Toyota, in a neck-and-neck race that could dethrone General Motors as the world's top automaker this year, said Tuesday it plans to sell 9.85 million vehicles globally in 2008.

Toyota also said it plans to produce 9.95 million vehicles worldwide during the same year, up five per cent from this year _ the same percentage jump for the automaker's global sales.

Toyota Motor Corp.'s targets, announced at a hotel in Nagoya near company headquarters, far surpasses the 9.3 million vehicles General Motors has given as its estimate for production this year.

GM has not given a forecast for the number of vehicles it expects to produce or sell in 2008.

GM has been fiercely fighting back and boosting its overseas business to try and retain the top industry spot, which it has held for 76 years.

Toyota has grown steadily in recent years, along with the popularity of its models such as the Camry sedan, Corolla subcompact and the Prius gas-electric hybrid.

Soaring gas prices have dramatically boosted the appeal of smaller fuel-efficient models that are Toyota's trademark.

Demand for Toyota models has been growing in almost every region, including the United States, and new markets such as China, South America, Russia and India.

But Koji Endo, auto analyst with Credit Suisse in Tokyo, said next year will likely prove a challenge even for Toyota, as U.S. economic woes weigh on sales and profit. But he said the overall optimism for sales growth is ``reasonable,'' given Toyota's recent performance.

``These are targets Toyota is giving, not forecasts, and so they are reasonable,'' he said.

If Toyota achieves the target given Tuesday, it would put the company far ahead of the industry record of 9.55 million vehicles sold by GM in 1978. GM sold 9.1 million vehicles around the world in 2006.

GM spokesman in Tokyo Michihiro Yamamori declined to comment, saying the Detroit-based automaker's policy is to refrain from comment on its rivals' targets.

Toyota president Katsuaki Watanabe said keeping a balance between quality and quantity will be key to growth.

``These are times when we must change what needs to change but preserve what must not change,'' he said.

``We have always said there can be no growth in quantity without raising the level of quality.''

In August, Toyota set a global sales target of 10.4 million vehicles for 2009.

Toyota also said it is preparing mass-production of lithium-ion batteries for low-emission vehicles.

Lithium-ion batteries, already widely used in laptops and other gadgets, are smaller yet more powerful than the nickel-metal hydride batteries used in gas-electric hybrids like the Prius now.

That battery will not be used in the Prius, on sale for a decade and the most popular hybrid on the market, Toyota said.

The lithium-ion battery will be used in a plug-in hybrid, which would recharge from a regular home socket, and travel longer as an electric vehicle than the Prius. Toyota has started tests on its plug-in hybrid but has not shown a model using the new battery.

Executive vice-president Masatami Takimoto, who oversees technology, said Toyota has developed the lithium-ion battery to a level that it is almost ready for mass-production, although that won't start until sometime after next year.

Watanabe said Toyota expects its U.S. sales to grow next year, despite problems such as the subprime mortgage crisis and soaring oil prices that are likely to crimp overall auto sales. Other overseas regions will also post growth, including China and Russia, next year, he said.

After the first nine months of this year, Toyota was _ at 7.05 million vehicles sold worldwide _ trailing Detroit-based GM's sales of 7.06 million vehicles for the same period.

The final tally for this year's numbers won't be out until January next year.