Japan’s champion had already been overtaken by Germany’s Volkswagen AG (VLKAY) as the world’s biggest automaker by sales in the first half of the year. Now it’s also fallen short of expectations in its earnings for the first quarter of its fiscal year.

Operating profit rose 9.1% to 756 billion yen ($6 billion) in the three months to June, from 693 billion yen a year earlier, but that was still less about 5% less than analysts had forecast (and a touch less than the 9.3% rise in revenue, implying a drop in basic profit margins).

Although the group still posted a record first-quarter net profit for the third straight year, it had to thank a 34 billion yen boost from the yen’s depreciation against the dollar and euro over the last year, which made its exports more profitable. But even with that tailwind, its sales in the U.S. rose only 1.7% in the quarter, lagging the 3.3% growth posted by the overall market.

The stock market wasn’t impressed, sending the company’s shares down 1.0% while the Nikkei 225 index lost only -0.1%.

Global sales in the three months to June were down nearly 6% from a year earlier at 2.114 million vehicles (North America was the only region where they rose). They continue to be held back by a self-imposed halt on increasing production capacity aimed at preventing quality problems. The automaker lifted the three-year freeze in April with plans for plants in Mexico and China. Like many other carmakers, it suffered from the slump in Russia, where sales fell 38% from a year earlier in the first half.

Sales in China, the world’s biggest auto market, have also been hit by intensifying price competition, especially for the RAV4 sport utility vehicle (SUV) as car makers seek to capitalise on a vogue for SUVs. SUVs are expected to become more important in the Chinese market as saturation of the more developed market in the south and eastern provinces puts the focus on selling into less-well developed central and northern China, where roads are often of a lower quality.

Toyota’s sales with its Chinese joint ventures declined 0.1% in January-March. That featured in Tuesday’s earnings as Toyota reports Chinese income one quarter later, and books them at net level under U.S. accounting rules.

The Japanese automaker left its net profit forecast for the year ending March unchanged at 2.25 trillion yen, and raised its revenue guidance slightly to reflect higher-than-expected currency gains.

(Reuters contributed to this report.)