cars trucks lotThough vehicle sales have underperformed some analyst expectations in recent months, results are much improved compared to those of a year ago. The industry is seeing a broad trend that is benefiting nearly all automakers.

"Improved sales are not limited to one or two healthy companies, but rather represent growth for the entire industry," says Jeffrey Anderson, director of consulting and analytics for Experian Automotive, an industry-information supplier. "This slow, steady upward trend isn't bolstered by one or two hot models or artificial stimulants such as 'cash for clunkers,' but rather an improvement in overall consumer demand," Anderson says.

In a report issued Thursday, Experian said that new-car registrations in the U.S. rose for the third consecutive quarter during the three months that ended June. Compared to the second quarter 2009, new registrations rose 13.5% to 2.93 million units in the second quarter, a level recently eclipsed only by those recorded in the third quarter of 2009, which were boosted by the federal 'cash for clunkers' rebate program.

Production Slowly Gears Up

It isn't just that automakers are selling more cars than they did in 2009, it's that the economy, despite a less-than-robust recovery, is looking brighter. That has manufacturers on a bit of a hiring binge, with General Motors, Ford Motor (F), Toyota Motor (TM), Volkswagen and others in recent months committing to hiring more workers, and opening new plants or reopening idle ones.

One example is GM's decision last week to begin building a compact Buick sedan, to be called the Verano, along with a yet-unnamed Chevrolet subcompact car at a dormant former Pontiac plant in Orion Township, Mich. The move means employment for more than 1,600 unionized autoworkers who might otherwise remain unemployed. The Orion plant is expected to employ workers on two shifts, building about 160,000 vehicles a year, after production gets underway. Expectations are that the new Buick sedan will debut next fall as a 2012 model.

Beyond selling more cars, automakers are also making money. Under the leadership of former Boeing (BA) CEO Alan Mulally, Ford returned to profitability last year and fully expects to be profitable again this year. In the U.S. auto market, Ford has outsold perennial No. 2 car company Toyota every month this year with the exception of March.

GM, after succumbing to a government-backed bankruptcy last year, turned the corner during the first half of 2010, recording two consecutive quarters of profits. Further, the nation's No. 1 automaker plans to once again become a publicly traded company, when it floats an initial public offering of stock next month.

Polishing Tarnished Brands

Both GM and Ford have substantially improved their corporate image and their bottom lines, says Arthur Wheaton, who analyzes the auto industry for Cornell University's ILR School. Compared where the companies were two years ago, Wheaton says, "they're doing much better."

GM benefited from being able to erase much of its debt under restructuring, while Ford, which several years ago went so far as to mortgage its famous blue oval logo to finance its turn-around, has made significant strides in paying down its substantial debt, Wheaton says.

Even Chrysler Group, which is struggling to overcome last year's bankruptcy and the lasting effects of a failed merger with Germany's Daimler, is doing better under the management of CEO Sergio Marchionne, who is also chief executive of Italy's Fiat. While a complete revamp of Chrysler's lineup is months if not years away, Marchionne's commitment to overhaul 75% of the Auburn Hills, Mich., automaker's cars and trucks by the end of 2010 has largely been met with accolades by critics who have seen the results.

Upon inspecting and driving a number of new Chrysler products last month, Consumer Reports reported that the automaker's re-engineering efforts have produced laudable accomplishments. The buying guide noted, for example, that the Chrysler 200 midsized sedan has a nicer interior, and rides and handles better than the the underwhelming Sebring it replaces.

Cornell's Wheaton says the U.S. government's insistence that Chrysler be taken over by Fiat was a good decision and made sense. "Chrysler on its own didn't have a very good portfolio. They didn't have a lot of strong [assets] other than the Jeep nameplate," he says. The partnership with Fiat gives Chrysler a small car -- the Fiat 500 -- to draw customers, an offering otherwise missing from its lineup. And Fiat gains by being able to reintroduce Fiat as well as Alfa Romeo models to the U.S. market.

