J.D. Power and Associates said it based the prediction of 1.1 million sales on data gathered from 10,000 dealers nationwide during the first 13 selling days in August.

The company also boosted its sales forecast for the full year to 10.3 million vehicles, up from the 10 million that it predicted in April, mostly because of the impact of the clunkers incentives.

Also, retail sales to individuals will be slightly more than 1 million, up nearly 2 percent from August of last year and the first increase in retail sales since June of 2007, J.D. Power said. Retail sales exclude purchases by fleet buyers such as rental car companies.

The clunkers program, also known as CARS, or the Car Allowance Rebate System, offers buyers rebates of $3,500 or $4,500 for trading in older vehicles for new, more fuel-efficient models.

The program has been so successful that it's in danger of exhausting the $3 billion that Congress allocated for the rebates by early September.

Through early Wednesday, auto dealers have made deals worth $1.81 billion. The incentives have generated more than 435,000 vehicle sales but dealers want a clear plan on when the rebates will no longer be available so they don't end up on the hook if the government runs out of money.

"Improved consumer confidence and credit availability during the past six months have combined with the CARS program to lift industry sales out of their slumping year-to-date levels, which have been down approximately 35 percent year-over-year," Gary Dilts, J.D. Power's senior vice president of global automotive operations, said in a statement. "These factors set the foundation for a gradual recovery in the months ahead."

But Dilts said reduced inventories could hold back some momentum, although automakers have moved to increase production to match rising sales.

J.D. Power also said that the clunkers program is expected to pull sales forward from next year, flattening the recovery. So it reduced its 2010 sales forecast slightly to 11.5 million from 11.6 million.

U.S. sales exceeded 16 million as recently as 2007, but have slumped during the country's financial meltdown and global economic downturn.