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U.S. auto industry uneasy after weak July sales

DETROIT — Auto sales rose only slightly in July, adding to concerns in the industry that Americans are pulling back on car buying. A lack of discounts and lingering shortages of Japanese cars kept many buyers away. Americans also worried about the economy.

"There's definitely some weakness kind of looming out there," said Jeff Schuster, executive director of global forecasting at J.D. Power and Associates.

But July wasn't a total loss. Sales of compact cars and newer, more fuel-efficient SUVs rose.

Trucks sales were down, however, hurt by continuing weakness in construction.

Sales rose 8 percent at General Motors, led by fuel-efficient vehicles such as the Chevrolet Cruze, which can get 30 mpg in combined city-highway driving. Sales rose sharply for the Chevrolet Equinox and GMC Terrain small crossovers, which also get good gas mileage.

Ford said sales rose 6 percent. The new Ford Explorer was a strong performer, with sales more than double a year ago. One of the company's small cars did well, too. The Fiesta saw sales rise 58 percent.

Sales fell 28.4 percent last month at Honda and 22.7 percent at Toyota compared with July 2010. Both companies have been struggling to meet demand because of parts shortages caused by the earthquake and tsunami that struck Japan in March.

Kia said its July sales jumped 28.5 percent, thanks to strong sales of the new Optima sedan, which were more than triple last year's numbers.

Buyers, who are accustomed to summertime discounts, are also concerned about high prices. Schuster said a standoff could be brewing between people waiting for deals and automakers that are reluctant to give them.

Carmakers are keeping prices high because of rising steel costs and lingering shortages of some vehicles and parts.

General Motors' vice president of sales, Don Johnson, predicted that discounts would rise in the second half. Japanese cars are re-entering the market as their factories come back on line. That could boost industry sales because many people are waiting for those cars. Also, sales could get a lift from people who are driving older cars and finally need to replace them.

"The underlying fundamentals are there to get back on track with that slow, steady growth that we saw earlier in the year," Johnson said.

U.S. auto industry uneasy after weak July sales 08/02/11 [Last modified: Tuesday, August 2, 2011 8:54pm]
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