The cut comes on top of the 10 per cent pay reduction for directors announced last month.

The move affects about 4,800 managers at Honda group companies in Japan, including those stationed abroad, but not those hired by Honda's overseas units, the company said in a statement.

Profits battered

The reduction continues through to May, and what happens after that is still undecided, it said.

Japan's number two automaker has been battered by the plunge in demand in major auto markets like the United States. The rising yen also hurts Honda and other Japanese exporters, by reducing their overseas earnings.

Last week, Honda slashed its profit forecast for the fiscal year through March by 57 per cent, to 80 billion yen (US$888.9 million) from an earlier 185 billion yen.

The latest projection marks an 87 per cent slide from the 600 billion yen earned the previous year.

Honda, which makes the Accord sedan and Odyssey minivan, also lowered its sales target by three per cent to 10.1 trillion yen - the first time in nine years Honda will mark an on-year sales drop.

Larger worries

Still, Honda's troubles may be smaller than its rivals. General Motors Corp and Chrysler have received massive bailouts from the US government to stay in business.

Toyota Motor Corp, the world's biggest automaker, is projecting its first operating loss in 70 years.

Toyota, Honda and Nissan Motor Company have laid off thousands of temporary plant workers to adjust production.

- AP