Car Sales Are Rising, But Is The Market Really On The Mend?

Analysts divided over whether car industry can return to its former vigor

How high can the car market go? That’s the question a lot of industry observers have started to ask after looking over November’s automotive sales figures.

The month brought significant relief to an industry struggling to climb out of one of the worst downturns it has suffered since the Great Depression. Overall, sales volumes surged 17 percent in November. Other than industry giant Toyota, which is still suffering from its ongoing safety recall problems, most major carmakers saw double-digit gains.

Ford, for example, said its November sales were driven by truck sales that rose 34 percent, while sales of the Fusion jumped 28 percent. Ford said it has already set a full-year sales record for the midsize sedan.

It’s a very different scenario from the beginning of 2010 when car manufacturers seemingly couldn’t give their products away. Last year saw U.S. motorists purchase a grand total of just 8.6 million new cars, trucks and crossover vehicles — that’s barely half the record sales levels the industry set early in the last decade. The current year didn’t get off to a much better start, so for all of 2010 the new car market will still just nudge past the 11 million mark, according to industry research firm J.D. Power and Associates.

Still, the industry sales freeze looks set to thaw in October and November. It’s an odd time for sales to pick up, but warming demand has seen the annualized sales rate nudge 12 million for the last two months. That’s still down 30 percent from the industry’s peak, but a big improvement nonetheless.

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