Auto purchases increased 0.7% last month, the highest rate in the past half-year. The "cash for clunkers" program is credited with the spike, particularly given that other retailers continued to struggle.

Not including the auto sector, retail sales were up only 0.1% in July. So, the car manufacturers are getting their bump, but to call a recovery would still be premature. It's even gotten to the point where dealers are running out of inventory.

Car sales in the United States might be struggling, but in China, they are moving product. Passenger vehicle sales spiked 48% last month, its biggest gain since February 2006. Chinese buyers picked up 872,900 cars in June 2009, according to the China Association of Automobile Manufacturers, and total auto sales (with buses and trucks included) climbed 36% to 1.14 million year-over-year.

Government officials are proclaiming the country's "downward slide" over, and aggressive goals are being set. The full 2009 vehicle sales forecast was raised from 10.2 million to 11 million, as sales for the first half of the year were up 18% year-over-year to 6.1 million.

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For two companies with similar backgrounds, Toyota Motor Corp. (NYSE: TM) and Honda Motor Co. (NYSE: HMC) have grown markedly different. Toyota has taken a vertical approach to become arguably the world's premier brand in combining high volume sales with high-quality products. Honda has taken a much more horizontal route, dipping its feet successfully into a wide range of products.

In 2007 Toyota passed Ford Motor Co. (NYSE: F) as the world's second largest auto manufacturer. However, some question whether this victory came at the sacrifice of quality; Consumer Reports, which had consistently rated the company's cars at the top of its quality rankings, declined to recommend many of its models due to concern about slipping reliability. Its secondary line of autos, the Scion, which is targeted to a younger driver, is still scrambling for traction in this crowded field.

Honda's horizontal approach has taken it into farm and garden equipment, lawn mowers, motorcycles, even airplanes and soybeans. However, four-wheeled vehicles remain its core industry. Toyota's quality stumbles have opened up the field for Honda's reliable, affordable if unsexy lineup. The new subcompact Fit has replaced the Civic at the bottom of its price structure.