Toyota, the world’s biggest carmaker, made a loss of 77.8bn yen ($818m; £483m) in the three months to the end of June as global car sales slumped.
But it also upgraded its outlook for the rest of the year, saying losses would total 450bn yen rather than the 550bn yen it forecast previously.
Toyota has cut production, including its UK plants, as sales have declined.
“My first impression of the results is that they are better than expected,” said Tatsuo Yoshida at UBS.
“Sales in Asia exceeded my prediction while sales in other markets were mainly in line with expectations.”
Analysts also said the company could make a profit during the July to September quarter.
“Sales and production are likely to increase thanks to government incentive measures.
“I think the first quarter was the bottom for Toyota and it is likely to return to profitability on a quarterly basis around the third quarter,” said Kazuyuki Terao at RCM Japan.