August auto sales sluggish

The U.S. auto industry felt like it dodged a bullet in July when retail sales to consumers held up and confounded forecasts for a drop, but then August came and that sense of relief went out the window.

With a still-critical last weekend of sales left that could change the outlook, August U.S. auto sales are expected to offer more evidence of a slower-than-expected industry recovery as General Motors Co GM.UL prepares its IPO.

Sales have risen from the worst depths of the downturn last year, but how much farther the rebound goes and how long that will take depends in large part on a strengthening in the economy that would boost consumer confidence and employment.

"We are crawling around," Jesse Toprak, an analyst at industry-tracking website TrueCar.com, said Friday. "It feels like we got a dead car to jump-start but we just can't get it to go over 20 miles an hour."

U.S. economic growth was revised down to a 1.6 percent annual rate in the second quarter, pointing to an even softer third quarter, but analysts so far do not expect the economy to slide back into recession.

TrueCar expects U.S. auto sales to be down 3 percent in August from July and nearly 20 percent from a year earlier when government "cash for clunkers" incentives drove demand. The annualized rate is expected to be about flat from July.

Edmunds.com expects Chrysler to report a 6.4 percent sales gain in August from July and Honda Motor Co (7267.T) a 3.4 percent gain from last month.

Edmunds expects GM sales to be down 5.8 percent in August from July, Ford Motor Co (F.N) down 3.2 percent, Toyota Motor Corp (7203.T) down 4.6 percent and Nissan Motor Co (7201.T) down 6.6 percent.

Analysts surveyed by Reuters forecast an average annualized sales rate of 11.6 million vehicles in August, with a range of 10.9 million to 11.9 million vehicles. That would be a slight increase from the 11.5 million unit rate in July.

SLOW GROWTH, OUTLOOK FLATTENING

Automakers face a dilemma in an environment where meeting broad sales targets has required increasing profit-sapping incentives on retail sales to consumers or adding to less-profitable fleet sales, analysts said.

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