If confirmed the yearly loss would be the biggest faced by the company in its 70-year history.
For the latest quarter alone, from October to December 2008, Toyota said it saw an operating loss of $3.97bn.
For the year to March, Toyota officials said they are now predicting a loss of 450bn yen ($4.95bn), a sharp revision downwards from the 150bn yen loss forecast in December.
|Toyota ousted General Motors for the top spot in global vehicle sales last year [Reuters]
Like other Japanese car manufacturers, Toyota has been hit hard by the twin effects of the global slump set off by the US financial crisis combined with the rising value of the yen which has reduced overseas earnings.
Toyota shares have also lost about half their value over the last year amid a plunge on the Tokyo stock market.
Last year the company overtook Detroit-based General Motors Corporation for the first time in terms global vehicle sales, a position the American company had held for 77 years.
Car manufactuers around the world are enduring one of the worst periods in the history of the industry.
Consumers are shunning showrooms as the fallout from the credit crunch and increasing job cuts takes its toll.