Higher GM and Ford sales point to steady recovery

Auto sales rose 5 percent in July in an uneven recovery that left Toyota Motor Co (7203.T) and Honda Motor Co (7267.T) sputtering with declines from strong results a year ago.

The two U.S. automakers run through government-funded bankruptcies last summer, General Motors Co GM.UL and Chrysler, posted sales gains of 5 percent each.

The biggest gains came from Hyundai Motor Co (005380.KS), where sales rose 19 percent, and Nissan Motor Co (7201.T), where sales were up 15 percent.

Ford Motor Co (F.N) disappointed investors who had hoped for an outsized gain for the only U.S. automaker to have avoided a bailout. Including the Volvo brand it has now sold to China's Geely, Ford's sales were up just 3 percent, sending its shares down 1.9 percent.

The sales data, among the earliest snapshots of consumer demand for the third quarter, suggested that the U.S. economy is not slipping back into recession but left open questions about the strength of the rebound.

"We're dealing with a soft economic recovery so we are certainly not seeing sales sprint ahead by any stretch of the imagination," said Paul Ballew, chief economist at U.S. insurer Nationwide in Columbus, Ohio.

July marked the eighth consecutive month that U.S. auto sales rose from year-earlier levels but also the lowest percentage growth since November 2009, when sales were flat.

WINNERS AND LOSERS

Hyundai, the fastest-growing major automaker in the U.S. market, said it would "substantially" increase production to meet demand for strong-selling models like the new Sonata, its redesigned flagship sedan.

That will boost revenue for the current quarter and second since automakers book sales when cars are produced rather than when they are sold through dealerships.

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