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DETROIT — Lured by the government's “cash for clunkers” campaign, car and truck buyers started returning to showrooms last month, as Ford Motor Co. reported its first U.S. sales increase in nearly two years and other major automakers said sales showed signs of stability.

Hyundai and Subaru joined Ford in the plus column. Chrysler, which had been the worst-performing of the major automakers, managed a single-digit decline in July. If converted to an annual rate, overall industry sales could top 10 million cars and trucks for the first time in 2009. As recently as 2007, car and light truck sales topped 16 million vehicles, but the recession, tight credit and a lack of consumer confidence sent sales plunging late last year.

Ford, led by the redesigned midsize Ford Fusion, and strong sales of the Escape crossover vehicle and F-series pickup line, offered encouraging signs for industry analysts who predicted a modest improvement in the second-half of the year.

July sales of Ford, Lincoln, and Mercury light vehicles rose 1.6 percent from the same month last year. It was the first year-over-year rise since November 2007. Ford sold 158,354 vehicles, a 2.2 percent increase over June's figures, showing that the worst U.S. auto sales slump in a quarter-century may be easing.

Meanwhile, crosstown rival Chrysler Group posted a smaller year-over-year sales drop compared with recent months. The automaker, which emerged from bankruptcy protection earlier this year, said its sales fell 9.4 percent and received help from heavy incentives and the cash for clunkers program.

General Motors, which joined Chrysler in bankruptcy court for a time, said its July sales fell 19 percent from last year. But that figure was weighed by a 47-percent drop in sales to fleet customers such as rental car companies. Retail sales fell a smaller 9 percent.

Officially called the Car Allowance Rebate System, or CARS, the program offers owners of old cars and trucks $3,500 or $4,500 toward a new, more fuel-efficient vehicle, in exchange for scrapping their old vehicle.

Subaru of America said its U.S. sales leaped 34 percent in July on sizable sales improvements for most of its models. Hyundai said its sales jumped 12 percent, while Toyota, whose sales have taken a beating in the downturn, posted a slower sales decline of 11 percent.

German automaker Daimler said its sales in the U.S. fell by 24 percent in July, amid plunging sales of its Smart minicar and Mercedes-Benz luxury vehicles. Honda, Japan's No. 2 automaker, said its U.S. sales fell 17 percent last month. Nissan said its sales dropped 25 percent. link....