Image:
David Zalubowski  /  AP
The Ford Co. logo is seen on a 2010 Ford F-150 pickup. Thanks in part to robust sales of the truck, Ford reported a 2010 sales increase of 15 percent.
updated 1/4/2011 7:05:45 PM ET 2011-01-05T00:05:45

Auto sales rose in the United States last year for the first time since the recession. They're still far from what they were just a few years ago — but that's just fine with the downsized auto industry, which can post profits even if it sells millions fewer cars and trucks.

For the year, new car and truck sales came in at 11.6 million, up 11 percent from last year, automakers reported Tuesday. For December alone, sales were 1.14 million, also up 11 percent from a year earlier.

While the figures have some in the industry talking about a return to the glory days, it's a fragile idea. Rising gas prices or more economic trouble could still shake the confidence of American car buyers.

But for now, executives are optimistic about this year. General Motors, Ford and Toyota all predict sales will come in at 12.5 million to 13 million for 2011. It will take years, analysts expect, to get back to the peak sales of 17 million reached in the middle of the decade.

"The economic downturn has lasted quite a while," says Jessica Caldwell, director of pricing and analysis for consumer website Edmunds.com. "It's going to be slow and gradual rather than a fast bounceback."

  1. More must-see stories
    1. The Hartford Courant, Political
      Wild Wall St.

      Has the market volatility got you nervous? These cartoons may give you a little comic relief.

    2. Cyber-thieves create fake Kelley Blue Book site
    3. US says Reebok toning shoes don't really
    4. Can you live on $9 an hour? Play the game

Toyota was the only company that sold fewer cars and trucks than in 2009. The company was stung by sudden-acceleration recalls in early 2010 and never fully recovered despite luring buyers with generous incentives. Production problems at its San Antonio plant cut its supply of Tundra and Tacoma pickup trucks, and troubles importing the Prius hybrid also hurt sales. The company lost nearly two percentage points of market share, slipping behind Ford to rank third in the U.S.

"We're coming off what was arguably the most challenging time in our 53-year history," says Don Esmond, senior vice president of Toyota's U.S. operations. He says he is optimistic that sales will rebound in 2011.

U.S. automakers are relieved to have the past two years behind them. When the financial crisis hit in the fall of 2008, car sales plummeted. GM and Chrysler were on the brink of death, saved by a $60 billion government bailout and speedy bankruptcies that helped both companies close plants and eliminate debt. Ford didn't declare bankruptcy or take a bailout, but it closed plants, laid off employees, and worked to lower its overall cost structure.

As a result, those companies can now make money even if sales hover below pre-recession levels.

Over the past two years, many Americans, even those who had enough money to buy a car during the recession, had been wary to commit to monthly car payments, so they put off making such a large purchase. Many opted to repair or make do with what they had.

Those buyers are easing back into the market, replacing aging vehicles. The average vehicle on U.S. roads is now 10.2 years old — the oldest since 1997 and a full year older than in 2007, before the recession, according to the National Automobile Dealers Association.

"With 240 million vehicles out there on the road, a lot of them are going to be ripe for replacement," says Ellen Hughes-Cromwick, Ford's chief economist.

Auto sales peaked in 2005 at 17.4 million and bottomed out at 10.6 million in 2009. The peak was fueled, in part, by big incentives — like the employee-discounts-for-everyone schemes that were popular in the summer of 2005. But those deals may be a thing of the past.

Don Johnson, vice president of U.S. sales for GM, says GM expects sales eventually will creep back up to 15 or 16 million, but not much higher. Car companies have downsized and they're producing fewer vehicles, so they don't have to resort to costly incentives in order to clear out inventory. Also, buyers have been spooked by falling home prices and high unemployment — fears that could have a lasting effect on buying patterns.

Gas prices should go up in 2011, which could change the kinds of cars buyers want. After moving away from large trucks and SUVs when gas prices spiked in the summer of 2008, Americans turned back to bigger wheels in 2010, and SUV and truck sales rose again. Car sales made up 49.8 percent of sales in 2010, while truck sales made up 50.2 percent. And trucks and SUV sales keep growing: In December, they made up 54.3 percent of total sales. That was despite gas prices that topped $3 a gallon.

"Buying behavior doesn't change dramatically unless gas prices change dramatically," says Rebecca Lindland, director of automotive research with IHS Automotive. "If they gradually increase, people adjust."

That's because Americans love their SUVs, says Jesse Toprak, vice president of industry trends and insight for the automotive website Truecar.com. The trend will continue unless gasoline rises above $3.50 per gallon, Toprak predicts.

The figures include only sales made in the United States, and don't count sales made by U.S. automakers in other parts of the world. Globally, auto sales should hit around 65 million this year.

The U.S. car market is considered the most profitable market in the world, because buyers tend to pay higher prices for vehicles and opt for add-ins that bring up the cost.

The Associated Press and Reuters contributed to this report.

Explainer: 10 new car companies to look out for

  • Image: Saba
    Saba  /  Saba

    Like a big-budget sports team on a free-agent acquisition binge, the car industry has been rapidly acquiring new players. And as there’s no overpriced ball park program for car buyers to work from, we thought we had better put together a guide to the rookies.

    As usual, not all of these newcomers are going to make it in the league, but the season is young, optimism is in the air and we will soon see which of them has what it takes to compete in the major leagues.

    Here’s a guide to the newest crop of car companies.

