DETROIT – U.S. auto sales were flat in October but the annualized sales pace was quicker than in September, bolstering confidence the industry remains headed for a slow recovery.

General Motors Co. and Ford Motor Co. led the way, posting increases compared with October 2008, when sales were depressed by the financial crisis on Wall Street, The Wall Street Journal reported.

Chrysler Group LLC, which has struggled to jump-start sales since exiting bankruptcy reorganization, saw its sales fall 30 percent in the month. Sales were flat at Toyota Motor Corp. and Honda Motor Co.

Auto makers sold 838,052 new cars and light trucks, according to Autodata Corp. That’s just 104 fewer than in October 2008, but up 12 percent from the previous month, when September’s sales plunged following the end of the U.S. government’s “cash for clunkers” rebate program.

The closely watched seasonally adjusted, annualized selling rate was 10.46 million vehicles, down from the year-ago pace of 10.82 million but up from 9.22 million in September, Autodata said.

October’s rate was the highest rate of any month this year except for July and August, when cash for clunkers rebates caused new-vehicle sales to spike.

“The economy is in transition from recession to recovery,” Ford Chief Economist Emily Kolinski Morris said on a conference call with analysts and reporters. She cautioned, however, that consumer confidence remains fragile and many uncertainties cloud the near-term economic outlook.

Auto makers said they were encouraged by recent signs that new housing starts, a key indicator of economic health, have hit bottom and are beginning to recover. Home values appear to be mending, the companies said.

Both GM and Ford benefited from higher sales of small and mid-sized sport-utility vehicles and crossovers.

GM’s total sales rose 4.7 percent to 176,632 cars and light trucks in October, its first year-over-year gains since January 2008.

Sales in the four brands that GM is keeping – Chevrolet, Cadillac, Buick and GMC – increased 7.6 percent. That was partly offset by a 41 percent decline in sales of the four brands it is selling or shutting down – Hummer, Saab, Pontiac and Saturn.

Roughly half of GM’s October U.S. sales was made up of 2009 model-year vehicles sold at discounted prices, which erode profitability and hurt their resale value.

WSJ’s Matt Dolan and Dow Jones Newswires’ Jeff Bennett break down the Big Three auto makers’ sales for October and their respective outlooks. Plus, a preview of Chrysler’s restructuring plan.

Ford’s sales increased 3.3 percent to 136,583 vehicles. Its total was boosted by strong sales of its new Taurus sedan, which more than doubled from a year ago.

Ford estimated its total market share in October was more than 15 percent. That would be at least 2.5 percentage points higher than where it stood a year ago.

Ford’s overall increase came despite a fall in incentive spending. The company’s incentives averaged $2,909 per vehicle, down 25 percent from a year ago and 5.8 percent from September, according to car shopping site Edmunds.com. Industry-wide, incentives averaged $2,468 per vehicle in October, down 8 percent from September and down 12 percent from last year.

Firmer pricing has helped Ford. On Monday the company reported nearly $1 billion in profit for the third quarter. The company has also benefited from a rise in consumer sentiment toward the company because it was the only one of Detroit’s Big Three auto makers that didn’t require bailout loans and didn’t go through bankruptcy.

Toyota sold 152,165 vehicles in October, and Honda sold 85,502 vehicles, down slightly from a year ago.

Chrysler’s troubles continued in October, however. It sold 65,803 vehicles, about 3,000 more than in September, but a third fewer than a year ago.

On Wednesday, Chrysler will outline a turnaround plan it has worked out with its alliance partner, Fiat SpA. Included are launches of several new small and mid-sized models based on Fiat technology, although the first ones are not expected to arrive for another two years.

Until then, Chrysler will have to make do with its current line up. Its recovery plan calls for phasing out many of the current models over the next couple years.

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