Are Car Sales "Stuck In Neutral"?

DETROIT (WWJ) There were a few bright spots in a July sales report that has many analysts concerned that the auto industry's recovery may be sputtering.

"We are edging up," said J.D. Power analyst Jeff Schuster. "But, it's not getting the recovery back on track in a way we expected, or the industry expected."

With a twenty per cent sales hike, Chrysler was one of the leaders in a report that saw all three of the domestic carmakers post sales increases, but saw Toyota sales down 19 per cent and Honda sales down 25 per cent.

This continued a trend we saw in May and June.

"This is worrying to the industry, because we've seen three months in a row where sales are really soft," said WWJ Analyst John McElroy.

McElroy and others attending this year's Management Briefing Seminars in Traverse City expressed worry that a weakness in the economy may have as much to do with the sales downturn as the perceived lack of availability of Japanese products.

J.D. Power's Jeff Schuster feels it's a combination of factors, including a July filled with concerns about whether U.S. debt concerns could derail the recovery.

"All of those things have pushed consumers to stay out of showrooms," he said. "What that could be doing is pushing the stronger recovery back into 2012."

Executives at the major auto companies, who had been expecting a strong second half, say they still see improvement coming, just not as much as they first thought.

"We certainly see the last half of they year, having a higher rate of sales than, say Q2, but it's not going to be as strong as we originally forecast back at the beginning of the year," said Don Johnson, GM's sales operations manager.

GM posted a sales increase of about eight per cent in July. Three of it's four brands were up, but Cadillac sales were down slightly.

"Consumers, despite a lot of uncertainty, kept leaning to a lot of small cars," said Johnson. "The Cruze was over 20 thousand units for the fourth month in a row. The Chevrolet Terrain and Equinox were up 73 per cent."

It was an abundance of new products that pushed Chrysler sales up 20 per cent over last year. In 2009, very few of those new products were in Chrysler dealerships.

"In a market that remains tougher than a cheap steak, we were able to produce our highest retail sales in more than three years," said Reid Bigland, President and CEO – Dodge Brand and Head of U.S. Sales, in a statement.

Ford sales were up nine per cent, with solid sales of passenger cars. That's a trend that Ford sales chief Ken Czubay was glad to see.

"Fiesta, Focus and Fusion have put Ford back in the car business," Czubay said in a statement.

The industry will be keeping a wary eye on August sales, that could be improved by the end of the government standoff over the debt ceiling. September and October could be boosted by an infusion of Japanese brand products, along with new advertising and incentives.

But there remains a lot of uncertainty, and analysts like John McElroy say uncertainty is never good when you're talking about a product that now averages around thirty thousand dollars.

"That's a big outlay, and if you're uncertain about the future, you say, 'I'll just keep the old one for another six months and see what happens."

Connect with Jeff Gilbert:
Email: jdgilbert@cbs.com
Twitter: @jefferygilbert
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