| Detroit Free Press DETROIT -- Toyota Motor Corp. said Thursday that its first quarter net income dropped 28.1 percent to 353.6 billion yen, or $3.2 billion, mainly due to the impact of exchange rates between the yen and the dollar, higher raw material costs and the turbulent U.S. market. SAVE MONEY ON TRAVEL DEALS While Toyota worked to cut costs and said global vehicle sales increased by 24,000 to 2.19 million vehicles, it wasn't enough to overcome a plunge in sales in the United States and Western Europe. For the three months ending June 30, Toyota's total revenue declined by 4.7 percent to 6.22 trillion yen or $56.9 billion. "The financial results for this quarter were severe, due to our rapidly changing business environment", Mitsuo Kinoshita, Toyota's executive vice president said in a statement. Toyota said the decrease in sales volume, the shift of product mix to compact cars, and an increase in sales expenses such as incentives and increase in reserves for bad debts, resulted in the profit decline. The strengthening yen compared to the U.S. dollar cut profits by 200 billion yen or $1.8 billion while operating profit for Toyota's financial services unit dropped 21.8 billion yen or about $199 million. Toyota began putting a cost reduction program in place earlier this year, but Takahiko Ijichi, Toyota's senior managing director, said during a conference call that all of the company's gains were wiped out by higher steel, plastic and other raw material costs. Toyota has also struggled this year to produce enough small cars and hybrid vehicles to satisfy demand as gas prices soared above $4 a gallon in the United States and has also been hit by a steep industrywide decline in pickup and SUV sales. "Toyota will take swift action in accordance with market changes by increasing the supply of models in high demand and launching new models", Ijichi said. In July, Toyota announced that plans to begin assembling the Prius gas-electric hybrid are scheduled for 2010 at a plant in Blue Springs, Miss. Toyota also is suspending production of its Tundra pickup and Sequoia SUV beginning this week through mid-November. Despite all its troubles, Toyota said its U.S. market share reached 17.4 percent, a record high, and the company stuck to its profit outlook for the year will be 1.25 trillion yen. "The whole strength of the company is to flexibility to adjust to the market", said University of Michigan professor Jeffrey Liker. "This is like a minor headache compared to a deadly virus for the American car companies, but Toyota is not used to that."
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