Toyota sold 7.4 million vehicles around the world in the first nine months of the year, up 28 per cent from a year earlier, but its strong growth faces headwinds from a sales plunge in China that could unseat it as the world's top automaker.
Anti-Japanese sentiment flared in China after Japan nationalised tiny islands in the East China Sea, called Senkaku in Japan and Diaoyu in China, intensifying a territorial dispute.
The move set off violent protests in China and a widespread call to boycott Japanese goods. The islands are administered by Japan but also claimed by China and Taiwan.
Toyota's vehicle sales in China dropped to about half of last year's levels in September to 44,100 vehicles from 86,000 the year before.
In August, Toyota sold 75,280 vehicles in China, down 15 per cent.
Toyota reclaimed its crown as the world's top automaker from General Motors (GM) in the first half, selling 4.97 million vehicles globally.
That marked a turnaround for Toyota, which had suffered setbacks in recent years from massive recalls and natural disasters.
Toyota had planned to sell a million vehicles in China this calendar year.
But the company no longer expects to achieve that number. It has not given a new target.
Over the first half of the year, Toyota sold about 300,000 more cars and trucks than GM did.
Initially, that kind of lead was seen as large enough to make it difficult for GM to catch Toyota in the final six months of 2012.
GM said it sold 4.67 million vehicles during the first half. It's set to give its January-September numbers on October 31.
Nomura Securities auto analyst Masataka Kunugimoto expects Toyota's China sales to gradually recover, reaching 900,000 vehicles for the year, even if they fall short of a million.
He expects GM and other non-Japanese manufacturers to get a lift in sales as buyers avoid Japanese products.
"But we don't expect this kind of drop to continue," he said. "The Chinese market is still growing."
Toyota's production was hit by the earthquake and tsunami in northeastern Japan last year and then by flooding in Thailand.
Its sales were also dented by massive US safety recalls, totalling more than 14 million vehicles since the quality control problems emerged three years ago.
GM was No.1 in world auto sales last year.
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