U.S. auto sales boomed in August as $3 billion in government incentives spurred sharp gains for Hyundai Motor Co, Ford Motor Co and Honda Motor Co and left the industry facing shortages of top-selling vehicles.

Ford reported a 17 percent monthly sales gain on Tuesday and the success of the U.S. government's cash for clunkers trade-in incentives put industry-wide monthly sales on track for the first increase since October 2007.

Korea's Hyundai Motor Co posted a 47 percent increase as sales of its Elantra sedan more than doubled.

The U.S. government incentive program also helped Honda post a 10 percent sales gain while Toyota Motor Corp sales were up 6 percent.

The two U.S. automakers to have emerged from government-sponsored bankruptcies -- General Motors Co and Chrysler -- lost market share during the August sales bonanza.

GM sales dropped 20 percent, while Chrysler was off 15 percent.

Meanwhile, France saw a 7 percent gain in August car sales and the French government said it would continue to fund its scrappage program to encourage consumers to swap out of old cars into 2011.

The now-exhausted U.S. clunkers program, which was inspired by the programs in France and other European markets, drove a rush into dealerships in July and August.

More than 690,000 vehicles were scrapped in the United States for taxpayer-funded credits of up to $4,500 as consumers took advantage to drop gas-guzzling trucks and SUVs.

On an annualized basis, industry-wide U.S. sales topped 14 million units, according to Autodata. That was up from 13.6 million a year earlier but still far below the 16 million range that had been seen as the bottom for the market until 2007.


The winners in the U.S. incentive program were major Asian automakers and Ford, which benefited from a stronger lineup of smaller cars and crossover vehicles, analysts said.

Ford, the only U.S. automaker to avoid a federally sponsored bankruptcy, posted its second consecutive monthly sales gain and said signs of a recovery in truck demand pointed toward a broader recovery in the economy.

The No. 2 U.S. automaker said it had taken market share and reported the first increase in sales of its market-leading F-Series pickup trucks in almost three years.

Pickup trucks like Ford F-150 are widely used in the U.S. construction industry.

Pickup sales have dropped sharply in recent years on a combination of high gas prices, tight credit and the slowdown in home building.

But Ford chief sales analyst George Pipas said the rise in pickup truck sales appeared to reflect some increased spending on construction -- including projects funded by federal stimulus spending -- and steadier consumer confidence.

Even with an expected drop in demand after the clunkers program, Ford expects U.S. industry sales to be better in the last few months of the year than they were during the first half.

Toyota also said it saw signs of improvement in the U.S. economy and could raise its forecast for industry-wide demand in 2010.

We see some drop-off in September, but we are starting to see concrete signs of automotive recovery moving into the fourth quarter, said Bob Carter, Toyota's manager of its main brand in the United States.

Automakers that lost share said they had been hurt by unfavorable comparisons to strong sales a year ago and in some cases shortages of cars to sell on dealer lots.

GM said part of the reason for the sharp decline in its sales was the comparison to stronger sales a year earlier when a GM employee pricing promotion generated a strong results.

Nissan Motor Co sales fell almost 3 percent from record results in August a year earlier.

Chrysler, now under control of Italy's Fiat, said it had lost potential sales when dealers ran short on some models after it shut down all of its production during a bankruptcy process that ended in June.


Car registrations in Italy were up almost 9 percent in August, including a rise of roughly 11 percent for Fiat.

In Europe, carmakers have called for a gradual phasing out of government sales incentives. French Economy Minister Christine Lagarde said the program there would continue for another two years in 2010 and 2011.

For August, France's biggest carmaker, PSA Peugeot Citroen, saw a 17 percent increase in group sales in August. Renault group sales rose 11 percent.

Spanish car sales stabilized in August after 16 months of declines. Car sales for Germany, Europe's biggest market, are due on Wednesday.

(Reporting by Shin Jieun, Jason Webb, Devidutta Tripathy, Crispian Balmer, David Bailey and Soyoung Kim; Writing by Helen Massy-Beresford; Editing by Patrick Fitzgibbons and Matthew Lewis)