Toyota stays ahead of Volkswagen in global sales image

Toyota Motor Corp. said Wednesday its group’s January-September global vehicle sales fell 20% from a year earlier, yet the firm still managed to widened the sales gap with rival Volkswagen AG thanks to improved performance in Asia.

General Motors Co., which sold the most vehicles in the quarter ended June, hasn’t released its global sales for the July-September quarter, nor for the first nine months of the year.

Toyota–the world’s largest seller of automobiles in the first half of the year–said its group sold 5.65 million vehicles in the January-September period, less than the 7.05 million it sold in the same term last year, as flagging sales in the U.S., Europe and Japan offset solid sales in China.

Still, the figure–which includes vehicles sold by subsidiaries Daihatsu Motor Co. and Hino Motors Ltd.–exceeded the 4.76 million vehicles sold by Europe’s largest car maker Volkswagen.

In the most recent quarter ended September, the Toyota group sold 2.08 million vehicles, down 7% on year. The fall was limited by growth in China and a rebound in domestic sales in Japan, while the sales decline in the U.S. has eased.

The German car maker closed the gap in the global sales race with Toyota to 100,000 vehicles in the quarter ended June from 400,000 in the January-March period. But, Toyota extended its advantage in the latest three months ended September to 420,000.

The competition between the Japanese and German car makers is intensifying after Toyota posted its first annual loss in 59 years in the fiscal year ended March, following a collapse in auto demand in the U.S. and other major markets. In contrast, Volkswagen enjoyed a 15% rise in net profit for 2008 partly due to its more limited exposure to the crumpled U.S. market.

“In the short-term, Toyota will further boost its sales” as subsidies and tax breaks to promote fuel-efficient vehicles will lift sales of its hybrid cars in Japan, while such government buying incentives have expired in Volkswagen’s home market, Yasuaki Iwamoto, an analyst at Okasan Securities, said.

Even so, the sales gap between the two biggest auto sellers could narrow again once such government steps are gone, while GM will find it hard to increase its global sales significantly as it is reducing production capacity in the U.S., analysts said.

“Where growth will come from is emerging markets. Toyota does not necessarily have strength there” while Volkswagen enjoys its top position in China, one of the auto industry’s red-hot markets, Tatsuya Mizuno at Mizuno Credit Advisory said.