US car sales give economy unexpected boost

American drivers hit showrooms in greater numbers than expected last month, providing an end of year fillip to the auto industry as it emerges from its worst year in more than three decades.

Shares in Ford surged after it announced December sales were 33 per cent higher than in the same month in 2008, besting its arch-rival, the bailed-out General Motors, which suffered an unexpectedly sharp drop in sales.

Ford sold a total of 184,655 Ford, Lincoln, Mercury and Volvo cars and trucks in the United States in the final month of 2009, and a total of 1.68 million for the year. Up 7 per cent to more than $11 in the minutes after the announcement, Ford shares are back to their level of August 2005.

Analysts had predicted a strong rebound, because the year-on-year comparisons were so weak, but the strength of demand surprised even the most optimistic forecasters. Foreign car companies also increased their share of the North American market. Nissan sales were up 18 per cent. The figures are for the numbers of vehicles sold; profit margins depend on the scale of discounts offered, which are not formally disclosed, but estimates from research firm Edmunds suggest discounts were down 11 per cent on December 2008.

GM and Chrysler are struggling to rebuild their finances, having emerging from bankruptcy thanks to bailout money provided by the US government. GM ended the year offering deep discounts, sometimes up to 50 per cent off, to shift the remaining inventory of its discontinued Pontiac and Saturn brands, but it missed forecasts. Its sales slipped 13 per cent from December 2008 levels. It is concentrating on four brands in the US - Chevrolet, Cadillac, Buick and GMC - and has promised to focus on winning back market share from Ford. The Detroit Motor Show, which begins this weekend, will mark the global unveiling of some 30 new models.

Chrysler last night reported a 4 per cent drop in sales, a little above forecast.The overall strong finish in December put a silver lining on a disastrous year for the industry. After adjusting for population, US auto sales suffered their deepest decline since World War II in 2009. The final tally is expected to be just over 10.3 million vehicles, down 40 per cent from where the industry began the decade in 2000.