Despite a weak domestic market, the company says it is set for a strong expansion in Europe and North America, and now eyes moving into Russia, and Eastern and Central Europe.

A cost-cutting drive and favourable exchange rates helped net profits to surge to a record 553.7bn yen ($4.53bn, £2.9bn), while operating profit rose 44% to 730.8bn yen.

Sales were also growing strongly, up more than 15% to 7.8 trillion yen. Over the whole year the company now expects to find customers for 6.2 million vehicles worldwide.

Toyota's performance was boosted by the popularity of its new Camry model and the Highlander four-wheel drive in the United States.

Continued strong sales of its Yaris compact car - tailored for the European market - also helped the company. The firm hopes to achieve a 5% share of the European market soon, which would make it the region's most successful Japanese car maker.

Domestic weakness

Toyota's luxury car division, Lexus, is also making life difficult for its US rivals.

But Toyota must worry about the weakness of its domestic market.

It managed to increase its dominant market share - now 42.1% - ever so slightly, but overall sales were down.

This contrasts sharply with a sales growth of 23.5% in its overseas markets.

One of the keys to Toyota's success is its policy of producing cars near its local markets.

The company has mooted plans to build another US factory, and Toyota's president Fujio Cho said the company would "continue to work aggressively" to expand local production.