The German firm sold 10.3 million vehicles in 2016, putting it ahead of the 10.2m from Toyota. Volkswagen recorded a 3.85 sales rise despite ongoing legal claims in the USA over the dieselgate emissions scandal.
Volkswagen CEO Matthias Müller said: "The race for size is not an end in itself. The fact we delivered more than 10 million cars worldwide in 2016 gives us stability. Our present vehicles success is the basis for our intensified efforts with future technologies such as e-mobility, autonomous driving and digitalisation."
Felipe Munoz, Global Automotive Analyst for JATO Dynamics, said: "The emissions issue was an enormous challenge for VW Group. Despite, the reputational issues it brought about, the German car maker was in a strong position when the scandal hit as a result of its strong sales volumes. By leading two of the three largest car markets, Europe and China, VW Group has been able to weather the storm while simultaneously improving its product offering more quickly than its competitors."
There are other reasons why VW has moved ahead of Toyota, as Munoz pointed out: "The other major reason why VW Group is today the biggest manufacturer globally is the gap between the perception of consumers and the reality. Despite the reputational problems, excellent quality standards continue to win over consumers. This has been particularly true for the Audi and Porsche brands."
Munoz also cites China as a major influence on VW’s success: "The Chinese market has remained largely untouched by the scandal with its sales continuing to grow to offset significant declines in Brazil, the USA and Russia. Similarly, the recovery of the European car market enabled VW Group to hold on to the top spot in terms of volume, despite the fact that its market share suffered a small decline."
Looking further ahead, Munoz is confident VW Group will retain its lead over Toyota: "We expect that it will be more positive for VW Group as the Brazilian and Russian markets stabilise and we expect volumes in the US to grow with the launch of models that are expected to appeal to American tastes. On a shorter-term basis, we expect the company to be well positioned to take advantage of the boom in the SUV segment thanks to the launches of the new Volkswagen Tiguan, Seat Ateca and Skoda Kodiaq as the company looks to recover further."
Toyota says it expects its sale volume in 2017 to remain constant at 10.2 million due to the US market reaching peak demand.