TOKYO -- Toyota said today that its fiscal first-quarter profit plummeted 28 percent and 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.

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 was boosting sales in new markets such as China, it couldn't make up for the shortfall in giant markets such as the United States, 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.

And like its U.S. counterparts, Toyota is losing money as the plummeting popularity of trucks and SUVs sends their values lower. When people who leased such vehicles return them at the end of the term, automakers can't resell them for as much as they had predicted two or three years ago.

Toyota said an increase in reserves for those residual value losses, and more credit losses in the United States, were the main reasons for decreased profit in its financial services segment.

In its residual value forecast released last week, Automotive Lease Guide Inc. said the expected price of a Toyota Sequoia SUV after three years fell 6.3 percentage points from a year ago to 38.3 percent of its sticker price. That means a new Sequoia Limited with a $45,225 base price could fetch about $17,320 after three years, a drop of about $2,850 from a year ago.

But other automakers' models are faring worse, with the lease guide's projected average value of a Ford Expedition SUV dropping by 12.2 percentage points to 32.4 percent.

Ford said last month that it would raise leasing prices on some models after reporting an $8.67 billion loss in the April-June quarter, including a $2.1 billion charge for the decline in leased vehicle values. GM last week reported a $15.5 billion loss, with a $2 billion charge for the drop in residual values.

"Toyota will continue to keep a close eye on the used car market and set suitable values in a timely manner," the automaker said in a statement.

Toyota kept its profit forecast for the fiscal year through March 2009 unchanged at 1.25 trillion yen ($11.43 billion) on sales of 25 trillion yen ($228.52 billion). That would be a 27 percent dive in profit and a 4.9 percent drop in sales from the previous year.

Toyota announced its earnings shortly after trading ended in Tokyo. The company's shares dipped 1.3 percent to 4,580 yen ($41.90). Toyota's U.S. shares gained 11 cents to $86.56 in afternoon trading.