Toyota, the world's largest carmaker, made a loss of 77.8 billion yen (€571 million) in the three months to the end of June as global car sales dropped.
However, the company upgraded its outlook for the rest of the year, saying losses would total 450 billion yen rather than the 550 billion yen forecast previously.
Toyota now expects sales in Japan to come to 2.02 million units, up from 1.92 million in its previous forecast.
It forecast sales of 1.86 million vehicles in North America and 920,000 in Europe, unchanged from its projection issued three months ago.
A senior executive said it is having difficulty gauging vehicle demand in markets outside its home base of Japan.
"Demand is being supported to a large extent by government schemes, and it's difficult to get a read on how much this will translate into a fundamental recovery in demand," managing director Takahiko Ijichi said.
Reuters