Toyota Motor Corp said it would announce a new president as part of a reshuffling of top management as the world's top automaker struggles to cope with sliding global demand.
Media reports have said Executive Vice President Akio Toyoda, grandson of the company's founder, would replace Watanabe as president in June.
Toyota said it would announce changes to its top management team at 3 pm (0600 GMT).
Chairman Fujio Cho, President Katsuaki Watanabe and other executives will hold a news conference, first in Nagoya, near its headquarters in central Japan, and a second one in Tokyo at 6:30 pm (0930 GMT).
Shares of Toyota were up 1.3 per cent at 3,070 yen as of 0531 GMT, outperforming a 2.6 per cent fall in the benchmark Nikkei average.
Toyota last month forecast its first-ever consolidated operating loss for the year to March 31, with the situation aggravated by a sharp rise in the yen against most currencies.
Toyota said earlier on Tuesday that sales across the group fell 4 per cent to 8.972 million vehicles in 2008, dragged down by a sharp decline in the main markets of North America, Europe and Japan.
The figure was in line with previous company forecasts, as car sales globally plunged in the final quarter as the financial crisis spread, tightening credit markets around the world and forcing most automakers to slash production.
For the parent only, which excludes minivehicle maker Daihatsu Motor Co and truck unit Hino Motors Ltd, sales fell 5 percent to 7.996 million vehicles, Toyota said in a statement. Sales at the two units rose from 2007.
The tally is almost certain to keep Toyota ahead of General Motors Corp as the world's biggest automaker after the U.S. giant suffered a 23 percent drop in the United States in 2008, compared with Toyota's 16 per cent fall. The United States is the single-biggest market for both automakers.
GM is scheduled to announce its 2008 sales on Wednesday.