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GM, Ford Sales Stall in July But Overall Sales Still on Pace for 14M in 2012

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U.S. auto sales have been a bright spot in an otherwise grim economy in recent months. But that trend could be turning if July auto sales are any indication.

General Motors (GM) reported a 6 percent decline in July sales, selling more than 201,000 vehicles last month, while Ford (F) posted a 4 percent drop versus a year ago, selling 173,966 vehicles. Chrysler, which Italy's Fiat holds a majority stake, sold more cars than any time during the last five years, but the automaker still fell short of some analysts' expectations.

Nissan North America said it sold almost 100,000 cars in July, or 16 percent more than a year ago. Toyota (TM) sold almost 165,000 cars in July, up 25 percent from July last year but down 7 percent from June. Honda's (HMC) July sales are expected late Wednesday. Last year Japanese automakers faced strong headwinds after a deadly earthquake and tsunami rocked the country. Strong sales from the three automakers this year have indicated that they're restored their production capabilities to pre-March 2011 levels.

Why the sluggish sales from U.S. automakers?

"June is generally a much larger fleet month than July and last month we saw fairly high fleet sales from both General Motors and Ford," says Jessica Caldwell, senior analyst at Edmunds.com. "When you look at their sales sequentially, they are going to be down."

To her point, GM reported at 41 percent decline in fleet sales in July. Ford's fleet sales fell 16 percent.

Caldwell does not believe Ford's recent recalls for its Escape SUV model "deterred" customers. "As long as Ford handles the recalls well, that is what consumers want to see," she says. "They want to see quick actions by the automakers. They want to see their cars being fixed."

Chrysler's success is due in large part to the popularity and draw of its new Dodge Dart, which was released in June. The automaker reported sales of the new vehicle more than tripled month-over-month.

In July, automakers were on pace for 14 million in annual sales, according to a survey of economists conducted by Reuters. That is down slightly from estimates of 14.1 million in June.

While July may be somewhat of a bump in the road for auto sales, Caldwell believes the strength in the auto sector can continue. She has not reduced her estimate of 14 million or more sales in 2012.

"When you look at the cars on the road today the are old and a lot of vehicles are at the point where they cannot be repaired," she says. "It makes a lot of sense to buy a new vehicle" now with credit so cheap these days and more automakers trying new incentive programs to draw customers.