Volkswagen has overtaken Toyota to become the world's best-selling carmaker, despite its ongoing car emissions scandal. The German manufacturer, which also owns Audi and Porsche, said it sold 10.3 million vehicles worldwide last year.

This puts it ahead of Japan's Toyota, which had topped sales for the past four years, and sold 10.2 million vehicles globally in 2016. It is the first time the German group has held the top spot.

The milestone comes despite VW's scandal over emissions tests cheating, which sparked a global backlash and multiple lawsuits.

Volkswagen saw a 3.8% increase in sales buoyed by demand in China, its second-largest market after Europe.

Toyota's sales grew by 0.2%, though it appears to have suffered from a slowdown in the US car industry. In the US, Toyota's strong seller is the Camry sedan, however the biggest area of growth in the US is among trucks and sport-utility vehicles.

US rival General Motors reports its figures next week, but it is expected to lag behind both the Japanese and the German firms. GM was the world's third-largest carmaker in 2015. It held the number one title in 2011 after Toyota's production was hit by a massive earthquake and tsunami in north-eastern Japan.

Earlier this month VW agreed to pay the US Justice Department $4.3bn (£3.5bn), the largest fine the American government has handed a carmaker. Six of its executives were also indicted for their role in the diesel emissions scandal that has engulfed the German carmaker for 16 months.

The penalty came after VW admitted it installed software into diesel engines on nearly 600,000 vehicles in the US that allowed the engines to turn on pollution controls during government tests and switch them off in real-world driving.

The software, called a "defeat device" because it defeated the emissions controls, improved engine performance but spewed out harmful nitrogen oxide at up to 40 times above the legal limit. Up to 11m vehicles worldwide were fitted with the "defeat devices" to reduce their nitrogen oxide emissions in laboratory tests.

Volkswagen has previously reached a $15bn civil settlement with environmental authorities and car owners in the US, under which it agreed to buy back up to 500,000 vehicles. VW said in October it had set aside €18.2bn ($19.2bn) to cover the costs of the scandal.

Volkswagen has overtaken Toyota to become the world's best-selling carmaker, despite its ongoing car emissions scandal Reuters