Although its North American sales saw a 1 percent drop for the October-December quarter, Toyota Motor Corp. still saw its operating profit climb 4.7 percent.

The company attributed the slight drop in vehicle sales in North America to the current crisis in the sub-prime mortgage market. With growing concerns over the economy and a potential recession, many buyers are reluctant to take on car payments.

Toyota's fiscal year ends on March 31 at which time it hopes to have sold 2.97 million vehicles in North America, a lower estimate that the previously predicted 2.99 million.

Globally, the company is on track to sell 8.93 million units with sales in Asia expanding rapidly. Toyota's total sales for the third quarter were an impressive $59.3 billion with operating profit at $5.32 billion.

In North America specifically, however, operating profit fell to $562.8 million, down a third from previous levels. Sales in the U.S. in January were down 2.8 percent.

Like other carmakers, Toyota is expected to begin a program of increased incentives to move inventory as it struggles with not only slower sales but loan losses from buyers unable to meet payments in the current U.S. economy.

According to Takeshi Suzuki, Senior Managing Director, however, the rate of default on Toyota loans is only half to a third that of its competitors.