DETROIT, Jan 14 (Reuters) - Toyota Motor Corp <7203.T> is confident it can continue to outperform its rivals in the overall U.S. car market and increase sales in 2008 even if demand falls below its relatively optimistic forecast.

"We still have the strength to beat the market," Shigeru Hayakawa, chief executive of Toyota Motor North America, told a small group of reporters in an interview at the North American International Auto Show on Monday.

He added, however, that its margin of outperformance has been shrinking from around 10 percent just two years ago.

Toyota is expecting the U.S. market for light vehicles to come in at 16 million vehicles this year, down just a tad from 16.15 million in 2007.

Many auto executives and analysts have lowered their projections of late, to 15.5 million or even lower. John Krafcik, vice president of product and strategic planning at Hyundai Motor North America <005380.KS>, said on Monday at the Detroit show that Hyundai was also estimating 15.5 million.

Still, given high gasoline prices, Hayakawa said Toyota's passenger car-dominated product line-up puts it in a better position than General Motors Corp <GM.N> and Ford Motor Co <F.N>, which are dependent on large SUVs and pickup trucks.

Toyota is now the No. 2 auto brand in the United States behind GM but ahead of Ford and Chrysler.

Its sales grew 2.7 percent in 2007 to 2.62 million vehicles, against a similar percentage fall in the overall U.S. market. That gave it a market share of 16.2 percent, up 0.8 point from the year before.

This year, it has forecast a U.S. sales rise of about 1 percent to 2.64 million vehicles, driven by the planned full remodeling of the Corolla and Matrix sedans. (Reporting by Chang-Ran Kim, Editing by Peter Bohan)

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