The rate of new vehicle sales in the U.S. is continuing to make steady gains through October, building upon strength from prior months and boosting recovery prospects for the automotive industry, according to new reports.

Despite lingering economic challenges depressing demand, automotive sales in the United States continue to make a swift recovery, posting significant gains through September and October. Although elevated unemployment and sluggish consumer spending are likely to constrain new vehicle purchasing for the foreseeable future, the sales outlook for major automakers, particularly U.S. firms, remains strong.

Last week, automotive research firm J.D. Power and Associates forecast that at the current rate, new vehicle retail sales in the U.S. will reach 756,300 units in October, representing a seasonally adjusted annualized rate (SAAR) of 10.2 million units. This marks a 17 percent increase over sales in October 2009 and a gain of 1.2 million units in the year-over-year SAAR. It is also the first month this year to reach a selling rate of 10 million units.

Including new vehicles, total light-vehicle sales are expected to come in at 922,700 units in October, 14 percent higher than in the same period last year. Although this month’s figures show a slight decrease from sales in September, the retail SAAR has grown by 0.7 million units from the previous month.

“Unlike July, August and September, which experienced some mid-month weakness, October’s robust sales pace has continued through the second week,” Jeff Schuster, executive director of global forecasting at J.D. Power and Associates, said in an announcement of the findings. “Coming off a strong close to September, October’s expected performance marks the first back-to-back months of strength since the spring. Despite the drag from high unemployment and lower incentive levels, improvement in the automotive market continues in October, suggesting that consumers are discounting the negative sentiment.”

For vehicle manufacturers, North American production in the first three quarters of 2010 has already surpassed total production for 2009, with 8.9 million cars produced so far this year compared with 8.5 million for all of last year. Fourth-quarter production is forecast to be 2.8 million units, up from 2.7 million in Q4 2009, while the overall yearly output is expected to reach 11.7 million units, 37 percent more than in 2009.

“Production for several high-profile models — such as the Chevrolet Cruze and Volt, Ford Explorer and Focus, and the Dodge Durango and Charger — will start this quarter or will continue to ramp up, driving a strong production recovery at the close of 2010,” Schuster said. “North American production levels are expected to grow by an additional 1 million units in 2011 to 12.7 million.”

According to automotive market tracker Autodata, General Motors Co. led the sales upswing in September, selling 173,031 units, 11.5 percent more than in September 2009. Year-to-date, GM has sold 1.6 million vehicles in the U.S. Meanwhile, Ford Motor Co. sold 160,375 vehicles in September, a 46.4 percent increase over the previous year, Toyota Motor Co. sold 147,162 units, up 16.8 percent year-over-year, and Chrysler sold 100,077 units, 60.9 percent more than in September 2009.

Toyota, the world’s largest automaker, continues to suffer from the effects of global recalls that affected more than 10 million of its vehicles around the world, and last week announced another recall of 1.5 million cars due to braking issues. These problems have contributed to Toyota’s declining production.

“The figures come as a report Monday said the company was facing a near $2 billion hit as it revises down its dollar forecast, with the greenback sitting at 15-year lows against the yen,” Agence-France Presse reports. “Toyota’s worldwide production, excluding output by Daihatsu and Hino subsidiaries, fell 1.3 percent from a year earlier to 672,604 units in September, marking the first year-on-year fall in 12 months.”

Meanwhile, Ford is having one of its best years in recent memory, this week announcing $1.7 billion in revenue for the third quarter. This marked the automaker’s sixth consecutive profitable quarter and the best third-quarter performance in more than 20 years.

“Though it avoided bankruptcy, Ford posted a $14.8 billion annual loss in 2008, the biggest in its history. Its turnaround has happened faster than predicted,” the New York Times explains. “[Ford CEO Alan R.] Mulally pledged that Ford would be consistently profitable by 2011. But the company has beaten that goal by earning $6.3 billion so far this year. Now Ford is setting its sights on expanding its operations overseas, particularly in China, India and Brazil.”

GM is increasing its focus on international opportunities, as well, forecasting that the Chinese domestic auto market will reach sales of 17 million this year and 19 million next year. The continuing rise of vehicle demand in China is likely to help the country remain the world’s largest auto market in the coming future. In September, GM’s Chinese sales rose 15 percent to 208,353 units and its year-to-date sales totaled 1.78 million units, up 37.4 percent from the same period last year, according to a release from the company.

“China has already become a key outlet for GM, Audi and others and a hotbed of manufacturing for the automakers,” the Wall Street Journal explains. Moreover, “in the long term, aside from favorable government policy support such as vehicle purchase incentives, China’s continued economic strength, along with the resulting rise in personal income, are likely to keep automobile sales growing.”

Earlier

Toyota Recalls Hurt Production and Reputation

Ford Forecasts 2011 Profitability

Resources

Revitalized New-Vehicle Retail Sales Pace Continues in October
J.D. Power and Associates, Oct. 21, 2010

U.S. Light Vehicle Retail Sales – September 2010
Autodata.com, September 2010

Toyota Announces Intent to Voluntarily Recall Certain…Vehicles to Replace a Brake Master Cylinder Seal
Toyota Motor Co., Oct. 20, 2010

Toyota Suffers Output, Sales Drop
Agence-France Presse, Oct. 25, 2010

Ford Posts Third Quarter 2010 Net Income of $1.7 Billion…
Ford Motor Co., Oct. 26, 2010

General Motors Sales in China Increase 15% in September
General Motors Co., Oct. 11, 2010

China’s Auto Sales Run Hot
by Norihiko Shirouzhu
The Wall Street Journal, Oct. 23, 2010