But the Competition Isn't Sitting Still

Toyota, meanwhile, despite its recall woes, will continue to see increased sales, Wheaton predicts. The Japanese automaker has proven it can essentially "buy" sales by offering generous incentives, such as cheap financing and leases, and heaping on perks, such as two years of free maintenance.

Toyota's plan to boost U.S. sales by 30% to 2 million vehicles annually by 2013 relies more on the health of the overall auto industry than it does on consumer perceptions, Wheaton says. With sales down by as much as 6 million units compared to just a few years ago, he says, "nobody can tell you when the market is going to try to get back to normal."

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13 Comments

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cbstinc

The American Car Ind. does not learn yet, the Japanese is selling car cheaper and reliable, in the meam time the Big Tree or whaever is left, is still trying to sell their cars for a lot more than the competition, are they Stupid? I think so.no wonder they are in this situation, and to top it off, they are still dealing with the union crap.

October 15 2010 at 11:29 AM Report abuse rate up rate down Reply
rgkarasiewicz

Auto sales for the month of October and beyond will hit the skids.

October 15 2010 at 3:35 AM Report abuse +2 rate up rate down Reply
ultraz2

SALES ARE INDEED SLOW.

October 14 2010 at 11:34 PM Report abuse rate up rate down Reply
BUFFALO

People are keeping there cars longer for economic reasons and for the simple fact that new cars have nothing more to offer that a lot of used cars. When a new car can give you say 30% better mileage than your used car than you may go for it or if it can offer a 25 or 30% better emissions rating or a lifetime warrenty or serious safty improvments but whats the advantage of buying new if the only thing you get is a new color??

October 14 2010 at 10:10 PM Report abuse +2 rate up rate down Reply
z4rock

Sort of like a 2 engine plane with one on fire making slow but steady progress toward the destination.

October 14 2010 at 9:45 PM Report abuse +1 rate up rate down Reply
mkw737

The economy will bounce back. Government spending created many jobs in the Great Depression, Hoover Dam for example. Some view that as socialism, others as a wise public investment -- a cool site; Balkingpoints ; incredible satellite view of earth

October 14 2010 at 8:48 PM Report abuse -1 rate up rate down Reply
smithdeane

Make what we want and they will buy , medium power medium cars , small v8 , 2500 lbs. max , not all the BS options , not the 400 CID motors (6.0 +)

October 14 2010 at 8:11 PM Report abuse +2 rate up rate down Reply
John Willis

I have the idea that if Jeep made like a Jeep shud be that they would be the number 1 4x4. But, no, we have padded dashes, a/c, auto trans, etc. If you want a street vehicle buy a car. Make car that is useful and we will buy it. And I agree, we should never have gave bailout. Things happen for a reason. But the bailout was wrong.

October 14 2010 at 7:26 PM Report abuse +1 rate up rate down Reply
frank1946

Ha.......I am laughing, after revaluing the Yen and Yuan 30 %, Detroit is selling only because of this price increase for Import Companies. GM has so much debt it will never pay it off unless the Chinese buy them, Ford is still making designs from the last generation Mazda 6 and Chrysler is building Fiats now. Not to contradict this story of course but I think that America is now making excuses and hiding from the truth, we are not competitive in the World Economy anymore ! The Dollar will soon be abandoned as a trading currency, just a local one now. But that's OK, right ? My Father would not be so accepting of this story.

October 14 2010 at 6:05 PM Report abuse +4 rate up rate down Reply
MSmailbox

Slow, steady growth is what we want... The feast/famine cycle of the auto industry, is what causes so much jerking around. It doesn't make sense to keep relocating people, here and there, then out on the street. Of course, hindsight is 20/20. When GM was loosing several thousand dollars, every time they put a new car out the door, I always wondered why they didn't stop. Or even try running the assembly plants in reverse, disassembling new cars, returing the parts to the suppliers (for credit), and making a hefty profit. If I'm ever elected as President...

October 14 2010 at 5:54 PM Report abuse +1 rate up rate down Reply