U.S. auto sales rose to the highest rate in 16 months in December as major automakers forecast the recovery would gather momentum in 2011 despite the drag from a weak housing market and rising oil prices.

The December sales capped a year of gradual recovery for the industry as it snapped a four-year downturn in sales.

General Motors Co said sales rose 7.5 percent and it expects the industry to report sales at a 13 million-vehicle annualized rate for last month -- far higher than many forecasts and the highest rate since August 2009.

Ford Motor Co said sales rose 6.7 percent in December from a year earlier. Chrysler sales rose 16 percent and Nissan Motor Co sales rose 28 percent.

Al Castignetti, the head of Nissan brand sales in the United States, said U.S. consumers appeared to be much more confident in shopping for new cars after delaying those kinds of big-ticket purchases for months.

I think people are a lot more confident in making big purchases now. That's the story of the fourth quarter, Castignetti told Reuters. I think we're going to see slow, steady growth.

GM and Ford both reported a jump in sales to retail customers and released 2011 U.S. auto industry sales forecasts. GM expects industry sales of 13 million to 13.5 million vehicles in 2011 including medium and heavy trucks.

GM expects a gradual industry sales recovery in the United States, but not a return to boom levels of a few years ago when the automakers totaled close to 17 million vehicles.

If you start to look around the 15 million mark, maybe the 16 million mark, that's probably in the realm, GM U.S. sales chief Don Johnson said on a conference call. But quite frankly, at this point, we don't know.

Ford has forecast U.S. auto industry sales for 2011 at 12.5 million to 13.5 million vehicles including medium and heavy trucks. Ford expects industry sales globally to reach a record level of 75 million to 85 million vehicles in 2011.

The global economy is reaching a dynamic phase, Ford chief economist Ellen Hughes-Cromwick said in a statement.


A year after its 2009 bankruptcy, and less than two months after its largest-ever IPO, GM remains the top-selling automaker in the United States. GM's U.S. sales rose 6.3 percent to 2.2 million in 2010 from the prior year.

In December, GM sales rose 16 percent from a year earlier in its four remaining brands: Chevrolet, Cadillac, Buick and GMC. The automaker sold its Swedish brand Saab and closed its Pontiac, Saturn and Hummer brands during its restructuring.

GM said results were led by a 42 percent jump in sales of its crossovers in December from a year earlier. The automaker also sold 29 percent more full-sized pickup trucks, most of those 2011 model-year vehicles that command higher prices.

Economists surveyed by Reuters expect automakers to report sales at a 12.3 million vehicle annualized rate in December.

Toyota Motor Corp and Honda Motor Co are expected to report U.S. sales results later on Tuesday. Toyota is expected to be the only top-selling automaker to report a U.S. sales decline for December.

Automakers have expected the U.S. market to show gradual growth while the economy displays some signs of stability with nagging concerns about slow job creation and persistent weakness in the housing market.

Overall, U.S. auto sales are expected to come in at about 11.6 million light vehicles in 2010, according to industry tracking firm J.D. Power and Associates, which expects U.S. auto sales to rise to near 13 million vehicles in 2011.

GM and Ford forecasts include medium and heavy trucks that, when excluded, put their industry outlooks roughly in line with the JD Power expectations.

The auto industry snapped a four-year streak of declining annual sales in 2010 and growth in 2011 beyond expectations could force automakers to deal with capacity constraints, a somewhat pleasant problem given recent years.

GM already has been adding capacity for strong-selling SUVs including the Chevy Equinox and GMC Terrain.

Growth is expected to stay strong in developing auto markets over the next several years including China and India.

Car sales in India were reported strong in December with Fitch expecting sales growth of up to 15 percent in 2011 driven mainly by a growing middle class and more financing opportunities.

GM shares were up 0.8 percent at $37.35 and Ford shares were down 0.3 percent at $17.19 on Tuesday afternoon on the New York Stock Exchange.

(Reporting by David Bailey, Deepa Seetharaman, Kevin Krolicki and Bernie Woodall, editing by Matthew Lewis)