But it also shows Toyota's vulnerability to market swings after its rapid expansion into most regions and vehicle segments.

Less than a month ago, Toyota secured the title of the world's biggest automaker, after outselling General Motors Corp. in 2008.

But its financial results were deteriorating rapidly. In the third quarter of its fiscal year, Toyota lost $1.8 billion, compared with a prior-year profit of $4 billion, after suffering big sales declines in its major markets.

The management warned investors in December that the company expected to lose about $1.7 billion this year on its operations, but on Friday it tripled its operating loss forecast to $5 billion.

'The negative results are largely due to lower vehicle sales volumes under difficult market conditions, mainly in the United States and Europe,' said Mitsuo Kinoshita, executive vice president at Toyota.

He said the yen's rise against the dollar and euro also hurt the company's results.

The last time Toyota had the equivalent of a net loss was in 1950, when the company came close to bankruptcy.

Toyota is trying to respond forcefully to the current crisis but said Friday that it was 'making every effort' to protect the jobs of its permanent workers. Over the past year, however, it has shed thousands of temporary workers.

Last fall, as the severity of the recession became evident, Toyota formed an 'emergency profit improvement committee' headed by CEO Katsuaki Watanabe.

It has since announced that Watanabe will give up the CEO position in June and become vice chairman, making way for Akio Toyoda, the grandson of the company's founder, to become chief executive.

Company officials say the management change is unrelated to an internal debate whether the company has grown too fast.

But Toyota's expansion backfired during this downturn. Its vehicle sales for the October-December quarter fell 19 percent from year-earlier levels to 1.84 million cars and trucks.

Toyota cut its global vehicle sales forecast for the fiscal year by 220,000 vehicles from its December forecast to 7.32 million. It sells vehicles ranging from minicars to luxury sedans and heavy trucks under the Toyota, Hino, Daihatsu, Lexus and Scion brands.

'Being by far the biggest Japanese automaker, it is no surprise that the company has suffered amid the downturn in the global vehicle market,' said Ian Fletcher, a London-based analyst at consulting firm IHS Global Insight.

'Some of Toyota's largest markets have been the worst affected, with Japan, North America, and Europe all having undergone significant corrections in the past quarter,' he said. 'The company has been forced to take drastic measures to match supply with reduced demand and prevent a build-up of inventory.'

Last fall, Toyota halted output of its full-size Tundra pickup at a new plant in San Antonio for three months after demand for big vehicles plummeted. It has indefinitely postponed the start of production at a new plant outside Tupelo, Miss.

Senior Managing Director Takahiko Ijichi told analysts Friday that 27 of Toyota's 74 production lines around the world were operating on one shift only.

Japan's second-largest automaker, Honda Motor Co., has proven more resilient in this downturn because its model range is weighted toward smaller, more fuel-efficient and affordable cars -- and motorcycles.

Last week, Honda eked out a third-quarter profit of $222 million and forecast a modest net profit for the year of $880 million, down sharply however from its previous forecast for a $2 billion annual profit.

Nissan Motor Co. will report its third-quarter earnings Monday.

Toyota plans to accelerate emergency measures to cut costs and restore profitability, Ijichi said. Among its objectives, Toyota wants to reduce fixed costs by 10 percent.

A few hours before Toyota released its earnings, Moody's Investors Service lowered its credit rating on the company from 'Aaa', the top rating, to 'Aa1,' citing concerns about its profitability not only for this fiscal year but also for the next.

Toyota still has large reserves, although they have slipped to $33 billion in cash and marketable securities from $36 billion at the end of March 2008.

Stripping out the exchange rate fluctuations, Toyota's reserves in yen are down by nearly a third. The yen has risen recently to 13-year highs against the dollar.