By Eric Pfanner 

TOKYO-- Toyota Motor Corp. hung on to its position as the world's top-selling auto maker last year, but said Wednesday it expects sales to slip this year, putting Volkswagen AG in a position to take the crown.

Toyota said it sold 10.23 million vehicles in 2014, up 3%, including cars and trucks from its Lexus, Daihatsu and Hino brands. That was slightly ahead of Volkswagen, which sold 10.14 million vehicles last year, up 4%. General Motors Co. came third, at 9.92 million, up 2%.

But Toyota said it expected sales to fall by 1% this year, to 10.15 million vehicles. Volkswagen and GM haven't released forecasts, but analysts say Volkswagen is likely to show continued gains, allowing it to take top spot, which Toyota has held for three straight years.

IHS Automotive, a research firm, forecasts sales of 10.07 million this year for the German car maker, compared with 9.51 million for Toyota. IHS includes slightly narrower vehicle categories and market coverage in its forecasts, accounting for the lower numbers.

Volkswagen, which passed the 10 million mark last year for the first time, has been expanding aggressively in China in an effort to unseat Toyota as the world's largest auto maker.

Toyota has held that position since 2012, when it took over the top spot from GM. Toyota has been helped by buoyant sales in North America, but the company's growth in China, the world's largest auto market, has lagged.

Volkswagen says its sales in China rose 12% to 3.68 million vehicles in 2014, while GM's China sales rose 12%, to 3.54 million. Toyota sold just over than a million cars in China last year, up 12.5%.

"My guess is that at some point VW does pass Toyota, simply because VW is a lot bigger than Toyota in China," said Christopher Richter, an analyst at CLSA.

But forecasts are complicated by a slowdown in sales growth in China. IHS expects sales to total 24.9 million vehicles this year, up 7%, but predicts that the rate of growth will slow from 15% in 2013 and 9% in 2014.

Other markets in which Volkswagen is strong, such as Brazil, have also struggled, while Southeast Asia, where Toyota is bigger, has been volatile, with pronounced weakness in Thailand.

Under President Akio Toyoda, who took over in 2009, Toyota has prioritized profitability over sales growth, after an expansionary phase resulted in overcapacity. Mr. Toyoda has pledged not to build any new plants before 2016.

"It's benefited them quite a bit not to have any expansion projects and to sweat the assets they already have," Mr. Richter said.

Following a plunge in the price of oil that has revived demand for pickup trucks and other gas-guzzling vehicles in the U.S., Toyota's sales could be held back by limits on its ability to ramp up production, Mr. Richter said.

Toyota also said it expected a 9% drop in sales in Japan, where the auto market hasn't fully recovered from an increase in the consumption tax last year.

Yoko

Kubota

contributed to this article.

Write to Eric Pfanner at eric.pfanner@wsj.com

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