U.S. Auto Sales Jump in July

By Dow Jones Business News, 

U.S. auto demand roared ahead in July thanks to healthy summer sales incentives, with top auto makers posting near double-digit increases over last year on top of already-high sales levels in the U.S.

Underlying the momentum is evidence that auto makers are resorting to more discounts and rebates in a battle to maintain market share. TrueCar Inc., the Internet-based auto-pricing service and research firm, said incentive spending rose 8.4% from last July, the highest level since July 2010.

General Motors Co., Chrysler Group LLC, Ford Motor Co. and Nissan Motor Co all reported gains.

Sergio Marchionne, chief executive officer of Fiat Chrysler Automobiles NV, said earlier this week that incentive spending hurt profitability in North America and that the company was planning to rein in spending going forward.

New car sales have been a bright spot in consumer spending and the U.S. economy in recent years, and some analysts and auto executives believe the industry is near its peak for normal demand following deep declines in 2008 and 2009.

Edmunds.com, a car shopping website, forecasts the industry sales rate to be 16.8 million units for July on an annualized rate, the highest since July 2006. The sales rate is getting near historic highs for the U.S., when sales touched 17 million in 2000. Those years, however, were fueled by much heavier use of subsidized leases and sales of new cars to rental car fleets.

A Ford economist, Emily Kolinski Morris, said the company expects U.S. economic growth to be about 3% for the third and fourth quarter, supporting continued strong demand.

"This is a pretty well supported (sales) level for the industry," she said. "We are getting to a level where you might see some ups and downs."

General Motors Co., the largest U.S. auto maker, said sales rose 9.4% to 256,160 in July, driven by a 22% increase from its GMC truck and SUV brand. Ford, the number 2 U.S. auto maker, said sales increased 9.5% to 211,467, excluding its heavy trucks. Chrysler said sales jumped 20% to 167,667, and Nissan said sales increased 11.4% to 121,452.

Sport-utility vehicles remained popular. Ford said sales of its SUVs rose 17.1% in July. Similarly, Chrysler's Jeep brand, made up of utilities, had a 41% increase over a year ago.

"The key behind this trend is the growth of the compact crossover SUV market. The segment's share of all sales has nearly doubled in the last decade," said Jessica Caldwell, an analyst with Edmunds.

Write to Mike Ramsey at michael.ramsey@wsj.com and Michael Calia at michael.calia@wsj.com

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