US auto industry off to a solid start in January

DETROIT (AP) - Americans gave automakers a confidence boost in January. They bought more cars and trucks and showed a still-fragile auto industry that they were ready to replace their clunkers in 2011.

Sales of cars and light trucks in the United States rose 17 percent from a year earlier to 819,895. That's still below the 1 million sold in January 2008, before most people felt the impact of the recession, but better than the last two years, when January sales fell below 700,000.

Nearly all big car companies reported double-digit gains for the month, a sign that the slow recovery in U.S. auto sales that began in 2010 remains on track. While the recovery could falter if turmoil in the Middle East pushed up gas prices or unemployment stays high, the industry was happy with what it saw last month.

"January signals a good start to the year for us, for the industry, and we think it's a good sign for the overall U.S. economy," said Don Johnson, vice president of U.S. sales for General Motors Co.

Car buyers went shopping for just about everything. Sales of recently redesigned SUVS such as the Jeep Grand Cherokee and Ford Explorer were strong. People also snapped up small cars such as the Nissan Versa and Honda Fit.

GM said its sales to individuals rose 36 percent, while its fleet sales fell 7 percent. Ford Motor Co. saw a similar trend.

January sales for the industry hit an annual rate of 12.6 million when adjusted for seasonal changes, a good start to a year in which many analysts expect sales of around 13 million. Last year automakers sold 11.6 million cars and trucks in the United States

Deals are helping move the metal. Car companies threw in more discounts in January, with incentives hitting an average of $2,576 per vehicle, said Jesse Toprak, vice president of industry analysis at car pricing site TrueCar.com. Toyota Motor Corp. and Honda Motor Co. increased their incentives by 40 percent.

The lowest interest rates in decades also spurred sales. Banks and finance companies have loosened up on credit in recent months, and people with good scores can get annual interest rates as low as 4 percent on car loans, said Paul Ballew, a former chief economist at GM who is now at insurance firm Nationwide. Plus, automakers are subsidizing loans so the rates fall even lower, cutting monthly payments.