(Corrects to show gain in Honda sales was nearly 25 percent, not 20 percent, in paragraph 6)
DETROIT - Ford Motor Co posted a 33 percent sales gain for December as U.S. auto sales ended 2009 on an upswing after a tumultuous year that saw GM and Chrysler collapse into bankruptcy and China overtake the United States as the biggest car market.
The Ford sales surge included all categories of its cars and trucks and ran beyond the expectations of analysts and sent the company's stock sharply higher. Ford shares powered above $11 to hit their highest level since August 2005.
Toyota Motor Corp was just behind Ford with a 32 percent sales gain.
Ford stock has gained 55 percent in a rally since early November and has more than quadrupled over the past year as investors bet the No. 2 U.S. automaker would steer clear of the federal bailouts that wiped out equity in its domestic rivals.
Ford's U.S. market share rose to 15 percent for all of 2009, up about a percentage point on the year to mark the first such gain for the automaker since 1995, when it controlled about a quarter of the market.
Honda Motor Co posted a sales gain of nearly 25 percent. Sales for Nissan Motor Co were up 18 percent.
GM and Chrysler lagged the pack. Chrysler's sales dropped 4 percent. General Motors Co posted a sales decline of 6 percent.
After adjusting for population, U.S. auto sales saw their deepest decline since World War Two in 2009. Full-year sales were expected to be near 10.5 million vehicles, down 40 percent from where the industry began the decade in 2000.
An annual U.S. sales total near that level would be the lowest since the recession of 1982.
In a historic reversal, vehicle sales in China surged to overtake the U.S. market as the world's largest in 2009.
With a final sales tally due later this week, analysts expect China sales to have soared 44 percent to 13.5 million units in 2009. Slower growth is projected for this year.
Major automakers are betting that the U.S. market is poised for a gradual but steady rebound this year and next and have set production plans higher.
Initial sales results pointed to a December sales rate of over 11 million units on an annualized basis and possibly near 11.5 million vehicles. That was stronger than expected and the best total since a summer boom driven by the U.S. government's cash for clunkers trade-in incentive program.
Both GM and Ford said they saw signs of a global recovery under way, led by growth in markets like China and Brazil.
There is a pitter-patter of data turning positive, said Ford economist Ellen Hughes-Cromwick.
Ford said it expected U.S. sales to hit a range of 11.5 million to 12.5 million in 2010, including work trucks. GM was only slightly more cautious, putting its forecast at between 11 million and 12 million sales.
Other automakers said the strong finish to a dismal 2009 had set the industry up for a better year ahead.
Emerging from the roller coaster of 2009, the industry has gained positive momentum for a gradual recovery, Don Esmond, senior vice president of operations at Toyota's U.S. sales arm, said in a statement.
INCENTIVES, FLEET SALES IN FOCUS
U.S. auto dealers said December sales results were boosted by bargain-hunting shoppers taking advantage of holiday discounts and by two additional sales days in the month compared with a year earlier.
In the most aggressive incentive offers, GM gave its dealers up to $7,000 -- a discount of almost 50 percent in some cases -- to buy up remaining inventory of the discontinued Pontiac and Saturn brands still on their lots.
GM said that cleared out almost all Pontiac and Saturn inventory, allowing it to focus on its remaining four U.S. brands: Chevrolet, Cadillac, Buick and GMC.
GM is trying to sell Hummer and will probably close Saab. It said it had just 5,123 vehicles from the four brands it is dropping on U.S. dealers' lots at the end of the year.
Overall GM inventories dropped to 385,000 vehicles at end December, equal to about 57 days' supply. That stock of unsold cars and trucks was down 56 percent from a year earlier, easing the pressure to offer discounts in the months ahead.
In another sign of progress, GM said retail sales through dealerships were up 7 percent in December, a positive since those transactions command higher margins than sales to rental agencies and other corporate fleet buyers.
Our goal is to earn our share with great products and marketing rather than to buy it with incentives and fleet sales, said U.S. sales chief Susan Docherty.
Docherty said GM had cut its average incentive spending per vehicle from $6,400 a year earlier as it was sliding toward bankruptcy to near $3,900 in December, Docherty said.
Industry tracking service Edmunds estimated industry-wide sales incentives for December dropped 11 percent from a year earlier to an average of just over $2,500 per sale.
Chrysler, now controlled by Fiat SpA, has also been battling to reduce a reliance on aggressive discounts and cut-rate fleet sales that have topped half of its overall sales in recent months.
The GM and Chrysler bankruptcies left GM held 60 percent by the U.S. Treasury and Chrysler under the management control of Fiat CEO Sergio Marchionne.
The sales results for GM were the first since Chairman and Chief Executive Ed Whitacre took direct charge of management with the departure of former CEO Fritz Henderson.
Whitacre installed a new sales team headed by Docherty with a mandate to reverse a long-running slide in sales and cut spending on incentives.
(Additional reporting by Soyoung Kim and Bernie Woodall, editing by Matthew Lewis)