Automakers sold 698,300 light vehicles in the U.S. last month, up from a very weak 657,000 units in January 2009, according to Autodata Corp.

Sales reached an annual rate of 10.78 million units in January, compared with a rate of 11.25 million in December and 9.62 million a year earlier, the research firm says.

Last month’s sales increase was paced by gains of 24% at Ford, 16% at Nissan and 15% at General Motors. Analysts say higher sales to commercial fleets, including car rental companies, contributed to the higher volume. Fleet sales more than tripled at GM and soared 154% at Ford from unusually low levels in January 2009.

Toyota Motors’ sales dropped 16% to the lowest volume for any month since 1999. The company estimates it lost 20,000 units of sales late in the month after it recalled 2.3 million vehicles and halted sales of the eight affected models.

Domestic brand sales increased 13% year over year, as the gains at Ford and GM offset Chrysler’s 8% decline. Chrysler fell to sixth place in sales behind (in descending order) GM, Ford, Toyota, Honda and Nissan. Market share for the domestic brands jumped 2.6 points from a year earlier to 45.1%.

Demand for Asian brands slipped 2%, as Toyota’s decline and a 5% drop at Honda more than offset increases of 24% at Hyundai and 28% at Subaru. Kia sales, which posted big gains last year, were flat in January. Asian brands lost nearly four points of share to 45.7%.

European brands recorded a 23% increase, thanks to gains at premium and luxury brands, including Volvo (+42%), Mercedes-Benz (+41%) and Audi (38%). BMW demand grew 8%. Volkswagen sales jumped 43% as demand surged for the Jetta compact car. European brands hiked their market share to 9.2% from 8%.

Passenger car volume increased 15%, while truck demand slipped 2%. Car demand was strongest in the midsize (+23%) and large (+25%) segments. Minivans sales dropped 25%, and pickup truck volume declined 9%. Demand for SUV dropped, except in the luxury segment, which posted a 20% increase.

The Dept. of Transportation is considering whether to levy civil penalties against Toyota for its handling of a pair of recalls involving accelerator pedals on 5.6 million vehicles in the U.S., according to several news reports that cite unidentified DOT sources.

The agency is under heavy political pressure from lawmakers who complain it reacted too slowly to consumer complaints about accelerators in Toyota vehicles. Next week Transportation Secretary Ray LaHood will testify before the first of two Congressional committees investigating the recalls.

Last week NHTSA lauded Toyota for acting responsibly. But yesterday LaHood said his staff had to make an “enormous effort” to get the company to agree to recall 2.3 million vehicles in the U.S. last month to fix sticking accelerator pedal assemblies.

In a statement, LaHood says DOT officials flew to Japan in December to meet with Toyota executives and remind them about their “legal obligations.” At a January meeting in Washington, D.C., he says the DOT had to “insist” the company deal with the accelerator pedal issue.

Shinichi Sasaki, Toyota’s chief quality executive, told reporters that the DOT’s prodding “helped to push us to act swiftly.” He says the company had been trying to decide for some time whether to take action.

The National Highway Traffic Safety Administration is investigating whether electromagnetic interference with electronic throttle systems in Toyota Motor Corp. vehicles could be behind reports of out-of-control vehicles, according to Bloomberg News, which cites an unidentified official at the U.S. Dept. of Transportation.

Yesterday Transportation Secretary Ray LaHood declared, “We’re not finished with Toyota.” He says the agency is “continuing to review possible defects” in the company’s cars.

Toyota’s two current recalls involve accelerator pedal assemblies that can jam or stick in the open position—not electronic throttle systems. Toyota says it has found no electronic problems after “exhaustive testing.”

Bloomberg News says the number of related lawsuits filed against Toyota that seek class action status has reached 15, half of which allege defects in the electronic throttle control system.

