Toyota became the world's leading seller of cars in the first quarter of this year, overtaking US rival General Motors for the first time.
The Japanese group, which began life making weaving looms, said it sold 2.35 million vehicles, a 9 per cent jump, compared with the 2.26 million sold by GM.
Its American competitor, the biggest carmaker for 76 years, saw its own sales rise 3 per cent as it continues its recovery from horrendous losses in the past two years by closing plants and axing 30,000 jobs.
The leap in Toyota's sales, on course to reach a global target of 9.34 million in 2007, is primarily due to booming export deliveries - the Camry is the biggest selling car in the United States - while sales in its stagnant domestic market fell again.
In the year to March 31st, the combined group's sales, including Daihatsu and Hino, fell for the first time in five years.
The figures are bound to raise pressure from within the US Congress on the Bush administration to push the Japanese authorities to take action to strengthen the yen against the dollar.
So far the Americans and their partners in the G7 group of developed economies have refused to intervene overtly.
The shrinking Japanese market was highlighted when Nissan said it would cut 1,500 jobs in Japan, the first time it has reduced local staff in eight years, because of falling sales.
Toyota has been eating into GM's leading share of the US car market as American consumers, worried about rising fuel costs, switch to more eco-friendly, smaller vehicles.
Its American rival is fighting back with new fuel-efficient models, including hybrid vehicles - up to now a Toyota speciality.
Koji Endo, analyst with Credit Suisse in Tokyo, told AP: "Everybody on the road expects Toyota to overtake GM in 2007. I won't say the trend is impossible to reverse but it's extremely difficult."
He added that GM had only achieved sales growth in China, while Toyota's sales were expanding around the globe.
Toyota, normally renowned for its quality, has been forced to recall hundreds of thousands of vehicles, prompting analysts to worry that its breakneck growth is overstretching its resources.
Senior executives constantly say that their aim is not to be the number one seller but to be first for quality while GM's chief executive Rick Wagoner insists that his goal is profit, not sales.
But Toyota is also likely to produce more cars than GM this year, making it the global leader in both output and deliveries.