Booming sales of the Prius hybrid helped the world’s No. 1 automaker Toyota deliver a lower than expected 77.82 billion yen ($ 819 million) quarterly loss and cut its forecast for the red ink year.

The Japanese manufacturer, whose models include the Corolla subcompact and Lexus luxury, said Tuesday he expects 450 billion yen ($ 4.7 billion) loss for the fiscal year through March 2010, better than the 550 billion yen loss initially anticipated.

The results for the quarter April to June showed that Toyota Motor Corp. is getting some traction aggressive cost-cutting and the Japanese government incentives that have boosted the sales of green cars like the Prius. Analysts surveyed by Thomson Reuters had forecast a loss for fiscal first quarter from 210 billion yen.

Toyota, which dethroned General Motors Corp. as the world’s top selling car in 2008, increased its forecast of vehicle sales in the world for the last fiscal year from 100,000 to 6.6 million vehicles. The increase reflects the success of the Prius in Japan, while sales forecasts for Europe and North America were unchanged.

The growing popularity of the environment of the vehicles Toyota has taken a breather from the merger automatically. The Prius hybrid gas-electric model has been the best sellers in Japan for two months, the first time that a hybrid obtained in situ, and reports on the runway to take this place again for the month of July. Toyota says it has received 245,000 orders for the Prius in Japan since it went on sale in May.

The Japanese government recently hybrid tax free money and start a program clunkers, helping boost sales of environmentally friendly vehicles, including the rival Honda Motor Co. ’s Insight.

Mamoru Katou, auto analyst at Tokai Tokyo Research, Toyota said the new forecasts were extremely cautious, as it had the potential to break even, and may end up selling thousands of cars in the U.S. and in Japan that its plan.

"Toyota is sticking with a goal that you know that you can achieve," he said.

Earlier this year, Toyota chose Akio Toyoda, grandson of the founder of the automaker, as its new president, in an effort to use his charisma to lead the ranks of workers, dealers and suppliers together.

Toyoda said the automaker was taken over management decisions by region to remain agile despite its size, but has yet to give details of a change in strategy.

The best sales forecast is still significantly lower than the 7.57 million vehicles Toyota sold around the world for the fiscal year ended in March, showing how far Toyota has to go to stop the red ink.

Toyota sold 1.4 million vehicles worldwide during the quarter, a decrease of 785,000 from a year earlier. Quarterly sales fell 38.3 percent to 3.836 trillion yen ($ 40.4 million), as vehicle sales fell in almost all regions, including North America, Europe, Japan and the rest of Asia.

Other Japanese car manufacturers have also reported better than expected earnings, with the No. 2 Honda continues to remain in the black, bucking expectations of losses. Analysts say Toyota due to its larger size, may need more time for a full recovery.

Tatsuo Yoshida, an analyst at UBS Securities Japan car, said that a solid recovery can come only when the global economy is growing and people start buying more cars.

"The damage was great at Toyota, as it headed towards the aggressive expansion by waving his foot on the accelerator," he said, comparing the global financial crisis to a car wreck.

Fiscal Year Toyota posted their worst loss in his seven decades of history, running up to 436.94 billion yen in red ink. For the quarter April to June last year, had a 353.6 billion yen profit.

Toyota had appeared almost unstoppable in the global financial crisis, with booming sales of its reputation for mileage and quality.

It is expected to sell 9.85 million vehicles in calendar 2008, annual sales, but ended up falling for the first time in a decade – to nearly 9 million vehicles since the crisis on Wall Street morphed into a global recession.

The automaker has aggressively cut costs to weather the recession – slash jobs and production, management pay cuts, reduced investment and previous travel and other expenses.

However, vehicle sales continue to suffer as recession crushes demand.

Japan Quarterly sales totaled 407,000 vehicles, 105,000 in the previous year, while Toyota said it sold 387,000 vehicles in North America by 342,000.

"Although we have been able to make certain improvements in the fixed costs and efforts to cut costs, declining vehicle sales and the appreciation of the Japanese Yen had a strong impact on our revenues," said Managing Director of Toyota Superior Takahiko Ijichi.

Toyota, based in Toyota City, central Japan, lost 140 billion yen during the quarter ended June 30 due to yen appreciation. Lost another 650 million yen in operating income for the miserable, because car sales.

Results of other Japanese car manufacturers have suggested the worst may be over.

Honda reported a 7.5 billion yen profit for the period April to June, and raised forecasts for full year on optimistic car sales to improve.

Nissan Motor Co., the nation’s third largest automaker, reported a smaller than expected loss of 16.5 billion yen for April through June.

Toyota shares fell 1.5 percent to 4030 yen ($ 42) in Tokyo. Earnings were announced before trading ended.

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