Toyota Motor Corp., a once-unstoppable but now money-losing automaker with idle production capacity, will stop making vehicles next year at the New United Motor Manufacturing Inc. plant in Fremont, Calif.

The decision, first announced by Calif. Gov. Arnold Schwarzenegger, is momentous for Toyota, a Japanese automaker proud of never having closed an auto plant since its founding in 1937.

But Toyota signaled it might quit the venture after its partner at NUMMI for 25 years, General Motors Co., said in June it would withdraw as part of its bankruptcy.

"We deeply regret having to take this action," Toyota's Executive Vice President Atsushi Niimi told reporters from Japan during a conference call late Thursday. He said Toyota had learned much from the joint venture with GM, calling NUMMI a "groundbreaking model of U.S.-Japanese collaboration."

Toyota plans to end production at Fremont next March.

"Today is a sad day in the history of Fremont as California joins the ranks of states adversely affected by the bankruptcy of General Motors and the worldwide collapse in demand for automobiles," Schwarzenegger said in a statement.

Niimi said Toyota thoroughly reviewed its alternatives after GM's decision. "In light of current and anticipated market conditions, we have determined that over the mid- to long term it just would not be economically viable to continue the production contract with NUMMI."

Niimi said UAW workers would be allowed to apply for other jobs at other Toyota locations, "but would not be prioritized over other applicants."

He declined to say what would happen to the NUMMI plant after March, saying that was up to the NUMMI board.

The UAW wasn't a factor in the decision to close NUMMI, but the high labor costs of California and supply chain and logistics costs were, he said.

The move comes as Toyota, for the first time in its history, is struggling with a horrendous sales slump and excess production capacity.

The decision is devastating for California, hard hit by the recession and housing slump. NUMMI, which employs 4,800 people, was California's last full-size auto assembly plant.

Schwarzenegger and other California officials had lobbied to save the plant, offering incentives and sending a representative to Japan to meet Toyota officials.

In 1984, Toyota and GM formed the venture at a mothballed GM plant. The deal allowed Toyota to make vehicles in the United States for the first time, while giving GM a glimpse of the renowned Toyota Production System. GM later patterned its global manufacturing system on Toyota's, as have many other automakers.

But this downturn proved too much for both automakers. GM, which was progressing too slowly with its turnaround plan, filed for bankruptcy.

Last year, Toyota plunged into the red for the first time in 60 years, losing $4.3 billion, even as it overtook GM to become the world's biggest automaker. More losses are forecast for the fiscal year that began on April 1.

Toyota's excess capacity is estimated at 30 percent. While global sales are expected to recover, Japan's Nikkei business daily reported this week that Toyota plans to cut global capacity 10 percent, to 9 million.

NUMMI produces about 400,000 vehicles a year, most of them Corolla compacts and Tacoma pickups. Toyota also makes Corollas in Canada and Tacomas in Mexico.

Of all of Toyota's North American facilities, NUMMI was the least profitable. Its other handicap, say people familiar with Toyota's thinking, was the plant's United Auto Workers' representation, a holdover from its time as a GM-only plant.

NUMMI is the only assembly plant in which Toyota deals with the UAW and its rigid work rules. It has fought organization efforts at its other U.S. plants.

Sergio Santos, the president of NUMMI's UAW local 4422, said he was willing to offer concessions to keep the plant open.

But Toyota officials may have been reluctant to become sole operator of a UAW plant and bring it into its manufacturing fold, say people familiar with the company's thinking.

The UAW issued a statement critical of the decision.

Closing NUMMI is "devastating news for thousands of workers in California," said UAW President Ron Gettelfinger.

Toyota, like all automakers, has significant overcapacity worldwide, he said. But "it's unfortunate the company chose to close a U.S. facility after benefiting so greatly from the federal "cash-for-clunkers" program.

Nearly 20 percent of the vehicles sold through the program were Toyotas.