NHTSA said it has been unable to replicate sudden acceleration in tests of a handful of Toyota vehicles whose owners reported the phenomenon. Last year the agency says it tested the electronic throttle system on one such vehicle by subjecting it to electrical signals and magnetic fields, with no result.

ArvinMeritor Inc. broke even in the fiscal first quarter ending Dec. 31, erasing a $961 million net loss a year earlier. The company credits the impact of earlier cost-cutting actions.

When one-time items are excluded, the company’s continuing operations broke even, compared with a $47 million loss in the year-earlier period. Revenue slipped 6% to $1.1 billion in the October-December period. ArvinMeritor generated $2 million of free cash flow vs. a $386 million outflow a year earlier.

For 2010, ArvinMeritor anticipates a strong rebound in heavy truck demand in Brazil, China and India. The company says U.S. sales of heavy trucks could recover in the second half of this year because owners need to replace aging vehicles.

ArvinMeritor plans to continue efforts to divest its light vehicle business, noting “significant” interest in its body systems unit, which it hopes to sell this year.

Diesel engine maker Cummins Inc. posted a $270 million net profit in the fourth quarter of 2009, a record high for the period, compared with a $43 million profit a year earlier. Revenue grew 3% to $3.4 billion.

The Columbus, Ind.-based company says demand grew strongly in Brazil, India and China in the latest quarter. In North America, customers rushed to buy engines before new emissions standards took effect on Jan. 1.

For the full year, net earnings dropped 43% to $428 million as sales slid 25% to $10.8 billion.

Cummins expects truck and engine demand in North America to decline in the first half of this year. The company says North American sales of buses and medium- and heavy-duty trucks could plunge by as much as 80% in the January-June period.

The company forecasts that its sales in 2010 will edge up to $11 billion and net income will remain at 2009 levels. Cummins plans to boost capital spending by 30% this year to $400 million to fund projects critical to long-term growth.

This week Toyota Motor Corp. shifts its crisis management efforts from accelerator pedals that stick to the return of a familiar but elusive industry complaint: unexpected and spontaneous acceleration.

Sudden acceleration became a household phrase in 1986 when allegations of such problems nearly drove Volkswagen’s Audi brand out of the U.S. market. Regulators, unable to duplicate the problem, gently suggested the real culprit was drivers who accidentally floored the accelerator when they meant to hit the brakes.

The same term has been used to describe the phenomenon that led to Toyota’s two accelerator pedal recalls. But those campaigns address a very different issue: vehicles that are difficult to slow or stop after intentional acceleration.

The National Highway Traffic Safety Administration defines sudden acceleration as unintended high-power acceleration from a standstill or low speed, accompanied by an apparent loss of braking effectiveness. Some consumers and safety advocates say some Toyota owners have experienced exactly that, claiming their cars rapidly accelerated—sometimes from a full stop—when they weren’t pressing any pedals.

Yesterday Apple Inc. co-founder Steve Wozniak said his 2010 Prius hybrid sedan sometimes accelerates to as much as 97 miles per hour when he uses the cruise control to increase the car’s speed. He says feet aren’t touching the accelerator or the brake when this happens, although tapping the brake stops the acceleration. He suspects a software glitch.

Wozniak says Toyota and NHTSA didn’t seem interested when he reported the phenomenon. Unlike most drivers who report sudden acceleration, Wozniak says he can replicate the condition at will. Toyota now says its engineers will borrow Wozniak’s car for testing.

Automakers spent an average of $2,380 per vehicle sold in the U.S. last month on sales incentives, $160 less than in December and down $330 from January 2009, according to online auto data provider Edmunds.com.

Domestic automakers spent an average of $3,110 per vehicle sold in January, down from $3,400 the month before. Chrysler boosted incentives by $490 to $3,060. Ford increased spending by $60 to $3,100. General Motors cut incentives by $900 to $3,100.

European carmakers reduced incentive spending by $360 to $2,610. South Korean automakers hiked spending by $70 to $2,100, and spending by Japanese companies was flat at $1,560.