April 24 (Bloomberg) -- Toyota Motor Corp. surpassed General Motors Corp. in first-quarter sales of cars and trucks, threatening GM's 76-year reign as the world's biggest automaker.

Toyota's first-quarter sales rose 9.2 percent to a record 2.35 million vehicles, the company said today. GM's sales gained 3 percent to 2.26 million vehicles, also a record, the Detroit- based automaker said last week. GM outsold Toyota 9.1 million to 8.8 million for all of last year.

Toyota overtakes GM 50 years after exporting its first passenger car to the U.S. The Toyota City-based automaker is relying on record imports and six North American plants to gain on GM in its home market. GM, after losing $12.4 billion in the past two years, is ceding lower-margin U.S. sales to rental-car companies and cutting incentives as it tries to return to profit.

``It's not about market share and it's not about world domination, it's about making a profit,'' Rebecca Lindland, an analyst at Lexington, Massachusetts-based Global Insight, said in an interview. ``It's a difficult pill to swallow, but GM really needs to get their house in order and their sales are going to have to drop to do that.''

Toyota commanded a 15.6 percent share if the U.S. market in the first quarter, up from 9.3 percent in 2000. GM's share fell to 23.1 percent from 28.1 percent seven years earlier. GM is trying to cut sales to rental-car companies by 120,000 this year.

Demand for Toyota's fuel-efficient vehicles, including the Prius gasoline-electric hybrid, has increased as rising fuel prices pressured GM's light-truck sales.

`Sooner or Later'

``Toyota was poised to top GM sooner or later because its momentum is much stronger than GM's,'' said Ichiro Takamatsu, a chief investment officer at Alphex Investments Co. in Tokyo. ``I'm not worried that this will cause trade conflicts, as Toyota is creating jobs by building new plants in the U.S.''

Toyota's sales in the U.S. grew 13 percent to 2.54 million last year, prodding it to set up more factories. The carmaker in February said it will open its eighth North American factory in Mississippi in 2010 to build Highlander sport-utility vehicles.

GM's U.S. market share is at an 81-year low, and 2006 sales were the lowest since 1970. GM is cutting North American production by 1 million units and closing 12 North American locations by the end of 2008.

The Detroit automaker's worldwide sales overall fell less than 1 percent to about 9.1 million units last year, from 9.17 million in 2005. Toyota's 2006 sales grew 8 percent to 8.8 million and it expects to sell 9.34 million vehicles this year.

GM's Strategy

GM will shore up its position in the U.S. and emphasize growth in other markets, which accounted for 55 percent of its sales last year, Chief Executive Officer Rick Wagoner said in an interview last week from Shanghai. He wouldn't concede that Toyota will end the year ahead of GM.

``That's the way we're going to fight off Toyota and every other competitor, to have a good position in our traditional markets and grow rapidly in the markets that are growing,'' Wagoner said.

GM may increase production to as many as 1.7 million vehicles by 2010 from about 900,000 now in China, its largest overseas market. The automaker said last year its investment in the world's fastest-growing major car market may exceed $1 billion annually. Wagoner is seeking to boost sales in emerging markets such as Russia, India and China.

`Not the Goal'

Toyota sales include those of subsidiaries Daihatsu Motor Co. and Hino Motors Ltd. Toyota production in 2007 will rise 4 percent to 9.42 million vehicles, the carmaker said in December.

Surpassing GM is ``not the goal, and it will only be a result of what we've been doing,'' said Toyota President Katsuaki Watanabe on Dec. 22.

GM's shares have increased 41 percent in the past 12 months through yesterday as the company offered workers buyouts and took other revival steps. They rose 10 cents today to $30.77 at 4:21 p.m. in New York Stock Exchange composite trading.

Shares of Toyota, which have risen sixfold in the past 20 years, fell 0.5 percent to 7,370 yen at the end of trading in Tokyo, giving the company a market value more than 13 times the size of GM. GM shares are worth 10 percent less than they were on April 24, 1987.

U.S. Sales

``It was obvious that Toyota was going to beat GM this year, but this is much earlier than expected,'' said Yasuhiro Matsumoto, a senior analyst at Shinsei Securities Co. in Tokyo.

Toyota makes Tundra pickup trucks at its new San Antonio factory and is building its seventh North American plant in Ontario, Canada. The company has said it plans to be able to build 2 million vehicles a year in North America by 2008, up from about 1.5 million in 2006.

Toyota increased capital spending by 1.4 percent to a record 1.55 trillion yen ($13.1 billion) in the year ended in March from a year ago. The automaker is also boosting production in countries including Russia, China and Thailand.

The carmaker has said net income probably rose 13 percent to 1.55 trillion yen in the year ended March 31, while sales probably gained 10 percent to 23.2 trillion yen.

GM last month reported fourth-quarter net income of $950 million, its second quarterly profit in two years, after it closed plants, eliminated jobs and trimmed health-care spending.

Pump prices for gasoline in the U.S. rose 33 percent in the past 11 weeks, the fastest rate of gain since a six-week, 34 percent rally to the record $3.069 in September 2005, Energy Department data show.

``Toyota has been successful in introducing about 10 new models every year, while GM has been slow,'' said Koji Endo, a senior analyst at Credit Suisse Group in Tokyo. ``GM is slowing down in North America, while in Europe, its Opel brand is weak. The only strong market in Asia at the moment is in China.''

To contact the reporters on this story: Kae Inoue in Tokyo at kinoue@bloomberg.net; Tetsuya Komatsu in Tokyo at tekomatsu@bloomberg.net

Last Updated: April 24, 2007 16:24 EDT