U.S. auto sales jump, upswing seen for 2011

By David Bailey

DETROIT | Tue Jan 4, 2011 2:46pm EST

DETROIT (Reuters) - U.S. 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 U.S. 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.

U.S. auto sales rose more than 11 percent 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 percent from a year earlier. Ford Motor Co's sales rose 6.7 percent and the carmaker overtook Toyota Motor Corp as No. 2 in the U.S. market.

The gains for the top U.S. 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 percent from a November initial public offering that marked the automaker's re-emergence as a listed company after a U.S. government bailout.

GM shares were up 1.6 percent at $37.65 and Ford stock was up 0.2 percent at $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 percent and Nissan Motor Co sales rose 28 percent.

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