According to predictions by analysts reported in Japanese newspapers and compiled in an Automotive News report, Toyota is facing a 40 percent decline in annual profits, proving that even the world's largest automaker is not immune to weak sales in the U.S. and increasingly around the world.

Estimates are suggesting that Toyota's operating profit will come in at around 1.3 trillion yen ($12.8 billion). The company had forecast a figure of 1.6 trillion yen. Additionally the company is likely to fall short of its projected global sales target of 9.5 million units considering it has already lowered 2008 and 2009 sales targets already.

Toyota has declined to comment on the reports, but Koichi Ogawa, chief portfolio manager at Daiwa Asset Management, said the report would not be likely to cause a "free fall" of shares in the company.

"In a market like this, the key decision is what you unload and what you hold. You will end up selling everything if you sell companies with weaker earnings," Ogawa said.

"Given that the price of fuel and some raw materials is falling, earnings in the auto sector are likely to start to recover in six months to a year. This could be a good buying opportunity for long-term investors."