Toyota held on to its lead over Volkswagen in the first quarter league table of global new vehicle sales, but the gap is closing.

Toyota said its group-wide sales fell by 27% to 1.767 million vehicles, while Volkswagen was 11% down at 1.4 million vehicles.

Volkswagen is benefiting from government stimulus plans for the car industry that have boosted demand in Germany, China and Brazil, its three biggest markets that together accounted for half of all group sales in the first quarter. In contrast, demand in Toyota’s main markets is falling, but could be boosted if – as is expected – the USA and Japan decide to launch a scrappage incentive scheme.