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Auto sales rise, defying recovery worries

Workers at General Motors' Lordstown Assembly plant in Lordstown, Ohio put the final touches on 2011 Chevrolet Cobalts. GM says its July sales rebounded slightly from June.
Workers at General Motors' Lordstown Assembly plant in Lordstown, Ohio put the final touches on 2011 Chevrolet Cobalts. GM says its July sales rebounded slightly from June.Mark Duncan / AP
/ Source: news services

Auto dealers attracted buyers in July, despite rising concerns about jobs and the strength of the recovery.

The world's big automakers, General Motors, Toyota, Ford and Chrysler, all reported sales gains in July versus June, some more than others, and most were helped by generous promotions.

"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.

Toyota said its U.S. sales rose 20 percent last month from June, as the Japanese automaker that has been battered by recalls continues to draw customers.

Auto sales at Detroit's automakers, GM, Ford and Chrysler, were flat to slightly higher in July, in a sign that Americans are still willing to spend on big-ticket items.

GM's sales rose 2.6 percent over June and 5 percent from July of last year, helped by promotions to make room for 2011 models. GM says sales from its four brands — Chevrolet, Buick, GMC and Cadillac — jumped 25 percent over July of 2009. Buick and Cadillac sales more than doubled. GM's total sales include Pontiac, Saturn and Hummer, which are brands it has sold or is discontinuing.

Newly launched models continue to propel GM's sales, with the Chevrolet Camaro muscle car, Chevrolet Equinox crossover, Buick LaCrosse sedan and Cadillac SRX crossover showing strong increases, the company said.

Ford, 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. Ford will end production of that brand at the end of this year. Sales at its Lincoln luxury brand slid 16 percent, largely because of falling demand for the Town Car sedan, which will go out of production next year.

Chrysler Group LLC says its July U.S. sales rose almost 1 percent from June and 5 percent over July of last year, a poor month because the company had just left bankruptcy protection.

Chrysler says it had strong Jeep and Ram pickup sales, with the new Jeep Grand Cherokee boosting sales by 54 percent over last July's numbers. Ram pickup truck sales were up 14 percent for the month.

Sales at Toyota fell 3.2 percent versus July last year, due to slower sales of small cars that sold briskly during last summer's Cash for Clunkers program. The program offered rebates to customers who bought fuel-efficient vehicles in exchange for gas guzzlers.

Toyota has been offering generous promotions, including cheap financing and low-cost leases, through much of the year to lure back customers after recalling 9.5 million vehicles. The recalls, which began in October, have covered a range of problems, including sticky gas pedals and faulty floor mats.

Industry analysts expected buyers to respond to the usual model year-end promotions advertised by automakers in July.

"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.

Credit is also thawing, with auto loan approvals up for buyers in every tier. GM announced last month that it would buy AmeriCredit Corp. in an effort to expand loans to customers with poor credit and offer more leases.

But the market is still vulnerable. Auto sales have been recovering from a 30-year low in 2009, but the pace has been fitful, with month-to-month sales falling as often as they rose in the first six months of this year.

Most automakers saw sales fall from May to June as shoppers avoided showrooms due to economic worries. Americans' confidence in the economy eroded further in July amid worries about a still-stagnant job market, according to a report issued last week by the private Conference Board.

J.D. Power revised its full-year industry sales downward last week, to 11.7 million vehicles from 11.8 million vehicles, citing the inconsistent recovery.

Government stimulus efforts and businesses rebuilding inventory had been fueling the economic recovery, but those have run their course, and any second-half recovery in the auto industry now depends on consumer spending, said Ted Chu, GM's chief economist.

He said as long as employment continues to slowly improve and gas prices stay below $3 per gallon, sales should rise on a gradual basis.

"As long as the economy is slowly recovering back, I think pent-up demand is going to continue to be the driver," he said.

Automakers are also 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.

All automakers report U.S. July sales on Tuesday. Analysts expect the month to be one of the year's strongest and better than last July, when the government started its Cash for Clunkers rebate program to resuscitate depressed sales in the first half of last year.

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, with the Outback crossover leading the pack.

— Daimler AG sales slipped 5 percent from June. Compared with July 2009, sales rose 7 percent, as strong sales of its Mercedes-Benz luxury cars offset plunging interest in its smart brand.