US vehicle sales jumped 20 per cent in August to the best performance in three years even as higher gas prices drove a shift towards smaller and more fuel efficient vehicles, industry data shows.
The results will be welcome news for President Barack Obama, who is touting his rescue of General Motors and Chrysler as he fights for re-election in November amid charges he didn't do enough to fix the nation's flagging economy.
"Autos have been a bright spot for the economy all year long and we see that trend continuing," said Kurt McNeil, head of GM's US sales.
While economic challenges remain, McNeil said GM is "bullish" and sees "a lot of opportunity in the back half of the year".
"We do see slow, gradual consistent growth in the industry," he said in a conference call.
Total industry sales came in at a seasonally-adjusted, annualised rate of 14.52 million vehicles, compared with 12.46 million in August 2011, according to Autodata.
That's the best sales pace since the 'Cash for Clunkers' government-funded incentive program drove consumers into showrooms in August 2009.
Much of the growth is fuelled by pent-up demand from all the people who put off buying a new vehicle in the wake of the 2008 financial crisis and lingering deep economic downturn.
But vehicle manufacturers said the gains also reflect an improved economic outlook.
"The economic fundamentals remain modest but stable," Ford economist Jenny Lin said in a conference call.
"This is still consistent for our outlook for the US economy to grow in the range of 2.0 to 2.5 per cent this year."
The biggest winners in August were Toyota and Honda, which saw sales collapse last year due to supply shortages in the wake of the devastating Japanese quake and tsunami.
Toyota's sales jumped 46 per cent to 188,520 vehicles while Honda's sales spiked 60 per cent to 131,321 vehicles.
While a "portion" of Toyota's sales gains reflects the recovery from last year's depressed levels, general manager Bill Fay said the "driving force behind our growth continues to be strong consumer response to the new models we've launched over the past 12 months."
Honda also insisted its gains were more than just a statistical bump.
"It's clear that demand for Honda products continues to be strong, and we're on track to post our best yearly sales results in four years," said John Mendel, American Honda executive vice president of sales.
The Detroit Three automakers posted double-digit gains thanks to recent investments in fuel-efficient and smaller vehicles and rising demand for pick-up trucks as the housing market recovers.
Ford - which posted a 13 per cent gain with 197,249 vehicles sold - announced plans to boost its fourth quarter production by seven per cent to 725,000 vehicles and to add a third shift at its Louisville Assembly Plant to support demand for the new Escape small utility.
"As fuel prices rose again during August, we saw growing numbers of people gravitate toward our fuel-efficient vehicles -- cars, utilities and trucks," said Ken Czubay, Ford's head of sales.
"Customers increasingly value savings at the pump, and Ford is answering the call with a full family of vehicles with leading fuel efficiency and the power to choose which vehicle best meets their needs."
GM posted a 10 per cent gain in August sales to 240,520 vehicles.
GM said extensive national advertising during the Olympic Games helped boost Chevrolet passenger car sales - which rose 25 per cent in August with the Spark, Sonic, Cruze and Volt all posting their best-ever month.
Fiat-controlled Chrysler posted a 14 per cent gain to 148,472 vehicles as sales rose for all its models in "the group's best August sales since 2007".
Fiat models led the sales pace, up 34 per cent, and Chrysler sales rose 25 per cent.
"Our hard work over the past few years is starting to pay some dividends in our sales growth, quality awards and profitability," said Reid Bigland, head of Chrysler group sales.
"An incredibly resilient US new vehicle sales industry doesn't hurt either."