TOKYO (Reuters) - Toyota Motor Corp 7203.T expects a weaker yen to lift net profit to a record high this year, offsetting sluggishness in the United States, the automaker's biggest market where it has been grappling with lower sales and steeper discounting.

Japan’s biggest automaker on Tuesday forecast a 31 percent profit jump for the year through March to 2.4 trillion yen ($22.02 billion), on the back of an expected 10 percent rise in operating profit to 2.2 trillion yen - up from previous forecasts of 1.95 trillion yen and 2.0 trillion yen respectively.

A year after a strong domestic currency wiped out nearly 1 trillion yen from Toyota’s operating profit, the automaker this year sees a positive currency impact of 240 billion yen, softening the blow of expected lower sales in Japan, North America, and Asia.

Reducing development costs by increasing integration between design and engineering teams, and lower expenses for quality-related issues including product recalls, were helping to cut overall costs, but Executive Vice President Koji Kobayashi said more work needed to be done to buffer against yen moves.

“We need to become more resilient to currency volatility,” Kobayashi told reporters at a briefing.

“Even though we have upgraded our forecast ... excluding the currency impact, our operating profit would be down 55 billion yen on the year. That’s unacceptable.”

For the third quarter, Toyota posted 673.6 billion yen in operating profit, a 54 percent jump from a year earlier and its best quarterly operating profit in two years.

FILE PHOTO: A Toyota Motor Corp. logo is seen on a car at the International Auto Show in Mexico City, Mexico November 23, 2017. REUTERS/Henry Romero/File Photo

The result exceeded a mean estimate of 527.22 billion yen taken from 11 analysts polled by Thomson Reuters I/B/E/S, and included a 291.9 billion yen reduction in income taxes, largely resulting from the impact of a cut in U.S. tax.

NORTH AMERICA SLUMP

On a consolidated basis, Toyota sold 2.29 million vehicles globally in October-December, largely flat from a year prior. Sales in Japan rose 3.3 percent but fell 1.3 percent in North America, where the automaker is struggling with heavy discounting as it tries to produce and sell larger vehicles.

Central and South America and other regions were a bright spot for sales, which rose 6.2 percent, while in Europe they rose 1.7 percent.

Operating profit in North America tumbled 73.3 percent.

Toyota has had a bumpy ride in the United States, its biggest market where it trails only General Motors Co GM.N and Ford Motor Co F.N in terms of sales, as automakers continue to angle for higher market share as overall sales retreat from a record high hit in 2016.

Profitability in the U.S. market is key for Toyota to help generate funds as it invests heavily in new technologies including self-driving functions, electric cars and new mobility services.

As U.S. drivers continue to gravitate toward larger pick-up trucks and SUVs over sedans and hatchbacks, Toyota, best known for its Camry and Corolla sedans, has been scrambling to shift more production from cars to trucks.

Meanwhile, it sold its sedans at hefty discounts for much of 2017 to bolster demand for models like the Camry, while also raising incentives on its SUVs and trucks including its popular RAV4, to remain competitive in the U.S. market.

This has lifted overall marketing costs per vehicle by 10 percent in 2017 from 2016, according to figures from Autodata, and making marketing costs a key drag on the company’s profits.