Tom Libby, an analyst with J.D. Power and Associates, said industrywide trends have favored Toyota and other Japanese automakers such as Honda and Nissan for some time.

‘I don’t think it was any surprise to anyone. I think it just a matter of time before Toyota passes GM,’ said Libby at the company’s office in Troy, Michigan.

Alan Baum, an analyst with The Planning Edge in Southfield, Michigan, said Toyota had clearly benefited from the perception among American consumers the company’s vehicles are better-built than those offered by the US Big Three: GM, Ford Motor Co. and Chrysler.

‘Quality is a big factor,’ Baum said since Toyota buyers tend to be among the most practicAl minded in the industry.

Toyota also has been helped by macro-economic trends, Baum said.

American buyers are moving out of market segments such as pick-up trucks, standard-sized sport utility vehicles (SUVs) and full-size cars where domestic companies are strongest and into segments such as small and compact cars and small SUVs where Japanese companies led by Toyota have an edge, Baum said.

‘These macro trends are all part of the reason for the shift,’  he said.

In a year-end news conference Friday, Toyota president Katsuaki Watanabe laid out a production target that would see the company overtake General Motors in 2007.

Toyota’s 2007 production target is 9.42 million units, which should surpass the 9.2 million analysts expect the financially struggling GM to build next year, when it is expected to continue to trim production.

A surge in oil prices over the past couple of years has made Toyota’s cars more appealing to many buyers, Watanabe said.