SUVs, Trucks Lead Upward Trend in Car Sales

Automotive Web site said Tuesday that new car sales are trending upward and are on track with estimations, led by trucks and SUVs that have soared higher-than-expected on stable gas prices and an improving economy.

Some 1.13 million cars are anticipated to be sold in 2010 as consumers started shopping for luxury items amid the gradual economic rebound.

Trucks sales are expected to grow 14.9% while SUVs surge 21.3% from the prior year, when high oil prices led consumers to shy away from large gas guzzling vehicles.

Midsize cars, meanwhile, are expected to be up 7.8%, while Hybrid sales, a car that soared during the recession due to its fuel-efficiency, will be down about 8.1%. Compact cars will be up just 1.1%.

“Many of the new trucks and SUVs were bought to be used as work vehicles by contractors and others who had delayed their purchases waiting for the economy to improve,” said senior analyst Michelle Krebs. “The midsize car segment also was a big winner this year since it had impressive new products and captured the relatively conservative mood of car-buyers.”

Automakers from the U.S., including General Motors (NYSE:GM) and Ford (NYSE:F), as well as Europe and Korea, saw their incentives fall from the prior year, while Japanese automakers increased their incentives, albeit marginally.

Japanese brands still remained the lowest in average incentive spending with only $1,968 per car sold this year, though that’s a notable increase from just $1,637 spent last year.

U.S. makes averaged $3,333 per car, down from $3,766 a year ago, while Korean brands fell to $1,820 from $2,721. European cars saw the greatest decline in incentives, averaging $2,491 per car from $3,295 the year-earlier.

Used cars, meanwhile, were about 10% to 15% higher than in 2009, as still spend-weary shoppers continued to flood the market.

"Consumers have been willing to either substitute premium for non-premium cars or consider used and certified pre-owned cars instead of new," said senior analyst Karl Brauer.

Amid the increased demand and dwindling supply however, some pre-owned cars are actually more expensive than new cars, an issue evidenced in higher used car transaction prices, up to $19,345 from $16,586 a year ago.

Edmunds, citing data from the National Highway Traffic Safety Administration, said safety recalls affected about 19.1 million vehicles this year, up drastically from 13.4 million annual average from 2005 to 2009. Many of those have been due to unwanted acceleration and rear axle issues in certain Toyota (NYSE:TM) models.

“The Toyota recalls cast a much brighter spotlight on this process,” said Edmunds analyst Panee Segal. “It will be interesting to see if the trend continues into the future when recalls aren’t earning front page headlines.”

Among its top car technologies for 2010 were Volvo’s pedestrian detection with full auto brake, Infiniti’s eco pedal and GM’s OnStar MyLink app.