SAN FRANCISCO - Daimler AG's Mercedes-Benz premium auto division expects year-on-year U.S. sales growth in the next few months and the potential to increase its U.S. market share next year, U.S. Chief Executive Ernst Lieb said on Monday.

Mercedes, which has seen its U.S. sales fall 20 percent so far this year, posted a 21.3 percent rise in U.S. sales in October, its best month of the year so far.

The results from Mercedes followed the industry's best monthly performance of 2009 outside of months in the summer that were boosted by the U.S. government cash for clunkers incentives program.

U.S. auto industry sales hit a 10.46 million unit annualized rate in October, the best monthly performance of the year outside of clunkers fueled July and August results.

Lieb, in an interview, said the industrywide sales atmosphere seems to be improving though it may be too early to say whether the U.S. auto market has turned a corner.

I think it's too early to say it's turning, Lieb said. At best I would say it's maybe some stabilization.

It (market) becomes a little bit more predictable, from a dealer perspective at least, he added. There seems to be some traffic. People are a little bit more willing to look at a new car and spending money.

Auto sales in the United States have been hurt in the past year as customers tightened purse strings amid a weak economy. The economic meltdown came on the heels of already-weakening vehicle demand amid record-high gasoline prices last year.

Even luxury vehicle makers, who typically are more insulated from market volatility, suffered with the global credit crunch that has plunged the U.S. economy into recession and created a backlash against lavish and conspicuous spending.

Lieb said the U.S. auto market is taking a step in the right direction but is certainly not in the clear yet.

We should be seeing a little bit of plus on November and most likely in December, he said of Mercedes' U.S. sales.

For 2010, Lieb said the forecast for industrywide sales of 11.3 million vehicles appears realistic and Mercedes could potentially increase its market share next year, especially with its redesigned E class car.

The luxury car maker said it is also getting ready to launch its hydrogen-powered fuel cell vehicles next year.

Lieb said the company will be launching only 50 such vehicles initially as it tests the acceptance for them.

Mercedes is investing in a range of green technologies as the market for such technologies is still evolving and there has yet to be a consensus on what type of vehicles consumers would adopt, Lieb said.

Fuel cells are not a new concept to the industry. Most major automakers have spent billions of dollars in researching a hydrogen-powered fuel cell for vehicles, tempted by the idea of a car that uses no gasoline and emits only water vapor. That research is now mostly on the back burner, given the expense, transportation issues and volatility of hydrogen gas.
Lieb said while Mercedes is experimenting with fuel cell vehicles, the technology still has a long way to go.

(Reporting by Poornima Gupta; Editing Bernard Orr)

U.S.