Oct. 3 (Bloomberg) -- Toyota Motor Corp.'s U.S. sales surged 25 percent in September on demand for fuel-efficient cars and an incentive-fed jump in truck sales. Most of its biggest rivals posted declines.

It was the steepest percentage gain in 17 months for Toyota, the world's second-largest carmaker behind General Motors Corp., and its 16th consecutive monthly sales increase. GM reported a 3.1 percent drop and announced deeper cuts in fourth-quarter production. Industrywide, U.S. sales rose 1.9 percent from September 2005 to 1.35 million vehicles.

Toyota has posted higher sales than DaimlerChrysler AG for six consecutive months, making it the third-biggest automaker in the U.S. by sales this year. Ford Motor Co., Chrysler and GM have struggled this year as high fuel prices smothered demand for pickup trucks, sport-utility vehicles and minivans.

``The momentum Toyota has had the past few months is phenomenal,'' said David Hilton, senior manager of Cap Gemini SA's Americas automotive consulting practice. ``It doesn't look like anything can stop them, or even slow them down.''

Ford's sales rose 4.7 percent on a 26 percent jump in passenger cars, while DaimlerChrysler and Honda Motor Co. reported declines from year-earlier levels.

Ford's increase ``is going to give them some breathing room,'' said Jim Sanfilippo, an analyst at Automotive Marketing Consultants in Bloomfield Hills, Michigan. The company had a first-half loss of $1.44 billion.

Market Share

Toyota's sales gains, which boosted its share of the market by 3.1 percentage points to 16.5 percent, were led by smaller models including the Prius hybrid-electric hatchback, and Corolla, Yaris and Scion cars, the company's U.S. unit said.

Automakers sold cars and light trucks in September at a seasonally adjusted annual rate of 16.6 million, compared with 16.5 million during the same month last year.

The market share of U.S. automakers, excluding their Europe- based brands, fell to 53.4 percent from 54.9 percent, according to data compiled by Bloomberg.

Asian automakers saw their market share increase to 39.9 percent from 38.2 percent. Asian automakers collectively have gained U.S. market share for 14 consecutive months, their longest streak in more than five years.

Toyota Trucks

Toyota also boosted light truck sales 35 percent from a year earlier, led by a 74 percent gain for full-size Tundra pickups and a 43 percent jump for the large Sequoia SUV.

Incentives, including cash back and low interest rates, were added for both models last month, Toyota spokesman Xavier Dominicis said.

Average rebates on Tundra pickups jumped to $3,304 last month through Sept. 24, compared with $2,912 in August, said Tom Libby, a market analyst with J.D. Power & Associates. Sequoia discounts rose to $3,154, up $954 from August, he said.

``Toyota has been spending money,'' said George Magliano, director of auto research at Global Insight Inc. ``They're doing it selectively, and on the truck side.''

DaimlerChrysler's sales fell 2.3 percent. Honda sold 4.1 percent fewer vehicles last month than they did a year earlier. Sales for Nissan Motor Co. slid 5.6 percent

Ford's sales increase breaks a streak of seven consecutive monthly drops. It included a 21 percent rise for the Focus small car and a 31 percent gain for the Mustang sports car.

Shift to Cars

``There's a huge shift this year to cars, which won't be undone because there aren't enough months left,'' said Alan Baum, director of forecasting at Planning Edge, a Birmingham, Michigan- based consulting firm.

GM reduced its fourth-quarter North American production forecast to 1.11 million cars and light trucks, down 20,000 vehicles from the projection it issued last month. Under the revised forecast, GM is now cutting output by 13 percent from a year earlier.

The U.S.-based automakers' reliance on trucks for a majority of their U.S. vehicle sales has helped Asian automakers gain market share this year. Gasoline prices have fallen over the past two months to $2.30 a gallon yesterday from $3 earlier this year, according to AAA data.

``We're keeping our fingers crossed the recent'' decline in fuel prices will hold, GM sales analyst Paul Ballew said on a conference call today.

Fleet Sales

Sales of the Ford Taurus, which is mostly bought by rental- car companies, jumped 64 percent. Ford is discontinuing the model at the end of this month. Company sales analyst George Pipas said sales to retail customers rose 6 percent, while those to fleets increased 4 percent in September.

GM reduced its less profitable fleet sales to 27 percent of the total last month, from 30 percent a year earlier. Ballew said GM spent an average of $3,400 per vehicle on sales incentives, unchanged from August and down about $700 for the year.

At Honda, declines were led by Accord sedans, Civic small cars and Element wagons. Nissan's sales drop, the 11th in 12 months, included a 25 percent drop for the Altima and 12 percent for Sentra cars. Both models will be replaced with new versions over the next month.

While Ford's overall truck sales fell 5.4 percent, some models recorded increases in September. That included a 1.7 percent gain in F-Series pickup trucks, which accounts for more than a quarter of Ford's U.S. vehicle sales, and a 22 percent rise in Explorer mid-size SUV sales.

``The F-150 still looks pretty good,'' Sanfilippo said.

Katrina Effect

GM's and Ford's sales in September 2005 fell more than 20 percent after they ended so-called employee discount programs and Hurricane Katrina's devastation cut truck demand. Chrysler's September 2005 sales fell 4 percent.

Ford earlier today announced a new incentive program that will last through the end of the month. The company is offering, no-interest, five-year loans on 2006 F-150, Super Duty and Ranger pickups. The automaker also will offer low-interest financing on 2007 versions of the pickups.

Chrysler said today it will offer up to $6,000 in rebates or no-interest loans for 60 months on its 2006 cars and trucks through the end of October. The program excludes the Chrysler 300, Dodge Charger and Dodge Magnum.

Some automakers, including GM, report adjusted results based on daily selling rates. There were 26 sales days last month, one more than in September 2005. Bloomberg reports unadjusted sales comparisons, which for September are about 4 percentage points higher than adjusted figures.

To contact the reporters on this story: Bill Koenig in Southfield, Michigan, at wkoenig@bloomberg.net; Alan Ohnsman in Los Angeles at aohnsman@bloomberg.net

Last Updated: October 3, 2006 17:21 EDT