GM sees October sales bounce, Chrysler plunges

General Motors posted its first monthly sales increase in nearly two years on Tuesday as a rebound in industrywide U.S. auto sales in October pointed toward a gradual recovery for the battered sector.

Chrysler was the weakest of the large automakers. Its sales plunged 30 percent in October, the day before Fiat SpA Chief Executive Sergio Marchionne releases a five-year turnaround plan for Chrysler.

Based on initial results from major automakers, U.S. auto sales appear to have bounced to an annualized rate of 10.5 million units in October, a level not seen in a year except for July and August when the U.S. government's "cash for clunkers" incentives program sparked a surge in auto sales.

The October sales are a key indicator because they are the first month of U.S. sales not affected by the clunkers boom, which provided incentives of up to $4,500, or the backlash that followed in September.

A rate of 10.5 million units would mean a jump from the 9.22 million rate in September after the incentives program had ended and inventories were decimated. It would also be a slight decline from October 2008, the first month after the financial markets collapsed.

Automakers said they were cautiously optimistic. GM said the U.S. economy and auto industry were starting to show signs of recovery and the results suggested the sector may be stabilizing after four years of declines.

GM posted a 4 percent sales gain, Ford Motor Co a 3 percent increase and Toyota Motor Corp a fractional gain. All three results were better than analysts had expected.

Korea's Hyundai Motor Co posted a 49 percent sales rise that blew past expectations and allowed the automaker to take more market share from rivals.

Nissan Motor Co Ltd reported a gain of nearly 6 percent, while Honda Motor Co Ltd reported a sales decline of less than 1 percent.

"We're seeing the industry get some legs under it," GM sales analyst Mike DiGiovanni said on a conference call.

While the sales results were viewed as positive, industry executives continued to question the speed and strength of any recovery given the high U.S. unemployment rate.

"We expect consumers to remain cautious as the recovery gains traction," said Ford economist Emily Kolinski Morris.

Toyota U.S. sales chief Bob Carter said the automaker expects a "very gradual" U.S. economic recovery.