Net income dropped to 316.8bn yen (£1.6bn) in the first quarter to 2008, down from 440bn yen a year ago.

The Japanese carmaker blamed a combination of slower demand in the US and a stronger yen, which has made the brand relatively expensive abroad.

Rising costs in steel, copper and aluminium have also curtailed Toyota’s expansion into emerging markets.

Toyota is not the only carmaker struggling to adjust to the effects of the deteriorating global economic climate - US rival General Motors posted a $3.3bn loss in the last quarter.

Despite these recent results, analysts predict Toyota will fare better than GM this year as US buyers looking for more fuel-efficient cars.