US car sales rise in July despite uncertainty

US car sales rose last month, but automakers said consumers’ confidence was rattled by the sluggish economy and the brinksmanship in Congress over raising the debt ceiling.

US light vehicle sales hit an annualised rate of 11.8m-11.9m in July, up from 11.4m in June and 11.5m in July 2010, according to JD Power, the consultants.
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The figures were in line with most analysts’ forecasts, and marked the third consecutive month when US light vehicle sales were below 12m.

Automakers have recently contended with higher petrol prices and disruption to production and inventories caused by Japan’s earthquake and tsunami in March.

“July was good, not great – better than the last two months where we saw a slowdown, but we’re not seeing the second-half recovery lift we had expected”, said Jeff Schuster, JD Power’s executive director for forecasting.

General Motors, America’s biggest carmaker by sales, said its sales were 8 per cent higher in July than the same month last year.

Don Johnson, head of sales for GM’s US operations, said that July had suffered from a “hangover effect” from the Japanese earthquake and higher petrol prices.

GM said that that uncertainty created by the deeply partisan debate over raising the US debt ceiling had dampened consumer sentiment, which was at its lowest level last month since March 2009.

“We’ve seen the consumer’s level of confidence is pretty fragile, given what’s happened in the past couple of months”, Mr Johnson said.

However, he added that there were some bright spots - including falling petrol prices, which provided some relief to consumers. While the economy had lost some momentum, GM thought it would continue to recover, albeit at a more gradual rate than it had forecast at the beginning of the year.

Ford Motor, America’s second-largest producer, reported its July sales were 9 per cent higher than a year ago.

“Despite a series of generally negative headlines punctuated by debate about the increase in the debt ceiling, auto sales moved higher, and this is a good sign for all of us going forward”, said Ken Czubay, Ford’s head of US sales and marketing.

Chrysler, which is majority owned by Fiat, reported a 20 per cent year-on-year increase in its sales, marking its best July since 2007.

Chrysler attributed the rise to its Jeep brand’s models, but said that Fiat’s small 500 city car also “contributed significantly” to the gain, along with its Dodge Durango SUV and new Chrysler 200 mid-size sedan.

GM and Ford both reiterated their forecasts of total light vehicle sales this year – including light trucks – of 13m-13.5m. However, both companies now said they expected sales ultimately to be at the lower end of that range.