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Optimism Fuels L.A. Auto Show

1929 Lincoln L Dietrich Convertible Coupe appears as part of Lincoln's Heritage On Display At Los Angeles Auto Show Press Day at Los Angeles Convention Center on November 28, 2012 in Los Angeles, California.
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1929 Lincoln L Dietrich Convertible Coupe appears as part of Lincoln's Heritage On Display At Los Angeles Auto Show Press Day at Los Angeles Convention Center on November 28, 2012 in Los Angeles, California.

In a city where it's all about building buzz, the auto industry is quietly generating the kind of optimism it hasn't seen in at least five years.

Even veterans attending the L.A. Auto Show admitted you have to go back to the mid '90s to find this much enthusiasm for auto sales in the U.S.

"I'm not sure I've ever seen the auto industry this upbeat," said Mark Reuss, President of General Motors North America.

Higher Sales, Higher Profitability

At the heart of optimism is the growth in sales and profitability. U.S. sales are now at their highest point since 2007.

What's driving it? Pent up demand and an improving economy. Consumer confidence is near a five year high and the housing market is in recovery mode. (Read More: Consumer Confidence Hits Four and a Half Year High.)

"We think the signs are good," said Mark Fields, president of Ford operations in the Americas. "The confidence is up, the Case-Shiller (home start) numbers are up and hopefully we'll see more recovery in the construction and housing industry." (Read More: Housing Prices Keep Slow, Steady Climb Up: Case-Shiller.)

More Models, More Choices

Another sign the auto industry is in full renaissance is the boom in the number of models that will roll out in 2013. It's a new record for the industry topping more than 300.

The result is that it's tougher for automakers to cut through the clutter and win over buyers. (Read More: Whoa! 1.7 Billion Cars on the Road by 2035.)

"It used to be, you went on TV, ran ads for your top car or truck and that was enough," said Jim Lentz, president and CEO of Toyota Motor sales in the U.S. "Now, there's more competition, more ways to reach buyers. It's a complete change from 10 or 15 years ago."

-By CNBC's Phil LeBeau

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