LINDA WERTHEIMER, host:
For U.S. automakers, 2010 has been a profitable year, overall. A big improvement, considering last year, which was the worst in three decades for the auto industry. Michigan Radios Tracy Samilton reports that car companies have reason to be even more optimistic about the new year.
TRACY SAMILTON: Heather Garvock loves to drive. So at first, she didn't mind the long commute between Ann Arbor and Detroit to attend law school. That commute put a lot of miles on her old car - a 1999 Jetta - and repair costs were mounting. But just as she graduated from law school, the housing bubble burst, and the economy got worse from there.
Ms. HEATHER GARVOCK: I held off thinking, OK, Ill wait until after I pass the bar exam, and then Ill buy a new car. And then I passed the bar exam. And then I said, OK, Ill wait until I get a job, and then Ill get a new car. And it just turns out that that took a long time.
SAMILTON: Garvock is a good example of the roughly 11 and a half million Americans who bought new cars this year. People hung onto their old cars as long as possible. Meanwhile, others who might have bought a second car, or young people who normally would be buying their first car, didnt.
George Pipas is U.S. sales analyst for Ford Motor Company. He says the car industry experienced something hes never seen before.
Mr. GEORGE PIPAS (U.S. sales analyst, Ford): The number of vehicles on the road actually declined in two years - the first time that happened in, well, almost recorded automotive history.
SAMILTON: And yet, despite having to fight for every sale they made this year, many carmakers made money, even General Motors. Thats primarily the result of the forced crash diet the industry was put on in 2008. Plants were shuttered, workers were laid off.
In the case of Chrysler and GM, massive debt was erased in bankruptcy. George Pipas says Ford wasnt the only one to toe the fiscal line this year. Almost without exception, automakers built only as many cars as needed. And they kept those profit-robbing incentives to a minimum.
Mr. PIPAS: If you would've told me a few years ago that Ford could be profitable in a - an 11 million sales year, I would have scoffed. I would not have been in the camp of believers.
SAMILTON: Still, not every car company fared equally well. While Ford, Hyundai and Kia improved their market share this year, GM and Hondas market share slipped. And Toyota had the biggest fall from grace. Aaron Bragman is an analyst with IHS Automotive.
Mr. AARON BRAGMAN (HIS Automotive): They had 17 recalls and over several million vehicles, which is a record for them. And that really did a number on their sales for 2010.
SAMILTON: Next year, its likely car sales will improve by at least a million or more. Already, inventories on some dealer lots are creeping up, and while Bragman says in the old days, that was a bad sign, this time, it may be warranted.
Mr. BRAGMAN: Especially if we see a good sales season for the Christmas season this year, I think a lot of that positive news could carry forward into 2011. And that could start to impact vehicle sales very early on.
SAMILTON: But that doesnt mean a full recovery is ahead. As long as the housing market is dismal and unemployment remains high, car sales will undoubtedly suffer.
Meanwhile, carmakers are preparing to kick off 2011 with the traditional bang at the Detroit Auto Show. Theyre hoping that thousands of people will see something they really, really like. Maybe enough to convince them to trade in the old clunker for the new, shiny model where everything works, and the gadgets are cool.
For NPR News, Im Tracy Samilton in Ann Arbor.
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