The Japanese firm said it sold 6.78 million cars worldwide in 2003, against Ford's 6.72 million.

Toyota has advanced rapidly in the US, where it knocked Chrysler out of the top three, while in Asia's wildfire markets US vendors have lagged.

The news came as Japan reported a 40% rise in its trade surplus, despite pressure from the strengthening yen.

Exports outstripped imports in December by 1.1 trillion yen ($10.4bn; �5.7bn), making sixth straight months of gains and reinforcing the impression of a recovery in the country's tattered economy.

Turnaround

Admittedly, Ford's figures - while including a raft of marques - do not count Mazda, of which it owns 33% and which sold a million cars worldwide in 2003.

TOP CARMAKERS IN 2003 1. GM: 8.59 million 2. Toyota: 6.78 million 3. Ford: 6.72 million

But even so the numbers will be a severe embarrassment for Ford, which has held the number two spot behind larger Detroit rival General Motors for as much as 70 years.

Toyota, whose sales were up 10% last year, now has about 11% of the world market for automobiles, with a target of reaching 15% in the next ten years.

Its profits are rising sharply, to about $7bn in the year to March 2003 - the best in the business.