Incentives Drive Strong July Auto Sales

DETROIT - Automakers posted higher U.S. sales last month, a sign that Americans are still willing to buy big-ticket items even though concerns linger about the economy and hiring.

After a sluggish June, sales rose slightly for General Motors Co. and Chrysler. Foreign-based companies such as Toyota and Honda posted bigger gains. Ford, meanwhile, had flat sales.

Sales were boosted by easier credit and new versions of cars and trucks ranging from Jeeps to large family wagons. Summer promotions also helped.

"Consumers have been conditioned to think that the summer is a great time to pick up a deal on a new car," senior analyst Jessica Caldwell said.

Car loan approvals have risen for buyers. And GM announced last month that it will buy a company that specializes in loans to shoppers with poor credit. Those subprime customers represent a big chunk of car buyers.

But the car industry is still vulnerable. Auto sales are recovering from a 30-year low in 2009, but the pace has been fitful. Month-over-month sales have fallen as often as they have risen in the first half of the year. Most automakers saw sales fall from May to June as shoppers worried about home values and high unemployment.

But when final sales figures are tallied late Tuesday, July could rank as one of the strongest sales months this year. It could also eclipse July of 2009, which was partly helped by the government's Cash for Clunkers rebate program.

Sales at General Motors Co. rose 2.6 percent over June, boosted by promotions to make room for 2011 models. Newly launched models also helped. The Chevrolet Camaro muscle car, Chevrolet Equinox crossover, Buick LaCrosse sedan and Cadillac SRX crossover showed strong increases, the company said. Crossover vehicles are roomy inside like a truck, but are usually built on a more nimble car platforms.

Ford Motor Co., which has enjoyed a strong 2010 so far, said its sales were flat from June. They rose 3 percent compared with July last year, lifted by stronger sales of its Ford-brand cars and trucks.

Ford's overall sales were weighed down by a drop in Mercury sales. Production of that brand stops at the end of this year. Sales at the Lincoln luxury brand slid 16 percent, largely because of falling demand for the Town Car sedan, which ends production next year.

Strong sales of Jeeps and Ram pickups lifted Chrysler Group LLC results over June and 5 percent over July of 2009, a poor month because it had just exited bankruptcy protection. The new Jeep Grand Cherokee boosting sales 54 percent over last July.

Sales at Japan's Toyota Motor Corp. jumped 20 percent in July from June. The Japanese automaker has continued to offer generous rebates to appease customers worried about safety recalls. Sales fell 3.2 percent from last year.

Nissan Motor Co.'s sales soared 28 percent from June on brisk demand for its cars and small SUVs. Honda Motor Co. sales rose 5 percent from June, but fell slightly from a year ago.

Any second-half recovery in sales depends on consumer spending since government stimulus and businesses inventory building have run their course, said Ted Chu, GM's chief economist. As long as employment continues to slowly improve and gas prices stay below $3 per gallon, sales should rise gradually.

"I think pent-up demand is going to continue to be the driver," he said.

Automakers are continuing to limit deals, which have hurt profits in the past. estimated that incentive spending, at an average of $2,831 per vehicle, was down 1 percent industrywide from June.

Jeff Schuster, director of global forecasting at J.D. Power and Associates, said the sales pace dropped off in the last half of July, likely because of the lack of big incentives.

Other automakers are reporting sales throughout the day:

— Hyundai sales rose 6 percent from June. Sales climbed 19 percent from July 2009, lifted by brisk sales of midsize and smaller sedans such as the Sonata and Elantra. .

— Kia sales rose 11 percent from June. Sales jumped 21 percent from July 2009, helped by new automobiles such as the Sorento crossover and the Soul hatchback.

— Subaru sales rose 11 percent compared with June. Sales rose 10 percent from July 2009, led by the Outback crossover.

— Daimler AG sales slipped 5 percent from June. Sales rose 7 percent from a year earlier, driven by its Mercedes-Benz luxury cars.