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Auto sales up for first time since the recession

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DETROIT (AP) -- Auto sales rose in the United States last year for the first time since the recession. They're still far from what they were just a few years ago -- but that's just fine with the downsized auto industry, which can post profits even if they sell millions fewer cars and trucks.

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For the year, car and truck sales came in at 11.6 million, up 11 percent from last year, automakers reported Tuesday. For December alone, sales were 1.14 million, also up 11 percent from a year earlier.

While the figures have some in the industry talking about a return to the glory days, it's a fragile idea. Rising gas prices or more economic trouble could still shake the confidence of American car-buyers.

But for now, executives are optimistic about this year. General Motors, Ford and Toyota all predict sale will come in at 12.5 million to 13 million for 2011. It will take years, analysts expect, to get back to the peak sales of the middle of last decade -- more like 17 million.

"The economic downturn has lasted quite a while," says Jessica Caldwell, director of pricing and analysis for consumer website Edmunds.com. "It's going to be slow and gradual rather than a fast bounceback."

Toyota was the only company that sold fewer cars and trucks than in 2009. The company was stung by sudden-acceleration recalls in early 2010 and never fully recovered despite luring buyers with generous incentives. Production problems at its San Antonio plant cut its supply of Tundra and Tacoma pickup trucks, and troubles importing the Prius hybrid also hurt sales.

"We're coming off what was arguably the most challenging time in our 53-year history," says Don Esmond, senior vice president of Toyota's U.S. operations. He says he is optimistic that sales will rebound in 2011.

U.S. automakers are relieved to have the past two years behind them. When the financial crisis hit in the fall of 2008, car sales plummeted. GM and Chrysler were on the brink of death, saved by a $60 billion government bailout and speedy bankruptcies that helped both companies close plants and eliminate debt. Ford didn't declare bankruptcy or take a bailout, but it closed plants, laid off employees, and worked to lower its overall cost structure.

As a result, those companies can now make money even if sales hover below pre-recession levels.

Over the past two years, many Americans, even those who had enough money to buy a car during the recession, had been wary to commit to monthly car payments, so they put off making such a large purchase. Many opted to repair or make do with what they had.

Those buyers are easing back into the market, replacing aging vehicles. The average vehicle on U.S. roads is now 10.2 years old -- the most since 1997 and a full year older than in 2007, before the recession, according to the National Automobile Dealers Association.

"With 240 million vehicles out there on the road, a lot of them are going to be ripe for replacement," said Ellen Hughes-Cromwick, Ford's chief economist.

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