The battered auto sector is poised for a rebound as car plants and buyers shift into a higher gear in 2010, a report by the Bank of Nova Scotia forecast on Tuesday.

General Motors recently invested $90 million to retool its Ingersoll, Ont., CAMI plant. (Dave Chidley/Canadian Press)

The bank said a cyclical recovery in global auto sales that began in the spring of 2009 would gain momentum in the new year. Improving access to credit and growth in the global economy should enable 2010 car sales to recapture half of the ground lost over the past two years, setting the stage for record sales volumes in 2011, Scotiabank's senior economist Carlos Gomes said.

The emerging markets of China, India and Brazil will lead the way, but even the hard-hit U.S. market will see a double-digit advance as incomes have been rising steadily since April 2009, the bank noted.

Price cuts to woo wary buyers are starting to have an impact on affordability, as a typical U.S. household now has to work only 13 weeks to purchase a new car — about 20 per cent below the average level of the past decade, the bank estimated.

Boon for Canada?

If events play out as the report predicts, Canadian-based car plants could be especially well poised as North American automakers have ramped up their production schedules for the closing months of 2009, and the bank expects further expansion in the early part of next year.

Vehicle output in Canada will climb 10 per cent next year, the bank forecasts, led by more light truck production stemming from an expansion at GM's Cami plant in Ingersoll, Ont.

With files from The Canadian Press