Toyota (NYSE: TM) has had a hard few years. Between the unintended-acceleration recall debacle that tarnished its reputation, and the March 2011 tsunami that devastated key suppliers and hindered its global production for months, the last several quarters have been mostly forgettable ones for Japan's largest automaker.

Lately, Toyota is doing a good job of helping investors forget about its troubled recent past. The Japanese giant reported net second-quarter income of 290.3 billion yen, or $3.7 billion.

That's a tremendous result, well above analyst estimates, driven by a 60% rebound in revenue from the tsunami-hindered year-ago quarter -- when Toyota managed just $15 million in net profit.

But Friday morning brought even bigger news: As good as things have been in the past few months, Toyota is betting that they can get even better.

Race for the global crown
Toyota fell behind General Motors (NYSE: GM) in the race for the global sales crown in 2011, but it's coming on strong this year. Through the first half of 2012, Toyota led GM -- and Volkswagen (OTC: VLKAY), which is also coming on strong -- in global sales, thanks to a 34% increase in total sales around the world. Its first-half-sales total of 4.97 million was about 300,000 ahead of GM and 520,000 ahead of VW.

But can Toyota sustain that lead? It's sure going to try. Toyota said on Friday that it had raised its global sales forecast to 9.76 million vehicles for the full year, up from an earlier target of 9.58 million -- a number that seemed ambitious just a few months ago.

Toyota's betting on more than just a strong recovery from last year's natural disasters, and with good reason. Its new Camry sedan, launched here in the U.S., late last year, has had great success: It's now the best-selling car in the U.S., and the second-best selling vehicle of any kind after Ford's (NYSE: F) F-series pickups. Toyota's total sales in the U.S. were up 48% in the second quarter, paced by the Camry and strong results for the Prius hybrid.

Meanwhile, at home in Japan, where Toyota dominates the local market, sales of the Prius have been very strong as Toyota nearly doubled its year-ago delivery totals. After tsunami-related disruptions last year limited availability of top Toyota and Honda (NYSE: HMC) models, pent-up demand led to a 54% increase in auto sales in Japan through the first half of 2012, a wave that Toyota has been happy to ride.

A big Toyota advantage
Toyota's global prospects -- and its profits -- relative to GM and VW are helped by its small presence in the market that is bedeviling both of its key competitors: Europe. While GM lost $361 million in Europe in the second quarter, a number that's likely to rise as the year goes on, and market leader VW cuts prices to battle local rivals for a dwindling number of customers, Toyota's exposure to the region and its structural woes is relatively insignificant -- a good thing, at the moment.

Meanwhile, Toyota continues to gather strength in China, the world's largest car market. Chinese consumers, like their counterparts elsewhere, have proven to be big fans of Toyota's reputation for dependability and durability. Toyota has also done quite well in the region's emerging markets: Profits from Asian markets outside of Japan, including China, were up 69% during the quarter.

Toyota's ability to adjust to the strength of the yen has also helped. At one point, Toyota executives said they were losing some $4,000 in profit per vehicle sold in the U.S. because of the yen's strength. Back then, Toyota's financial plans assumed an exchange rate of 90 yen to the dollar -- a level not seen since mid-2010. Toyota reiterated on Friday that its current plans assume an exchange rate of 80 yen to the dollar, close to current levels.

The upshot: Godzilla is back
Whether or not Toyota manages to regain the global sales crown in 2012 -- and right now, its odds of doing so look very good -- it's clear that the company is back on form and firing on all cylinders. While its profits trail Volkswagen's whopping $6.83 billion second-quarter total, Toyota's quarterly earnings dwarfed those of GM -- a strong showing considering the Japanese firm's exchange-rate disadvantage.

Toyota continues to gather strength, while GM's stock is currently hovering near its post-bankruptcy low. But GM could have significant upside in coming months, as new products hit showrooms and improvements continue around the world. However, investors need to stay attuned to fluctuating demand and the ability of automakers, like GM and Ford, to respond in unison. For starters, one of our top equity analysts has compiled a premium research report with in-depth analysis on Ford's competitive edge. To find out what could propel Ford down the road, get instant access to this premium report now.