GM lifts U.S. sales outlook; Chrysler posts gains

General Motors Co  and Ford Motor Co both reported a smaller-than-expected decline in U.S. new vehicle sales in April, and GM, the largest U.S. automaker, raised its full-year forecast for the industry due to a strengthening economy.

GM cautioned that the next few months could be choppy, but projected that U.S. auto sales for the industry this year would be at their highest level since 2007.

GM said overall industry sales will be between 14 million and 14.5 million cars and trucks this year, up from its previous outlook of 13.5 million to 14 million.

2012 sales of 14 million would represent a 9.4 percent increase over last year's U.S. auto sales. A 14.5 million figure would be a 13.3 percent increase.

"Despite some persistent headwinds that have come in and out of the market, whether it is the European debt crisis or some uncertainty around fuel prices, we continue to expect gradual improvement in the economy going forward," GM sales executive Don Johnson told analysts and reporters on a conference call.

The U.S. auto industry is on the mend after its near-collapse in 2009 when GM and smaller rival Chrysler Group LLC filed for bankruptcy and overall U.S. auto sales fell to 10.4 million. By comparison, vehicle sales averaged around 16.7 million a year between 1998 and 2007.

In the first quarter of 2012, the annual sales pace was 14.6 million, buoyed by the increased need for American car shoppers to replace their aging vehicles and other factors, Johnson said.

Among the best performers for April was No. 3 U.S. automaker Chrysler, which posted an increase of 20 percent. Chrysler has been helped by an overhauled lineup of vehicles and aggressive advertising including a Super Bowl commercial featuring actor and director Clint Eastwood.

Over the next few months, GM predicted that U.S. sales growth would be flat compared with the first quarter, when the sales pace outstripped even the most bullish estimates.

"The next couple of months I think will be a repeat of the March-April trend. After that, I think we'll have to see what kind of strength the economy gets under foot," Johnson said.

GM reported an 8.2 percent drop in vehicle sales, while Ford's sales in April fell 5 percent. Toyota Motor Corp (7203.T) reported an 11.6 percent sales gain, while Volkswagen AG (VOWG_p.DE) said sales rose 31.5 percent.

GM and Ford said their declines were due to three fewer selling days in April 2012 compared with the year-ago month, a quirk in the calendar that has happened just twice in the past 10 years.

When adjusted for the fewer selling days, Ford said its April sales rose 7 percent while GM rose 3 percent.

GM shares were up 1.7 percent at $23.38 and Ford shares were up a penny at $11.29 on Tuesday afternoon on the New York Stock Exchange.

FORD SAYS FIESTA SALES OFF 44 PCT

Including medium and heavy trucks, Ford expects the overall industry to post an annual sales rate for April in the "mid-14 million" range. Chrysler forecast an April sales rate for the industry of 14.6 million vehicles.