The German carmaker, which also owns the Audi, Porsche, Skoda and Bentley brands grew global sales by 3,8% to sell 10,3 million vehicles last year, slightly ahead of Japanese car manufacturer Toyota – whose global sales rose by 0,2% to 10,2 million in 2016.

This is the first time that Toyota has lost the crown since 2011, when the company was hit by supply chain disruptions caused by a massive earthquake that led to a tsunami in Japan’s north-eastern region.

Toyota’s slower sales growth also comes at a time where newly sworn-in US President Donald Trump, has heavily criticised the carmaker for its investments in Mexico.

READ MORE: VW to pay $4,3bn for their emissions scandal

The company downplayed their fall from the top spot by saying: “At Toyota, we are focused on chasing volume. We believe that our sales volume is just the result of our focus on making ever-better cars and providing better customer experiences. Our goal is to be number 1 with consumers by engineering and producing ever-better cars.”

The battle between the two carmakers is expected to escalate this year and the winner will be largely determined by sales in manufacturers two largest markets – China and the US.

“The question is how much Toyota can maintain sales in China as the growth rate declines and how much it can hold steady in the US as the market peaks out,” Credit Suisse analyst, Masahiro Akita, told the Financial Times. 

“The development of the US market is set to decide if VW can stay ahead of Toyota this year,” Sascha Gommel, an Analyst at Commerzbank was quoted saying in a Bloomberg report.

READ MORE: VW SA seek bigger black-owned supplier base

“If the Chinese and European markets continue to be solid and the US market weakens as I expect, VW might stay first in 2017 as Toyota has a larger exposure to North America.”

Toyota made more than double VW’s profit in the six months ending September, the latest earnings yet to be reported.

– Additional reporting by Financial Times, Bloomberg