GM, Ford and Chrysler sales advance on crossover, small-car demand

General Motors, Ford and Chrysler posted higher July sales, helped by demand for crossovers as well as small, fuel-efficient vehicles.

GM said today its sales rose 8 percent last month from a year ago, with passenger car demand rising 8 percent and crossover sales increasing 20 percent. At Ford, sales rose 6 percent, with car demand advancing 3 percent and light truck sales up 12 percent.

Chrysler's July sales increased 20 percent – helped by several new models and a 46-percent increase in Jeep volume. Volkswagen AG said sales at its VW brand rose 22 percent on higher demand for the Jetta and models equipped with diesel engines.

The results from Detroit automakers follow projections of another month of soft demand for the industry. The average seasonally adjusted sales rate forecast from analysts surveyed by Bloomberg was 11.8 million, the third straight month below 12 million.

While U.S. light vehicle sales rose 13 percent this year through June, demand has weakened in recent months because of supply shortages stemming from the March earthquake in Japan, a sharp drop in incentives, volatile fuel prices and the sluggish economy.

"There are people who put off vehicle purchases because of uncertainty about fuel prices, vehicle availability and the economy," said Don Johnson, head of U.S. sales for GM. "As these conditions improve in the latter half of this year, many of these buyers will return to the market."

GM said the protracted debate in Washington over whether to raise the nation's debt ceiling also cast a cloud over sales last month. And gasoline prices – while stabilizing at around $3.70 a gallon nationwide – continue to weigh on the minds of many motorists.

"The auto industry is having a difficult time shaking off adversity," said Jeff Schuster, executive director of global forecasting at J.D. Power and Associates.

While demand has softened, transaction prices are rising, offering a silver lining for some automakers.

TrueCar.com estimated today that the average transaction price for light vehicles rose $582 to $29,761 in July 2011 from a year ago. And average transaction prices rose $102 – or 0.3 percent – from June 2011.

"Despite continued weakness in the economy and the ongoing concern over the debt ceiling, consumers continued to purchase vehicles packed with options in July," said Jesse Toprak, an analyst with TrueCar.com. "Tightened inventories, lower dealer discounting and manufacturer incentives, along with a more expensive product mix resulted in the highest transaction prices we have recorded in the industry."

Demand for big pickups – a bright spot early in the recovery – softened for some Detroit automakers. Ford said F-Series sales dipped 2.7 percent last month.

Sales of GM's large pickups declined 3 percent from a year ago but inched up 2 percent from June, the automaker said.

"The increase in industry sales of full-size pickups is consistent with our forecast, as more truck buyers come back into the market," Johnson said. "We expect continued modest growth in the segment for the remainder of the year."

Japanese automakers are expected to lose ground again in July because of shortages of cars and light trucks.

U.S. stockpiles of Japanese models stood at 568,800 units on July 1, down from 598,400 in early June and 730,200 on May 1, according to the Automotive News Data Center.

Automakers are still counting on slow but steady economic growth, pent-up demand, and improving stockpiles following the March earthquake in Japan to bolster demand in the second half.

Analysts expect total vehicle sales – including medium- and heavy-duty trucks - to total 12.5 million to 13.5 million for all of 2011. GM said today it expected sales to finish at the low end of its forecast – 13 million to 13.5 million.

But recent economics reports – lackluster job and economic growth in the second quarter and first-quarter growth that was revised down – have prompted some analysts to lower their outlook for the rest of the year.

New government data released today showed that personal spending fell 0.2 percent in June, the first time it has dropped since September 2009. Nominal personal income inched up by 0.1 percent in June and wage and salary income – a key to consumer spending -- was unchanged in June from 0.2 percent in May, its smallest rise this year.

"With auto sales already not running at a strong rate this summer, it could be a tough second half of the year for the auto industry," said Toprak.

By David Phillips- Automotive News