CHICAGO, April 1, 2008 (AFP) - Japanese auto giant Toyota on Tuesday said its sales in the United States slipped 3.4 percent in March, dragged down by falling demand for its luxury Lexus vehicles.

The US subsidiary Toyota Motor Sales announced March sales of 217,730 vehicles, a decrease of 3.4 percent from a year earlier.

Toyota, which overtook Ford Motor Co. last year for the number two spot in the US market, said its Toyota division posted March sales of 192,791, a decrease of 2.9 percent from March 2007.

The Lexus division saw March sales skid an annual 6.9 percent lower to 24,939 units.

Passenger car sales rose 1.5 percent to 114,897 units, led by the Camry sedan, which posted best-ever March sales of 40,487, an increase of 3.2 percent over the same period last year.

Customers showed a growing interest in fuel-saving cars as gasoline prices surged. Toyota said its Prius hybrid, a gas-electric mid-size sedan, posted record March sales of 20,635 units, an increase of 16 percent from March 2007.

Sales of the Camry Hybrid jumped 45 percent to 6,930 units in March.