General Motors posted its first monthly sales increase in nearly two years on Tuesday as a rebound in industrywide U.S. auto sales in October pointed toward a gradual recovery for the battered sector.
Chrysler was the weakest of the large automakers. Its sales plunged 30 percent in October, the day before Fiat SpA. Chief Executive Sergio Marchionne releases a five-year
turnaround plan for Chrysler.
U.S. auto sales hit an annualized rate of 10.46 million units in October, according to industry tracking firm Autodata.
That is a level not seen in a year, except for July and August when the U.S. government's "cash for clunkers" incentives program sparked a surge in sales.
"In a nutshell, we can tell with confidence that we've seen the worst already past and we are seeing relative improvements in the market place and consumer demand," said Jesse Toprak,
analyst with Truecar.com.
However, high unemployment and weak consumer confidence will slow the recovery, he said. "The improvement in the automotive market for the rest of the year as well as next year will not be as fast or robust as we thought earlier this year."
The October sales are a key indicator because they are the first month of U.S. sales not affected by the clunkers boom, which provided incentives of up to $4,500, or the backlash that followed in September.
The annualized rate of 10.46 million units was a jump from the 9.22 million rate in September after the incentives program had ended and inventories were decimated. It also marked a slight decline from October 2008, the first month after the financial markets collapsed.
Automakers said they were cautiously optimistic. GM said the U.S. economy and auto industry were starting to show signs of recovery and the results suggested the sector may be stabilizing after four years of declines.
GM posted a 4 percent sales gain, Ford Motor a 3 percent increase and Toyota Motor a fractional gain. All three results were better than analysts had expected.
Korea's Hyundai Motor posted a 49 percent sales rise that blew past expectations and allowed the automaker to take more market share from rivals.
Nissan Motor reported a gain of nearly 6 percent, while Honda Motor reported a sales
decline of less than 1 percent.
"We're seeing the industry get some legs under it," GM sales analyst Mike DiGiovanni said on a conference call.
While the sales results were viewed as positive, industry executives continued to question the speed and strength of any recovery given the high U.S. unemployment rate.
"We expect consumers to remain cautious as the recovery gains traction," said Ford economist Emily Kolinski Morris.
Toyota U.S. sales chief Bob Carter said the automaker expects a "very gradual" U.S. economic recovery.
GM Gains Market Share
With inventories still below normal levels, automakers were able to pull back on discounts and other sales incentives in October. Ford estimated industrywide incentives were down 10 percent from a year earlier while it cut its own spending on such discounts by 30 percent.
Video: CNBC's Phil LeBeau looks at Ford's numbers with George Pipas, Ford's chief sales analyst.
Industry tracking firm Edmunds.com estimated the average incentive in the United States was $2,468 per vehicle sold in October, down 7.8 percent from last year and 11.8 percent from
the previous month.
Ford, which surprised analysts by posting a third-quarter profit of nearly $1 billion on Monday, said it gained market share due to strong demand for cars and crossover vehicles.
Strong demand for the Fusion sedan, and versions of the Taurus car and F-150 pickup truck helped Ford raise its share of the U.S. market to more than 15 percent, the company said.
Vehicles from the 2010 model year accounted for 80 percent of Ford's sales. New vehicles tend to require lower levels of incentives to lure buyers, meaning they generate higher profits, analysts said.
GM's sales rose year-over-year for the first time since January 2008 and the automaker said it also gained market share, standing at an estimated 21 percent for the month.
Late on Tuesday, GM's board opted to keep Opel, undoing months of painstaking negotiations to sell the European unit to a Russian-backed group led by Canada's Magna.