DETROIT - A year after the government-backed reorganization of General Motors and Chrysler, President Barack Obama on Friday trumpeted increased car sales and progress on battery-powered vehicles as a beacon of success in his administration's battle to revive a hurting U.S. economy. But his upbeat assessment can't mask daunting challenges for U.S. automakers and painfully high unemployment.

Touring Chrysler and GM assembly plants, Obama said a multibillion-dollar bailout of the two companies was paying off. Clear evidence that he sees an opening to appeal to recession-weary voters, Obama will continue to press the same case next week when he tours the Chicago plant where Ford builds the Taurus sedan and plans to assemble a new Explorer SUV.

At Chrysler's Jefferson North plant in Detroit, which recently added about 1,100 workers for a second shift, the president told employees, to loud cheers: "You are proving the naysayers wrong." After touring the GM's massive Hamtramck assembly plant not far away, where he drove a battery-powered Chevy Volt about 10 feet for the news cameras, Obama was even more animated.

Obama said he understands why many in the country were skeptical - or outright opposed - to a massive infusion of taxpayer cash into the industry, and acknowledged that "the politics of it weren't good." The taxpayer-financed bailout prevented complete failure of the domestic industry and set it up for long-term success, said Jesse Toprak, an economist and vice president at

Ford didn't receive the government's financial help, but benefits from the strength of its counterparts and supply chain.

GM has repaid $6.7 billion that the government considered loans, with the remaining $43.3 billion in aid converted into a 61-percent government stake in the company. GM is expected to conduct an initial public offering later this year.

Chrysler received about $15 billion in government help and was placed under control of Italy's Fiat as part of its bankruptcy. The U.S. government initially owned 9.8 percent of the reorganized Chrysler. The company has repaid about half of the $4-billion loan portion of its aid and is considering a public stock offering in 2011. - AP

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