US auto sales jump, upswing seen for 2011

US auto sales rose to the highest rate in 16 months in December -- topping industry and Wall Street expectations -- as major automakers forecast the recovery would gather momentum in 2011.

Auto sales results are one of the first snapshots of US consumer demand and stand as the latest in a string of indicators including unexpectedly strong factory orders for November pointing toward growing confidence in the recovery.

US auto sales rose more than 11% in 2010, snapping a four-year slide that forced the Detroit automakers into a wrenching restructuring that included government-directed bankruptcies for GM and Chrysler.

In a year-end surge that took the industry by surprise, the annualized sales rate for December jumped back above 13 million vehicles, according to initial data from major automakers.

That sales level was last seen consistently in 2008, before the financial crisis. Major automakers, including Ford and GM, said they expected that sales for 2011 could top the 13 million vehicle mark on a full-year basis.

"It was stronger than we thought," Ford sales analyst George Pipas said of industry-wide sales for December.

General Motors Co's sales rose 7.5% from a year earlier. Ford Motor Co's sales rose 6.7% and the carmaker overtook Toyota Motor Corp as No. 2 in the US market.

The gains for the top US automakers underline the stunning turnaround in the fortunes of GM and Ford in the past year.

Shares of Ford, which avoided a bailout, have gained more than 70 percent over the past year.

Shares of GM are up 13% from a November initial public offering that marked the automaker's re-emergence as a listed company after a US government bailout.

GM shares were up 1.6% at USD 37.65 and Ford stock was up 0.2% at USD 17.28 on Tuesday afternoon.

Toyota, which has been struggling with the aftermath of a safety crisis that surfaced in late 2009, posted a sales decline of almost 6 percent in December.

For all of 2010, Toyota sales were almost flat from 2009, a point when industry-wide sales were at the lowest level since the 1980s.

Other major automakers posted double-digit percentage gains for December. Chrysler sales rose 16% and Nissan Motor Co sales rose 28 percent.

Hyundai Motor Co's sales gained 33%. Its affiliate Kia Motors posted a 45% gain, continuing a trend that has seen the Korean brands take share from rivals in a recovering US market.

Confidence on the rise

Al Castignetti, the head of Nissan brand sales in the United States, said US consumers appeared to be much more confident in shopping for new cars after delaying those kinds of big-ticket purchases for months.

"I think people are a lot more confident in making big purchases now. That's the story of the fourth quarter," Castignetti told Reuters. "I think we're going to see slow, steady growth."

GM and Ford both reported a jump in sales to retail customers, sales of cars and trucks to individual shoppers that are considered the best indicator of underlying demand.

GM expects industry-wide sales of light vehicles of about 12.7 million to 13.2 million vehicles in 2011.

The top US automaker said it expected a gradual industry sales recovery in the United States, but not a return to boom levels of earlier this decade when the automakers totaled close to 17 million vehicles.

"If you start to look around the 15 million mark, maybe the 16 million mark, that's probably in the realm," GM U.S. sales chief Don Johnson said on a conference call. "But quite frankly, at this point, we don't know."

Ford forecast U.S. auto industry sales for 2011 at about 12.2 million to 13.2 million vehicles after excluding medium and heavy trucks with the U.S. economy growing by between 3 percent and 4 percent.

Ford said it expects global sales to recover by an even larger margin, hitting a record level of between 75 million and 85 million vehicles in 2011 from about 72 million in 2010.

"The global economy is reaching a dynamic phase," Ford chief economist Ellen Hughes-Cromwick said in a statement.

The engine of growth for the global auto industry is expected to remain developing markets led by China and India.

Car sales in India were reported strong in December with Fitch expecting sales growth of up to 15% in 2011 driven mainly by a growing middle class and more financing opportunities.

Economists surveyed by Reuters had expected automakers to report sales at a 12.3 million vehicle annualized rate in December.