DETROIT – Big discounts helped U.S. auto sales sizzle in July.
Toyota, Ford, Nissan and Chrysler all saw double-digit sales gains, and General Motors’ sales were up 9 percent over last July. Honda and Volkswagen saw declines.
Analysts predicted the best July for the industry since 2006. Industry sales were expected to rise 11 percent to nearly 1.5 million, according to car-buying site Edmunds.com.
Generous summer discounts helped boost sales. Automakers typically offer deals in the summer to clear out inventory before cars from the new model year arrive in the fall.
Incentives rose 8 percent – or $216 per vehicle – over last July, according to Jesse Toprak, chief analyst for the car-shopping site Cars.com. Incentives averaged $2,774 per vehicle, their highest level since August 2010.
Toyota was offering zero-percent financing on a five-year loan and $1,000 cash back on the Camry sedan. Ford offered $6,000 cash back on a new Expedition SUV. And Chrysler was peddling a $99 per month, two-year lease on a Dodge Dart.
Edmunds.com said 13.5 percent of new car loans in July had zero-percent financing, the highest level since December 2010.
While incentives are a boon for consumers, they’re costly for automakers and can hurt resale values down the line. But Ford’s U.S. sales chief, John Felice, said the trend isn’t too worrisome.
As the post-recession sales rate slows, he said, automakers are getting more aggressive, because in order to grow they need to steal sales from a competitor. That’s already happening in the car segment. Buyers are paying an average of $1,000 less for a Ford Fusion sedan than they did a year ago, he said.
But SUV and truck demand remains strong, and so do prices. Overall, he said, buyers are still paying $800 more per vehicle than they did last year. That’s because even with discounting, more people are choosing pricier SUVs and loading them up with features.
Michelle Krebs, a senior analyst at AutoTrader.com, said that unlike a decade ago, when automakers had to use discounts because they were producing too many vehicles, they’re now being more strategic. “There’s intense competition for a pie that’s not growing,” she said.