New York  - Japan's Toyota Motor raced past General Motors to become the world's largest car manufacturer, a position that the US car giant has held for 77 years.

GM said Wednesday its sales in 2008 fell 11 per cent, with fourth- quarter sales plunging 26 per cent, as the company lost its world top ranking to competitor Toyota.

Detroit, Michigan-based GM said it sold 8.35 million vehicles last year, of which fourth-quarter sales were 1.7 million.

The 2008 total was some 620,000 lower than Toyota, so that GM for the first time in 77 years ceded its position as the world's largest car manufacturer.

Toyota on Tuesday reported sales of 8.972 million vehicles last year, down 4 per cent from 2007. But it has steadily boosted sales by 70 per cent since 1999, riding high on the demand for fuel-efficient cars.

GM said it had record sales in Asia Pacific, Latin America, Africa and the Middle East, but even these could not offset a 21-per-cent- decline in North America.

US car sales plunged more than 35 per cent in the last quarter of 2008 as consumers struggled to get loans in the current financial crisis, adding to the woes of an industry that has already been struggling to keep up with more fuel-efficient and cheaper foreign competitors.

"The collapse of auto sales in the US completely trumps any joy Toyota may have taken in being the world's largest automobile manufacturer," CEO Mike Jackson of AutoNation Inc, the largest automotive retailer in the US, told Bloomberg TV. "The auto industry is in turmoil."

Fritz Henderson, GM's chief operating officer, said Tuesday that losing the sales race to Toyota wasn't as crucial as returning to profitability and success, Bloomberg reported.

While ahead, Toyota - which reported its first sales drop in a decade, wasn't really celebrating. "There aren't going to be any parties or banners," company spokesman Mike Michels said.

"From the standpoint of consumers, they are pretty oblivious to it. Corporate rankings just don't show up in customer surveys as a reson for purchasing a car," he told Bloomberg.

Last week, GM's chief executive Rick Wagoner said he could not rule out the possibility that the company will need another cash injection from the US government, which threw ailing carmakers a lifeline late last year.

GM and Chrysler LLC were given a 13.4-billion-dollar loan from the government through the end of March, but the loan comes with tough restructuring conditions. GM could get another 4 billion dollars in February.

GM and Chrysler will have to prove they can return to viability or the money could be withdrawn after March 31, likely leaving no option other than bankruptcy. (dpa)