DETROIT (AP) — Big discounts helped U.S. auto sales sizzle in July.
Toyota, Ford, Nissan and Chrysler all saw double-digit sales gains. General Motors' sales were up 9 percent compared with last July, while Hyundai's rose 1.5 percent. Of major automakers, only Honda and Volkswagen saw declines.
It was the best July for the industry since 2006. New vehicle sales rose 9 percent to 1.4 million, according to Autodata Corp.
Automakers typically offer deals in the summer to clear out inventory before cars from the new model year arrive in the fall. But July's discounts were unusually high.
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. Toprak said Ford, Toyota, Volkswagen and Hyundai were the most generous; GM and Honda spent less.
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.
John Felice, Ford's U.S. sales chief, says a slowing rate of sales growth will force automakers to get even more aggressive to steal sales away from competitors. That's already happening with small and midsize cars. For instance, buyers are paying an average of $1,000 less for a Ford Fusion sedan than they did a year ago, Felice said.
But demand for SUVs and trucks remains strong, and so does pricing. Overall, Felice 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, isn't alarmed about growing incentives. Things have changed from a decade ago, when automakers were making too many vehicles and had to use across-the-board incentives to sell them. Companies have cut back on production, she said, and they use incentives in a much more strategic way. They're also profitable, so they can afford to give a little on price.