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Global car industry sharpens U.S. focus for 2013

By Laurence Frost and Ben Klayman

PARIS/DETROIT (Reuters) - The U.S. car market's rebound may be slowing - but it still looks like the best bet to many of the global industry's top brass as they converge on Detroit for the 2013 auto show.

With Europe in a protracted meltdown and some emerging markets flagging, the United States will increase its share of world auto sales this year even as its economy cools, analysts and executives predicted ahead of Monday's media opening.

American light vehicle sales are expected to rise 4 to 7 percent with prices remaining strong, according to most estimates. That would outpace the 2.6 percent global expansion forecast by consulting firm LMC Automotive.

That is an alluring prospect for European brands fleeing the carnage at home and Japanese automakers hurt by a politically driven consumer backlash in China - where growth and pricing are less predictable for everyone.

"Even if China overtook the U.S. as our biggest-volume market, the U.S. is and will remain our second-most important market after Germany," Porsche CEO Matthias Mueller said.

The Volkswagen-owned sports car maker thinks Europe would be "lucky" to see a recovery before 2015, Mueller said in an interview. "The situation is as critical as ever."

U.S. OUTPERFORMS

The North American International Auto Show, better known as the Detroit auto show, opens to the public on January 19.

Among new vehicles to be unveiled by European carmakers at this year's event are the SQ5 high-performance crossover from VW's Audi brand, BMW's M6 Gran Coupe and the redesigned Maserati Quattroporte.

The European market, already near a 20-year low, will shrink another 1.7 percent this year to 17.8 million light vehicles, LMC predicts, while the United States grows 4.2 percent to 15.1 million.

By comparison, U.S. auto sales averaged nearly 17 million vehicles a year in the decade prior to 2008 when the recession cast a pall.

Although rising more sedately than last year's 13.4 percent surge, projected U.S. deliveries will account for 18.2 percent of the 82.7 million global total, compared with 17.9 percent in 2012.

"Right now, the U.S. is the healthiest auto market in the world," said John Casesa, senior managing director with Guggenheim Securities.

Sales growth will be close to zero in Brazil and will slow to 3.4 percent in Russia, according to the same forecasts, while China's expansion accelerates to 10.2 percent from 5.9 percent.

But with Chinese manufacturing capacity for 1.5 million additional vehicles coming on stream, some analysts warn that pricing and profitability could suffer this year.

Balancing China's enormous growth potential, "a certain amount of unsteadiness is a factor," Porsche's Mueller said.

Japanese automakers are still smarting in China, where public outrage over a territorial dispute has translated into more than 100,000 lost sales for Toyota Motor Corp <7203.T> and Nissan Motor Co Ltd <7201.T> since September.

That can only increase their appetite in the United States - where car sales by Asian and European brands both averaged 22 percent growth, compared with a 12 percent gain for domestic nameplates.

The yen's recent decline against the dollar will also give Japanese imports more edge, General Motors Co Chief Executive Dan Akerson acknowledged.

"People are going to be very competitive in this market," Akerson told reporters on Wednesday. "This is the market with the best margins."

While GM lost ground last year, it has broadly "held the line" since emerging from bankruptcy in 2009 and will soon benefit from the renewal of its aging lineup, Akerson said.

ENCOURAGING SIGNS

New pickup trucks being shown next week by Ford and GM's Chevrolet and GMC may help the incumbents fight back.

Ford is also cautiously optimistic about 2013, the company's chief economist said this week.

A coming payroll tax hike may weigh on sentiment, Ellen Hughes-Cromwick said, but signs of a housing market rebound and progress in President Barack Obama's fiscal policy standoff with Congress are "favorable developments."

While economic growth will likely slow to 1.6 percent from last year's 2.2 percent, Citi analyst Itay Michaeli said, a glut of aging vehicles on U.S. roads promises to unlock "pent-up demand" for replacements in years to come.

"We may have only begun to see the U.S. sales recovery," Michaeli said.

The bullish outlook shows that American carmakers' drastic job and factory cuts of 2009 are still paying off, said Michael Tyndall of Barclays Capital.

"The U.S. took its medicine in the last crisis and capacity has remained relatively tight, so pricing remains disciplined," the London-based analyst said.

"The operative word is growth - whereas Europe is going backwards again."

(Additional reporting by Andreas Cremer in Berlin, and Bernie Woodall and Deepa Seetharaman in Detroit; editing by Matthew Lewis)

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