U.S. auto sales are projected to rise nearly one-fifth to 11.8 million units in 2010, influential industry tracking firm CSM Worldwide said on Wednesday, citing signs that the worst of the economic downturn had passed.

CSM, raising its forecast by 600,000 units, said consumer confidence will improve enough to drive the industry's recovery by the first quarter of next year, when employment and other economic indicators are expected to bottom out.

Sales of 11.8 million units would represent the first year-on-year increase in U.S. light vehicle sales since 2005.

The move reflects cautious optimism that we will see gradual improvement in core market fundamentals following the first quarter of next year, CSM analyst Joe Barker said.

Separately, another leading forecasting firm, J.D.Power and Associates, said on Wednesday there are strong signals that the market had seen the trough of the current downturn that had saddled major automakers with mounting losses.

But it kept its forecast for 2010 U.S. auto sales at 11.5 million units.

I think the signals are strong but we are not fully out of it (slump) yet. Given what we have been through, we prefer to remain cautious, J.D.Power analyst Jeff Schuster said.

Both CSM and J.D.Power expect industry-wide U.S. light vehicle sales to top 10 million units this year.

Outlooks from the companies are one of the benchmarks that auto manufacturers and suppliers use to plan for future production.

The forecast for a recovery in 2010 comes at a time when the industry is gearing up to increase output on the view that sales are headed for a slow but gradual recovery. (Reporting by Soyoung Kim, editing by Maureen Bavdek)

Software