U.S. demand for light vehicles continued to defy mostly weak economic indicators by rising 9 percent in July.
Big sales gains at Japan's and Europe's top automakers -- Toyota, Honda, Nissan and Volkswagen -- offset declines at Ford Motor Co. and General Motors.
The seasonally adjusted annualized sales rate hit 14.1 million, in line with forecasts.
But July's 9 percent gain trailed analysts' projections as well as the double-digit increases of the two previous months. The industry's sales gain for the year is now 14 percent, down from 15 percent through June.
"Current data suggests that things are a little bit on the soft side compared with earlier in the year," Jenny Lin, Ford Motor Co.'s senior U.S. economist, said today.
Among major automakers, Toyota, Chrysler, Honda, and VW have gained market share this year through July, while GM, Ford and Hyundai-Kia have lost ground. Nissan's share has remained flat.
The Bureau of Economic Analysis said today it revised its seasonal factors used to determine the monthly calculation of seasonally adjusted sales rates, resulting in a lower SAAR for the first quarter of 2012 and slightly higher rates in the second quarter.
Under the revised figures, the SAAR has topped 14 million units each month this year except for May and January. Previously, May was the only month below 14 million.
Analysts and automakers continue to cite pent-up demand, new models, low interest rates and easing credit terms for the industry's sales gains.
Many consumers are choosing to replace older, less fuel-efficient models, still placing the industry on track to surpass sales of 14 million units in 2012.
"Signs of a housing recovery and good news on consumer confidence and household income should help keep the light- vehicle selling rate in the 14-million range and drive seasonally higher truck sales as we move toward fall," Kurt McNeil, head of U.S. sales operations for GM, said in a statement.
Still, recent reports showing lackluster job creation and persistent worries about the U.S. and European economies, are keeping automakers on alert.
Jeff Schuster, senior vice president of forecasting at LMC Automotive, says the forecasting firm's 2012 sales forecast of 14.5 million could be reduced by 150,000 units if the U.S. economy slows further.
"The auto industry is closely watching the sales performance over the next two months as the industry wrestles with a mixed bag of economic signals," Schuster said.
GM and Ford tied their declines in July U.S. sales on falling fleet deliveries.
GM's sales dropped 6 percent last month, with deliveries to retail customers off 3 percent. The company said total fleet deliveries declined 15 percent, including a 41 percent drop in sales to rental customers.
Ford reported a 4 percent drop in sales last month, with retail volume up 2 percent and fleet down 16 percent.
Honda Motor Co., Toyota Motor Sales, Chrysler Group, Subaru, Nissan North America, and the Volkswagen Group all had double-digit increases.
Toyota recorded a 26 percent increase as it continued to recover from earthquake-related inventory shortages a year ago. The Toyota division, aided by the redesigned Camry, posted a 24 percent increase in July sales, while Lexus shipments jumped 25 percent.
Honda: strong retail demand
American Honda said its July sales surged 45 percent to 116,944 units, with the Honda brand up 46 percent and volume at Acura advancing 36 percent.
John Mendel, American Honda's head of sales, credited "growing inventory" and "strong retail customer demand" for the company's July results.
"Our sales momentum continues to build through the summer," Mendel said in a statement.
Demand for each of the Honda brand's four core models -- Accord, Odyssey, CR-V and Civic -- soared 47 percent or more compared with July 2011, when earthquake-related shortages dented sales.
Toyota and Honda continued to recover U.S. market share in July.
At GM, sales were down 15 percent at Buick, 9 percent at GMC and 7 percent at Chevrolet. Deliveries rose 21 percent at Cadillac.
GM indicated earlier that sales to rental customers would be down sharply in July because scheduled shipments occurred earlier in the year compared with 2011.
Sales at the Ford Division dropped 4 percent while Lincoln volume dropped 11 percent.
Chrysler rolls on
Chrysler said its sales rose 13 percent -- its 28th consecutive monthly gain, with car sales advancing 19 percent and light truck deliveries up 11 percent.
Chrysler brand sales jumped 35 percent, while deliveries increased 15 percent at the Ram brand, 7 percent at Jeep, 6 percent at Dodge and 22 percent at Fiat.
Chrysler said sales of the new Dodge Dart compact hit 772 units in July, the model's first full-month on the U.S. market.
"July was another solid month for Chrysler Group as we again demonstrated our disciplined and methodical approach to growing sales and profits," Reid Bigland, head of U.S. sales for Chrysler Group, said in a statement.
Nissan North America posted a 16 percent July gain, aided by a 57 percent increase at the Infiniti luxury unit. Nissan Division sales rose 12 percent.
Volkswagen Group said July sales rose 27 percent at the VW brand and 28 percent at Audi. Subaru was up 16 percent.
The Hyundai-Kia Group, hurt by shortages of key models, said sales rose 5 percent last month, with Kia up 6 percent and Hyundai volume advancing 4 percent. It was the second-smallest monthly sales gain for the automaker since August 2010.
"This is a challenging situation in this hyper-competitive retail environment, so we are looking forward to August with great anticipation," said Dave Zuchowski, executive vice president of sales for the Hyundai brand. "Relief is on the way with the first shipments of our all-new Santa Fe ... and improved availability of [the] Veloster Turbo, Elantra GT and Elantra Coupe."
The BMW Group posted a 4 percent gain in July sales, with a 24 percent gain at Mini offsetting a 1 percent dip at the BMW brand. It was the first drop in monthly sales for the BMW brand since May 2010.
Some automakers face tough decisions this summer amid signs that the recent gains in transaction prices are slowing, and incentives and inventories are increasing.
With some companies hiking output, the industry may face more pressure to raise incentives if demand moderates, as well.
"It's a brave moment for the industry," John Krafcik, head of American Hyundai, said last month. "We're at a turning point."
The U.S. auto industry started July with a 58-day supply of cars and light trucks, up from a 52-day supply at the beginning of June.
Average incentives fell 2.7 percent in July to $2,480 from June, TrueCar.com estimates.
Autodata Corp. estimates average industry incentives have climbed 3 percent this year through June to $2,507, compared with $2,437 during the same 2011 period.
Average transaction prices in July rose 1.6 percent to $30,369 compared to a year ago, TrueCar estimated.
TrueCar analyst Jesse Toprak expects average transaction prices to remain above $30,000 for the rest of the year, but some automakers, notably the Detroit 3, may see transaction prices soften, he said.
The outlook for transaction prices will depend on how much automakers have to discount to clear out 2012 models.
"With economic growth slowing, sales growth will likely level off," said Alec Gutierrez, senior market analyst of Automotive Insights at Kelley Blue Book. "Manufacturers will need to get creative to keep sales momentum moving forward."
Joseph Lichterman contributed to this report