Nov. 6 (Bloomberg) -- Toyota Motor Corp., the world's second-largest automaker, may report net income rose for a ninth straight quarter as higher sales in China and Russia countered lower demand in the U.S.

Net income probably rose 9.4 percent to 444 billion yen ($3.9 billion) for the three months ended Sept. 30 from 406 billion yen a year earlier, according to the average of six analyst estimates compiled by Bloomberg. Sales likely increased 4.6 percent to 6.1 trillion yen, they said.

Toyota increased sales in China, the world's fastest-growing car market, by 57 percent to about 136,000 vehicles in the quarter, helping offset a 5 percent decline in the U.S., the company said. Toyota President Katsuaki Watanabe may raise the carmaker's annual earnings forecast after affiliate Denso Corp. and Honda Motor Co. both said overseas growth will boost profit more than expected.

``Smaller markets have led growth for Toyota as sales in the U.S. and Japan have slumped,'' said Koichi Ogawa, who helps oversee $28 billion at Daiwa SB Investments Ltd. in Tokyo. ``Toyota may follow Honda and Denso in raising its forecast if second-quarter earnings are strong.''

Emerging Markets

Sales in emerging markets including the Middle East and South America have risen at more than twice the pace of North America over the past four years, while sales in Japan have fallen. Toyota reports earnings on Nov. 7 at 3 p.m. in Tokyo.

Toyota will open a factory in Russia to make Camry sedans at the end of the year. It expects to make and sell about 1 million vehicles a year in China by early next decade, compared with a planned 430,000 this year, the company said in August.

Operating profit, or sales minus the cost of goods sold and selling, general and administrative expenses, probably rose 3.1 percent to 599.2 billion yen, according to the analyst estimates.

Toyota declined 0.6 percent to 6,390 yen at the 3 p.m. close on the Tokyo Stock Exchange. The stock has fallen 20 percent this year, compared with a 17 percent gain by General Motors Corp.

In Europe, sales gained 8 percent to 297,000 vehicles on the popularity of the Camry sedan and Yaris compact car in the quarter. Sales in Russia jumped 62 percent in the first nine months of the year.

U.S. Sales

Sales in the U.S., Toyota's largest market, dropped each month of the quarter. The company sold 671,000 vehicles, down 5 percent from the year-earlier period. Sales of the Corolla have declined 4.2 percent so far this year, according to Woodcliff Lake, New Jersey-based Autodata Corp., which tracks the industry.

Toyota has also lost two of its top U.S. executives. Jim Press, the automaker's highest-ranking U.S. executive, quit the company in September to head sales and marketing at rival Chrysler LLC. Jim Farley, who led Toyota's luxury Lexus brand in the U.S., has also left. He agreed to become Ford Motor Co.'s marketing chief last month.

``Falling U.S. sales don't worry us, because the company is strengthening its profitability in other markets like Asia,'' said Atsushi Kawai, a senior analyst at Mizuho Investors Securities Co. in Tokyo. ``The company can cover a drop in demand in the U.S. and Japan with remaining regions.''

GM Lead

GM retook the lead in global sales for the year after Toyota faltered in the U.S. At the end of the quarter, the Toyota City- based carmaker fell behind GM by 10,000 units after leading by 39,000 in the first half. GM is struggling to prolong its 76-year reign as the world's largest automaker.

GM sold 7.06 million vehicles in the first nine months of this year, compared with Toyota's 7.05 million, the two companies said separately last month. Toyota's sales include those of subsidiaries Hino Motors Ltd. and Daihatsu Motor Co.

Toyota stemmed the sales decline in October. U.S. gasoline prices, which have risen 29 percent this year, reached a peak of $3.23 a gallon in May, according to AAA, the U.S. drivers group. Sales of the gasoline-electric powered Prius surged 51 percent, and those of the RAV4 sport-utility vehicle jumped 31 percent, Autodata said.

Honda and Nissan Motor Co. reported higher operating profit for the quarter on overseas sales and a weaker yen and Toyota will gain from the same trends, according to Ashvin Chotai, a London-based analyst for Global Insight Inc.

``Overseas sales and exports from Japan are very strong,'' Chotai said. ``The yen's weakness is another bonus.''

Japanese Yen

The Japanese currency dropped 1.4 percent against the dollar and 8.5 percent against the euro in the second quarter. A 1 yen drop against the dollar and the euro raises Toyota's annual operating profit by 35 billion yen and 5 billion yen, respectively, according to the company.

Net income at Toyota may rise 11 percent to 1.82 trillion yen for the year ending March 31, according to the average of 18 analyst estimates compiled by Bloomberg. The company itself forecast net income of 1.65 trillion yen.

Honda raised its net income forecast by 2.4 percent after it boosted second-quarter profit by 63 percent and benefited from lower tax rates, the company said on Oct. 25. Denso increased its profit goal by 10 percent on rising sales in China and other emerging markets.

To contact the reporter on this story: Naoko Fujimura in Tokyo at nfujimura@bloomberg.net

Last Updated: November 6, 2007 01:50 EST