would form partnerships such as Nissan's alliance with Renault.

"Toyota is not the sort of company that is very good at alliances," instead preferring to develop relationships with suppliers and dealers, he said.

Eight Japanese automobile manufacturers suffered historic falls in their output, exports and sales in the first half of this year, following the global economic crisis.

In June, however, the performance of the car makers varied widely depending on whether they had best-selling eco-friendly vehicles on offer.

Toyota Motor Corp. and Honda Motor Co. have overcome their slump to an extent as their hybrid cars sold well due to government's tax breaks and subsidies for the purchase of eco-friendly cars. In sharp contrast, Suzuki Motor Corp. and Fuji Heavy Industries Ltd. continued to suffer declines in June.

Automakers' strategy for eco-friendly vehicles is likely to emerge as a decisive factor for their business performances in the entire business year ending in March 2010.

Eight major auto manufacturers made a combined 3,223,085 cars for the domestic market from January to June, down 44.2 percent from a year earlier. This is the first time since 1990 that the number of cars the companies produced has fallen below the 4 million mark over a six-month period.

This is attributable largely to curtailing output over the January-March period as the global recession deepened. Toyota's domestic production almost halved compared to last year's numbers, falling to its lowest level since 1976 -- the earliest year for which data is available.

Despite the setback, the Toyota group -- which includes subsidiaries Daihatsu Motor Co. and Hino Motors Ltd. -- remained the world's No. 1 car maker in terms of vehicles sold worldwide.

Worldwide, the Toyota group sold 3,564,000 vehicles in the first half of this year, down 26 percent from the previous year but still topping No. 2 company General Motors, which sold 3,552,722 vehicles.

All eight firms suffered year-on-year decreases in their output in June. Nevertheless, Toyota, Honda and four other companies riding the eco-friendly vehicle boom managed to put the brakes on declines in their sales last month.

In particular, Toyota resumed operations of some of its factories on weekends and national holidays, which it had suspended in December last year, as the company has been flooded with orders for more than 240,000 "Prius" hybrid cars.

Some workers of Yamaha Motor Co. are on loan to a hybrid car battery factory that Toyota and Panasonic Corp. jointly established to respond to the growing demand.

Toyota's domestic production in June came to 251,171 vehicles, down 31.2 percent from the corresponding month of last year -- an improvement of more than 10 points from the 41.9 percent year-on-year decrease in May.

Thanks to brisk sales of its own hybrid Insight and compact Fit, Honda too saw a lower drop in year-over-year output from May to June, with a 12 point difference between the two months.

In sharp contrast, Suzuki and others that produce mainly smaller vehicles are still struggling because they gain little benefit from the government's tax breaks for eco-friendly vehicles.

Suzuki's output for the domestic market in June fell 35 percent in June from a year earlier, 2.3 points more than the figure for May.

"We'll continue to curtail output for the time being," said an official of Suzuki's public relations division.

Meanwhile, Nissan has increased the number of cars subject to tax breaks in a bid to put the brakes on the decrease in their sales, which saw only a 2.1 point improvement from May to June.