U.S. auto sales may rise to highest of year on closeout deals

U.S. auto sales probably rose to the highest level of 2010 last month as model-year closeout deals drew consumers back to showrooms.

Industrywide deliveries, which are released tomorrow, may reach an annualized rate of 11.9 million vehicles in July, the average of eight analysts’ estimates compiled by Bloomberg. That would be 5.3 percent higher than last year’s 11.3 million pace and the best month since August 2009, when the U.S. government’s “Cash for Clunkers” incentive program inflated sales.

Automakers are offering discounts that are 3.8 percent higher than a year earlier to clear out 2010 vehicles and make room for new models, according to industry researcher TrueCar.com. The gains would indicate that sales, while still below historical levels, are steadily improving, analysts said.

“This is fueled by consumers who had postponed their purchases and are now getting back into the market,” Jesse Toprak, vice president of industry trends at TrueCar, said in an interview. “They’re not coming back in a flood -- they’re just trickling in.”

Ford Motor Co. and General Motors Co. may outpace the overall industry’s gain in July, with sales rising 10 percent for each, the average of five analysts’ estimates. Chrysler, aided by deliveries to large buyers such as rental-car companies, will have sales increase 2.2 percent, the average of five estimates.

Sales Incentives

The sales gains would come after industrywide deliveries dropped to an 11.1 million pace in June, feeding concerns that the auto recovery was stalling. Discounts and incentives, while higher than last year, were reduced 1.3 percent from June to an average of $2,831 per vehicle, according to TrueCar, which is based in Santa Monica, California.

The promotion of the clearance sales may have driven demand more than the actual terms of the deals, said Jessica Caldwell, director of pricing and industry analysis for Edmunds.com, also in Santa Monica.

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