Is Toyota Giving GM a Race for Its Money?

Toyota’s (NYSE:TM) Prius became the world’s third best-selling car line in the first quarter as incentives in Japan and higher U.S. demand turned the niche vehicle into a mainstream hit.

Investing Insights: SAIC First Quarter Earnings Sneak Peek.

Toyota recently extended the Prius name to a four-model “family” of vehicles, while Japan instituted tax breaks that are saving buyers the equivalent of $2,500 or more on their purchase of a Prius, boosting sales of hybrid to 247,230 in the first quarter, trailing Toyota’s Corolla at 300,800 and Ford’s (NYSE:F) Focus at 277,000.

With the hybrid’s improved status after two years of recalls and production disruptions, the Toyota brand gained three of the top 10 models in the U.S. so far this year, including its midsize Camry.

After last year’s earthquake and tsunami, which hindered auto production for Japanese automakers, the government established rebates to encourage purchases of fuel-efficient autos to improve sales for an important industry for the Japanese economy. The new Aqua has become the car of the moment in Japan, helping more than triple Prius family sales in the country to 175,080 in the first quarter.

Though the tax rebates extended to other high-volume car models including Hyundai’s Elantra, Volkswagen’s Golf, Ford’s (NYSE:F) Fiesta, General Motor’s (NYSE:GM) Cruze, and Honda’s (NYSE:HMC) Civic, the Prius line topped them all, according to the companies’ recent figures.

Meanwhile, U.S. Prius sales jumped 42 percent in the first quarter, and 56 percent through April to a record 86,027. Since being introduced in 2000, a total of 1.18 million Prius vehicles have been sold in the U.S.

Global sales increased 125 percent in the quarter.

Don’t Miss: Here’s Why Facebook is Trading at New All-Time Lows.