  • Coda Automotive

    With a contract to provide electric cars to Hertz, Coda looks to be solidifying its footing as a player in the electric car business. The company plans to kick off retail sales of its new electric car in California in 2011 and will roll out sales to the rest of the country soon after. The California-based company does final assembly in the Golden State using sub-assemblies imported from China. The company’s challenge will be to interest U.S. customers in buying its unremarkably generic compact sedan for $37,400 when they can now just as easily buy one from a mainstream automaker.

  • Wheego Electric Cars

    Image: Wheego
    Wheego  /  Wheego

    Despite an Atlanta headquarters, Wheego thinks that air conditioning should be an option (and not a standard feature) in its Smart car lookalike electric car (and the company wants you to pay $1,995 for it!). The LiFe two-seater’s base price is $32,995, and like most current electric models it’s approximate driving range is 100 miles. Its small size, 65 mph top speed and relatively high price compared to similar cars from established brands could make LiFe tough for Wheego. The company promises to start delivering cars at the beginning of 2011.

  • Tesla Motors

    Image: Tesla
    Tesla  /  Tesla

    With the arrival of financial angel Toyota, Tesla’s immediate future is solidified as the company moves from its racy Lotus-derived Roadster to developing its $56,500 Model S luxury sedan. This baby will rocket from 0 to 60 in 5.6 seconds and top out at 120 mph when Tesla gets it into production. Doubt about that eventuality should be eased by the $30 million investment in Tesla by Panasonic and Tesla’s deal to electrify RAV4 SUVs for Toyota, giving the startup company some stability as its gears up for production of the Model S.

  • Think

    Image: Think
    Think  /  Think

    Think isn’t really a new company, but it’s new to most consumers because Ford never consummated its plan to sell Think City cars in the U.S. Now the Norwegian company has set up final assembly in Elkhart, Ind., using lithium-ion batteries from Indianapolis and has contracts to sell its cars to government fleets, which should provide reliable income. More importantly, Think is already delivering its diminutive four-seaters to fleet customers. Hopefully a retail price and deliveries will follow.

  • Fisker Automotive

    Image: Fisker Karma
    Damian Dovarganes  /  AP

    Befitting its sublimely sophisticated founder Henrik Fisker, Fisker Automotive is blessedly short on bluster and credibility-eroding unfounded claims (in contrast to some other notable electric car start-ups). Instead, the company is quietly building substance to match the slinky looks of its Karma extended-range electric prestige car. The company says it has 3,000 “pre-orders” for its cars and plans to sell them through a network of 42 dealers nationwide.

  • Tango Commuter Cars

    Image: Tango
    Tango

    If a Smart car fell into the Death Star’s trash compactor like Luke and the gang did in "Star Wars," it might well pop out looking like the skinny Tango T600. Interested DIY types can buy a kit to build one, while those more interested in driving than building can put their names on a waiting list for a fully-assembled version. No price is yet available, but the company does list a like-new used car on its website with an asking price of $150,000.

  • BYD

    Image: BYD
    Vincent Yu  /  AP

    BYD (now said to stand for “Build Your Dreams”) started life as a contract manufacturer called Build Your Design, and it leads the Chinese charge into the U.S. market. As with other Chinese carmakers, BYD is finding that selling cars in the U.S. is tougher than one might guess based on the runaway success of import brands here. While the company’s products and activities in the U.S. may look inept so far, when a company has the backing of the Chinese government export machine we can expect that they aren’t going away until every Wal-Mart is stacked floor to ceiling with BYDs.

  • GEM

    Image: GEM
    GEM

    Global Electric Motorcars, or GEM, is a small car company, but it’s owned by a much larger one called Chrysler. Now that might not exactly be a financial Rock of Gibraltar, but it’s significantly more substantive than some of the wing-and-a-prayer companies emerging in the electric car segment. GEM builds neighborhood electric vehicles — that is, glorified golf carts that you can legally drive on many urban and suburban streets with low speed limits. These simplified machines provide an affordable route to electric car ownership and are ideal for fleets (and for golf communities).

  • SABA Motors

    Image: Saba
    Saba  /  Saba

    SABA Motors promises to soon deliver a Tesla-like, two-seat electric roadster that accelerates to 60 mph in five seconds and reaches a top speed of 105 mph with a driving range of between 120 and 140 miles per charge. But Tesla already sells similar cars and SABA doesn’t even list a price. Even so, SABA is aggressively seeking investors.

  • Venturi

    Image: Venturi
    Venturi  /  Venturi

    A French company building exotic cars in Monaco and Columbus, Ohio (wait, where and where?), Venturi is developing the “America” — a jacked-up, two-seat electric dune buggy. The thinking, apparently, is that Americans will buy anything with generous ground clearance, hence the high-riding America roadster. With 300 hp and a whopping 54 kilowatt-hour battery pack (that’s more than twice the capacity of the Chevy Volt’s battery), the America seems likely to achieve its promised driving range of nearly 190 miles.

Video: Auto Sales Continue to Surge

Discuss:

Discussion comments

,

Most active discussions

  1. votes comments
  2. votes comments
  3. votes comments
  4. votes comments

Data: Latest rates in the US

Home equity rates View rates in your area
Home equity type Today +/- Chart
$30K HELOC FICO 4.29%
$30K home equity loan FICO 5.09%
$75K home equity loan FICO 4.52%
Credit card rates View more rates
Card type Today +/- Last Week
Low Interest Cards 10.96%
10.96%
Cash Back Cards 16.45%
16.48%
Rewards Cards 15.99%
16.00%
Source: Bankrate.com