U.S. Auto Sales in July Best of Year

Automakers made their strongest U.S. showing of the year in July and sales provided further evidence of a strengthening economic recovery, even as Detroit’s Big Three lost market share to foreign rivals.

Aided by record high incentives and low interest rates, light-vehicle sales industrywide hit a seasonally adjusted annual rate of 17.3 million in July, at the top end of analysts’ estimates.

“I’m dumbfounded,” said Bill Turner, an equity analyst with Bank One Investment Advisors. “Who knows where the consumer is getting all their money, but they continue to buy cars.”

Sales were down 4.5% from July 2002, when automakers revived interest-free financing and sales hit an annualized rate of 18.1 million.

Although many import automakers reported stronger results Friday, General Motors Corp., Ford Motor Co. and the Chrysler arm of DaimlerChrysler were down from last year.

Despite offering cash rebates of as much as $4,000, Detroit automakers have lost U.S. market share this year, mostly to Japan’s Toyota Motor Corp. and Honda Motor Co.

Ford’s sales fell 11.5% in July from a year ago. GM, the world’s largest automaker, said it’s July sales dropped 5.8%. Chrysler, which lost $1.1 billion in the second quarter because of the high costs of incentives, said its sales fell 7.6%, steeper than analysts had expected.

Still, Ford, GM and Chrysler saw some signs of encouragement in July’s results. Although all three reported a steep drop in the sales of cars, those of highly profitable pickup trucks, sport utility vehicles and minivans fell only slightly, indicating that America’s appetite for large vehicles remains healthy.

Meanwhile, most foreign-based automakers reported stronger sales, including Japan’s three top automakers -- Toyota, Honda and Nissan Motor Co.