Toyota sells fewer cars, but makes 10% more profit

Toyota first-quarter profit rose 10 per cent to a new record as a cheaper yen helped boost its earnings.

But the Japanese automaker has lost its place as the world's top seller of vehicles to Volkswagen, selling 2.1 million vehicles in the April-to-June quarter, about 127,000 fewer than last year.

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Profit was 646.3 billion yen ($6.8 billion Cdn), up from $587.7 billion yen a year earlier.

Quarterly revenue increased by 9 per cent to 6.98 trillion yen ($70 billion), despite lacklustre sales in the key China market, the automaker said Tuesday.

Rivals General Motors, Nissan and Ford have all reported slowing China sales. China auto sales fell each month in the quarter as economic growth crawls at its slowest pace in 25 years.

Toyota will start selling a gas-electric hybrid version of the Corolla and Levin sedans in China later this year, which it hopes will help boost sales, executives said. But the company is not expecting strong profit out of China.

Weaker yen helping

Instead, it expects the yen will continue depreciating against the U.S. dollar as the U.S. Federal Reserve moves to raise rates.

That could mean still stronger profits for Toyota later in the year, as well as vindicating Toyota president Akio Toyoda's decision to keep a share of production in Japan.

Toyota does not expect much fallout from the massive recall of its vehicles in North America because of Takata airbags.

Toyoda slowed the car company's expansion plans and focused on cost cutting in response to the Takata scandal, improving quality controls and personnel training.

The Japanese automaker left its profit forecast unchanged at 2.25 trillion yen ($20 billion Cdn) for the fiscal year through March 2016.

"Favourable foreign exchange rates and cost reduction efforts were main positive factors, while decreased vehicle sales and increases expenses to support initiatives for enhancing competitiveness were negative factors," said Toyota managing officer Tetsuya Otake.