Thinking small lifts American car sales

Americans' demand for small cars produced a nine per cent increase in vehicle sales last month, despite their country's weak economy.

Big sales gains at Japan's and Europe's top automakers - Toyota, Honda, Nissan and Volkswagen - offset declines at Ford and General Motors.

Total sales for last month were 1.15 million, according to researcher Autodata.

Signs are that this year's sales will reach 14 million, making it the best year since 2007.

Chrysler, on the rebound since emerging from bankruptcy three years ago, has benefited from newer models such as the Chrysler 200 sedan, Jeep Grand Cherokee sport-utility vehicle and Fiat 500 small car. Its sales increased to 126,089 for July.

GM and Ford blamed their declines on falling fleet deliveries.

GM's sales dropped 6 per cent last month. Deliveries to retail customers were down 3 per cent.

The company said total fleet deliveries declined 15 per cent. This included a 41 per cent drop in sales to rental customers.

Ford reported a 4 per cent drop in sales last month, with retail volume up 2 per cent and fleet down 16 per cent.

Honda, Toyota, Chrysler Group, Subaru, Nissan North America, and the Volkswagen Group all had double-digit increases.

Toyota recorded a 26 per cent increase as it continued to recover from earthquake-related inventory shortages a year ago.

The Toyota division, aided by the redesigned Camry, posted a 24 per cent increase in July sales, while Lexus shipments jumped 25 per cent.

Honda USA said its July sales rose 45 per cent to 116,944. The Honda brand was up 46 per cent and Acura sales rose 36 per cent.

Honda's head of sales, John Mendel, credited growing inventory and strong retail customer demand for the company's July results.

Analysts and automakers continue to cite pent-up demand, new models, low interest rates and easing credit terms for the industry's sales gains.

Many consumers were replacing older, less fuel-efficient models.

Said GM's head of US sales operations, Kurt McNeil: "Signs of a housing recovery and good news on consumer confidence and household income should help keep the light vehicle selling rate in the 14-million range and drive seasonally higher truck sales as we move toward fall."

Still, recent reports showing lacklustre job creation and persistent worries about the American and European economies, are keeping automakers on alert.

Jeff Schuster, senior vice-president of forecasting at LMC Automotive, says the company's 2012 sales forecast of 14.5 million could be reduced by 150,000 if the US economy slows further.

"The auto industry is closely watching the sales performance over the next two months as the industry wrestles with a mixed bag of economic signals," said Schuster.

- Autonews