Auto Sales Flat as Demand Drags

Hefty cash rebates and interest-free loans failed to deliver a full-throttle increase in U.S. auto sales in June, as demand remained tepid in the face of the sluggish economy.

With most major automakers reporting results Tuesday, industry analysts said June sales of new cars and light trucks were expected to come in at a seasonally adjusted annual rate of about 16.3 million to 16.5 million.

That would be up from a rate of 16.1 million vehicles in May -- thanks to what analysts describe as an unprecedented blitz of consumer incentives -- but essentially flat versus 16.3 million in June last year.

Ford Motor Co.’s June U.S. sales fell 1.2% versus a relatively easy comparison a year earlier, when its sales fell sharply. The result excluded heavy trucks and Ford’s foreign nameplates Jaguar, Land Rover and Volvo, and were adjusted for sales days which improved the comparison with June 2002.

“We were frankly a little disappointed with the overall level of sales,” said George Pipas, Ford’s chief U.S. market analyst.

To cut bloated inventory, Ford, the world’s second-largest automaker, said last month that it was slashing third-quarter North American vehicle production by 15%.

General Motors Corp., the No. 1 automaker, said its June sales rose a better-than-expected 1.2%, excluding its Saab brand and some heavy trucks. GM’s results were the direct opposite of Ford’s.

But it too has cut third-quarter production, taking a direct hit to earnings to bring down inventories in the face of flagging demand.

On a bright note, the Chrysler unit of DaimlerChrysler said its U.S. sales were up 6% in June over the same month a year ago as new products, including the Pacifica sport wagon, helped give the company a boost.