Toyota said Thursday that its fiscal first-quarter profit plummeted 28 percent, and the automaker stuck to its forecast that full-year profit will fall for the first time in seven years as it faces more problems from the weakening U.S. market.
Toyota Motor Corp., which had been riding on the success of its fuel-efficient cars, has consistently posted growing profit since it started reporting under U.S. accounting standards. And there's no previous comparable data that shows its annual profit has ever fallen, the AP reported.
But sliding North American sales, a strong yen and rising material costs have battered the earnings of Japan's top automaker, which is on track to end ailing General Motors Corp.'s 77-year reign as the world's top automaker.
Toyota does not rely as much on truck and sport utility vehicle sales as its U.S. competitors and so far has avoided the kinds of deep losses racked up by GM and Ford Motor Co. But the company still is seeing its momentous sales growth slow amid a U.S. economic downturn and soaring gas prices.
Koji Endo, auto analyst for Credit Suisse in Tokyo, said that while Toyota is boosting sales in new markets like China, it can't make up for the shortfall in giant markets like the U.S., Europe and Japan.
"The situation is extremely tough for Toyota," he said. "If the currency fluctuation doesn't go in its favor, it's going to be in even deeper trouble."
Toyota said its April-June profit fell to 353.66 billion yen ($3.23 billion) from nearly 492 billion in the same period a year earlier. The strengthening yen, which eats away at the profits of Japanese exporters, cost Toyota 200 billion yen ($1.8 billion) in the latest quarter, the company said.
Quarterly sales edged down 4.7 percent to 6.215 trillion yen ($56.8 billion).
Toyota, which makes the Prius gas-electric hybrid and Lexus luxury models, has been running neck-and-neck in global vehicle sales with GM. The Japanese company sold 4,817,941 vehicles globally during the first six months of 2008 - 277,532 more than GM - and said its U.S. market share reached a record high 17.4 percent for the quarter.
Still, Toyota is foreseeing tough times ahead.
Last month, Toyota lowered its global vehicle sales plan for this calendar year by 350,000 vehicles to 9.5 million, blaming the sluggish North American market. The pace of Toyota's growth has been slowing to a 1 percent gain this year compared with a 6 percent climb in 2007.
For the latest quarter, Toyota sold 2.19 million vehicles worldwide, up 1.1 percent from a year ago. But North American sales fell 4.3 percent to 729,000, and European sales were down 9.6 percent to 301,000.
Toyota's sales in emerging markets are rising, though. In Asia - where the remodeled Corolla is popular - sales climbed 18 percent to 262,000. Exports to Russia, Australia and the Middle East also were strong.
Toyota is in a better position than some rivals to ride out the gasoline-price crunch because it doesn't have as many trucks or other gas-guzzlers in its lineup and boasts a reputation for good mileage, but the shift in demand still hurts Toyota because profit margins aren't as hefty as for trucks.