Toyota Motors' (NYSE:TM) lead in the auto market may be in jeopardy after it announced it sold 2.34 million vehicles globally last quarter falling short of General Motors' (NYSE:GM) 2.38 million vehicle sales. The news comes after Toyota shares were already trading near their 52-week lows amid a car recall and a declining spot in the Consumer Reports reliability survey.

General Motors saw most of its growth in South America and China - two hot spots that promise to show a continued growth in auto consumption. The U.S. automaker also saw greatly reduced expenses that came as a result of the company's new UAW contract. And finally, small sedans are starting to sell better in the U.S. leading to higher sales than previous quarters.

In the end, Toyota has the higher hand if you look past the number of sales. GM's profitability falls far short of Toyota, which has mountains of cash to invest in R&D and new model development. In fact, a recent study showed that GM made $2,123 per vehicle less than Toyota in 2006. Meanwhile, Toyota's profit per vehicle increased $1,175 in 2005 to $1,977 in 2006.

Overall, Toyota is still the most profitable car company in the world but continues to face several hurdles. Recent recalls and declining ratings may force it to look into its quality assurances practices and make some changes. Meanwhile, competition from GM for customers is certainly heating up and promises to make for an uphill battle. Regardless, TM is definitely a stock to watch at these low levels!

Related Companies
General Motors (GM)
Ford Motors (F)
Honda Motors (HMC)