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Economic Forecasts

U.S. Car Sales, Production Picking Up

Auto sales are finally turning the corner -- to the advantage of U.S. workers and communities.

The recovering economy will fuel another healthy gain in U.S. auto sales this year. By year-end 2011, look for total sales of cars and light trucks to climb to around 13 million, a 13% increase. In 2010, sales were 11.5 million, rebounding 11% from a 27-year low in 2009.

And in more good news for American workers and communities, a bigger share of cars sold in the U.S. will be made nearby. Last year, about 76% of cars sold in the U.S. were made in North America, an increase of two percentage points from 2009, and the share will continue to grow. Together, U.S.-based brands Ford, GM and Chrysler gained half a point in 2010, while transplants -- foreign brands that are manufactured here -- snagged a full percentage point more of total sales. Two-thirds of North American production is in the U.S.

By mid-decade sales will be back in the neighborhood of 16 million to 17 million a year, territory last seen in 2007. The growing population and consumers who are finally trading in worn-out cars will help. Still, it’ll be an “incremental” climb back, says Robert Schulz, managing director for Standard & Poor’s Rating Services. Even though sales are growing again, they’re increasing at a slower pace than they did after past sales swoons: Following a 1982 dip -- the last time sales fell to the 10 million level before 2009 -- sales grew at about 17% a year for the next two years. But after cratering in 2009, sales increases last year and this will be more modest.

Sales of pickup trucks in particular won’t return to previous highs for a very long time. Gone are the glory days of sales around 2.3 million a year. While small businesses and others will still need trucks for hauling, “about 500,000 of those sales were people who took their trucks to the golf course,” says George Magliano, senior principal economist for IHS Automotive. Now imported sports cars and American muscle cars are those drivers’ toys of choice.