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Auto Sales are Up, But the Industry Still Feels Queasy

Welcome to the "blah" recovery.

The U.S. economy is slowly recovering, and so is demand for new cars. U.S. car sales in the first quarter were up 15 percent from a poor year-ago quarter. March auto sales were up even more, by 24 percent, according to AutoData Corp.

The thing is, sales were artificially juiced by incentives from Toyota (TM) and others, as Toyota fights back from its recall scandal.

For the global economy and for the U.S. market, it still doesn't feel much like things are getting better, and it probably won't through 2010. That's according to research and consulting firm IHS Global Insight, which co-hosted a conference last week to coincide with the press preview for the New York auto show.

"Recovery, yes, but it sure doesn't feel like one," said Nariman Behravesh, chief economist for IHS Global Insight. "We just came out of the deepest global recession in the post-war period," he said. "It's going to be lackluster."

George Magliano, director of automotive research for IHS Global Insight, said it's going to be a couple more years before U.S. auto sales get back to where they were before 2008, let alone improve from that level. Sales in 2007 were about 16.2 million.

"The recovery will be painfully slow, keeping competitive pressures high," he said. IHS Global Insight expects U.S. car sales this year of about 11.8 million, up from 10.4 million in 2009.

Magliano said U.S. auto sales probably won't top 16 million again until 2013. "Auto sales have turned the corner and are starting to develop some momentum. It will be quite some time before the market returns to 'normal' levels," he said.

Behravesh said that 2011 and 2012 will "feel more" like an economic recovery. "The good news is it's a recovery. That bad news is, it's a blah kind of recovery."

Chart: IHS Global Inight