TOKYO: The president of Toyota Motor acknowledged Thursday its rapid global growth was partly behind an increase in quality problems in recent years.

The company has improved quality controls and is sticking to its sales targets, including those in North America, despite worries about a credit crunch and a slowdown in the auto market, said the president, Katsuaki Watanabe.

Speaking at the Japan National Press Club, Watanabe said the reasons behind the defects were varied, involving development, design, production, suppliers and maintenance.

But Watanabe said that at least some of the problems, including time pressures and shortage of experts, stemmed from the companys huge growth in recent years. “That is not zero,” he said, referring to quality problems rooted in Toyotas expansion.

Watanabe has generally been frank about acknowledging challenges facing the company as it enters markets and builds plants. Still, his comments highlight a sense of a crisis at Toyota, which is trying to maintain its sterling reputation for quality as it seeks to expand globally, especially in emerging markets like Brazil, China and Russia.

“The fact that Toyota is growing globally suddenly shouldnt be used as an excuse,” Watanabe said.

Last year, Toyota overtook General Motors as the worlds No. 1 automaker in global vehicle production, although GM still retains the top spot in global vehicle sales.

Toyota made a record 9,497,754 vehicles worldwide in 2007, up 5.3 percent from the previous year, compared with 9.284 million for GM. But Toyota sold fewer vehicles at 9.366 million, compared with 9,369,524 for General Motors. GM has been the worlds top seller for 77 years.

Watanabe said he had ordered a six-month delay in some products to tackle quality controls after the problems surfaced. He did not give details.

Toyota has gone over, one by one, each problem, tracking root causes, analyzing and coming up with ways to prevent a recurrence, Watanabe said. He even referred to “big company disease” caused by arrogance among its ranks.

Since 2006, when the alarming rise in recalls began to surface, Watanabe has apologized repeatedly at news conferences in Japan.

He also said he was aware of the concerns about falling U.S. auto sales amid a slowdown in the American economy. This year is expected to be the slowest in a decade for the U.S. auto industry. But automakers are still predicting that sales will pick up in the second half thanks to the U.S. governments economic stimulus package and pent-up demand.

Watanabe brushed off the worries. Overall American auto sales this year are likely to remain about the same as last year, and Toyota is expecting its regional sales to rise this year, he said. Toyota is expecting U.S. sales to climb 1 percent from 2007 to 2.64 million vehicles in 2008.

“I feel U.S. economic fundamentals are strong,” Watanabe said.

TOKYO: Senior Japanese lawmakers from the governing and opposition parties on Thursday called for a breakthrough by Monday to end the stalemate over the next governor of the Bank of Japan, hoping to avoid a monetary policy vacuum in the midst of an international credit market crisis.

“We have agreed that it is desirable to avoid a policy vacuum, even just for one day,” Kenji Yamaoka, parliamentary affairs chief for the main political opposition, the Democratic Party of Japan, told reporters after meeting his counterpart from the Liberal Democratic Party, Tadamori Oshima.

Toshihiko Fukui is scheduled to step down on Wednesday as governor of the central bank. The standoff over who will succeed him and his two deputies comes amid global market turmoil that sent Japanese shares down more than 3 percent and the yen to a 12-year high against the dollar Thursday.

The government on Thursday won a parliamentary vote in the lower house, which is controlled by the governing coalition, on its nominee for governor, Toshiro Muto, and its two candidates for deputy governors of the bank. But that outcome did nothing to clarify the situation because Muto has already been vetoed by the opposition in the upper house of Parliament.

A former Bank of Japan official, Masaaki Shirakawa, has been approved as a deputy governor by both houses after the upper house rejected Muto and the other deputy governor nominee, Takatoshi Ito, an academic. Shirakawa could serve as acting governor if the dispute is not resolved by Wednesday. Other options include extending Fukuis term or appointing someone else as acting governor.

Yamaoka said he had agreed with Oshima to request a new governor nominee, but Oshima and a government spokesman, Nobutaka Machimura, did not say whether they were thinking of offering a different choice.

While markets are focused on fears of a U.S. recession, traders said the political deadlock had hurt sentiment in Japanese stocks. “The yens gain and concerns about the Japanese economy and corporate earnings are pulling the Tokyo market down deeper than Wall Street,” said Yoshihiro Ito, a managing director at Okasan Capital Management. “Distrust in Japanese politics is also helping push down the market.”

The government must now either persuade the opposition parties to change their minds or offer a compromise candidate. “If the candidate cannot get approval, the government should come up with someone else, a Democratic Party official, Naoto Kan, said at a news conference. “I dont think there is any other way.”

Analysts say an acting governor might be unwilling to make important, long-term decisions, but they also point out that Japan, with interest rates at 0.5 percent, has little room to maneuver in monetary policy, regardless of who heads the Bank of Japan.

“The market has to some extent prepared for the risk of a vacuum at the BOJs top position,” Atsushi Ito, a Japanese government bonds strategist at Morgan Stanley. “Rather than who becomes BOJ governor, problems in the United States and Japans economic slowdown play a far more significant role in deciding the BOJs policy.”

Ichiro Ozawa, the Democratic Party leader, sat impassively at the back of the lower house chamber as the vote was held Thursday. Some analysts say that he holds the key to resolving the issue and that he will have to meet Prime Minister Yasuo Fukuda to negotiate a deal. Ozawa has vowed to push the governing coalition into an early election.

Opposition lawmakers have consistently opposed Muto mainly because of his close ties to the government as a former top bureaucrat in the Ministry of Finance, a relationship they say would hurt the independence of the central bank.

WASHINGTON: U.S. stocks fell about 2 percent Tuesday, mirroring drops in Europe, after the U.S. Federal Reserve made clear that inflation remained its primary concern and American consumers and German companies said they were less confident in the economic outlook amid volatility in global financial markets.

Confidence in German business confidence slipped in August for the third consecutive month, the Ifo Institutes closely watched survey showed, but the decline was smaller than most analysts had expected.

The inflation rate in Germany held steady in August at 2 percent, the Federal Statistics Office in Wiesbaden said Tuesday.

While worries over the U.S. subprime mortgage crisis may have dented optimism in Germany, Ifo and analysts said that signs still pointed to strong economic growth in the largest European economy.

“The outlook for the coming six months is still marked by optimism, albeit somewhat weaker,” Hans-Werner Sinn, president of Ifo, said. “Here the turbulences in financial markets may have played a role.”

Ifo, which is based in Munich, said its business confidence index slipped to 105.8 points in August from 106.4 in July.

In the United States, consumer confidence weakened in August, the Conference Board said, with its consumer confidence index declining to 105 from a revised reading of 111.9 in July, which was a six-year high. But while the index retreated, it was slightly stronger than the average analyst forecast.

In the minutes from its Aug. 7 meeting, the Federal Reserve noted that worsening financial market conditions might require a policy response but still held firm to its focus on inflationary risks.

“Members expected a return to more normal market conditions, but recognized that the process likely would take some time, particularly in markets related to subprime mortgages,” the central banks policy-setting Federal Open Market Committee said.

But data from Standard and Poors and the economist Robert Shiller showed Tuesday that U.S. house prices suffered their worst decline in at least 20 years in the second quarter.