DETROIT – U.S. automakers Tuesday posted sharp declines in July vehicle sales, hurt by comparison to last summer's discount-driven sales boom and the shift away from big trucks and SUVs in the face of high gasoline prices.
Pinched by the cost of fuel and higher interest rates, more consumers opted for smaller cars in the month, an accelerating trend that has proven a windfall for the Asian automakers, especially Toyota Motor Corp. and Honda Motor Co.
Toyota posted a 16 percent gain in sales, making it the No. 2 automaker in the U.S. market for the first time in the month, ahead of both Ford Motor Co. (F) and DaimlerChrysler AG (DCX), which both reported steep sales declines.
Honda sales were up 10 percent, while Hyundai Motor Co's sales rose 6 percent, putting all three Asian automakers on track for a larger share of a softening U.S. market for new vehicles.
Automotive executives said they expected an industry-wide sales decline of 17 percent to 20 percent from last July's near-record sales tally, when Detroit-based car companies offered deeply discounted employee-level pricing to all buyers.
Chrysler Group, the U.S. unit of DaimlerChrysler AG , reported a deeper-than-expected sales drop of 37 percent on an unadjusted basis.
That was a setback for Chrysler, which has been working to sell off unsold inventory ahead of the launch of key new models.
Chrysler has responded by extending a package of discounts, including employee-level pricing and zero-percent financing until the end of August.
"Consumers are wrestling with higher interest rates and other increased household costs on a monthly basis," said Michael Manley, vice president for sales strategy at Chrysler.
Ford's sales dropped 34 percent, weighed down by a 44-percent slide in its profitable truck line-up.
"Ford and Chrysler were just simply disappointing," said Jesse Toprak, an analyst at Edmunds.com, who had forecast higher sales. "It's a quite dramatic decline."
General Motors Corp. (GM), the No. 1 automaker worldwide, posted a 19.5-percent drop in sales, in line with expectations, given the tough year-earlier comparison.
GM, which touched last summer's price-war, has steered clear of a repeat of the same kind of sweeping rebates this year. Those incentives boosted the number of cars sold but sacrificed profitability for both the U.S. automakers and their dealers.
SALES SEEN DOWN FROM YEAR-AGO, UP FROM JUNE
Analysts have projected that U.S. vehicle sales would come in at a seasonally adjusted, annualized rate of 17 million to 17.2 million vehicles in July.
That would be down from last July's 20.7 million unit rate but higher than the 16.2 million rate posted in June.
"What we aren't going to have in (2006) was this roller-coaster that we were on in (2005)," said Ford sales analyst George Pipas. "We're aren't going to see the peaks and hopefully we won't see the valley."
Ford said sales of mid-size sedans -- the Ford Fusion, Mercury Milan and Lincoln Zephyr -- rose 18 percent in July, and pointed to its success in winning more retail sales.
Ford sold just 23 percent of its vehicles in July to commercial fleets, including rental car companies, down from an average of 37 percent over the first half, Pipas said.
Reflecting their fall from favor with consumers, large trucks and SUVs carried higher-than-average discounts of more than $5,200 on average in July, according to Edmunds.
The defection from SUVs also hurt some luxury car makers in July. Porsche AG suffered a 23 percent drop in demand for its Cayenne model, even as its overall sales rose 12 percent on the back of strong demand for the Cayman coupe.
By contrast, new compact and sub-compact models have proved popular. Nissan Motor Co. said it sold 2,856 of the new Versa compacts in July, double the company's internal forecast.
Nissan's overall sales dropped 16 percent, only slightly better than the overall market decline.
"Sedans are selling well and trucks have not done well. A lot of the fuel price is showing its effect," said Brad Bradshaw, Nissan vice president and general manager.
Nissan is weighing an expanded alliance that would bring it together with GM and Renault SA, the French automaker that owns a controlling stake in Nissan.