UPDATE 5-U.S. buyers snap up vehicles in July, but fleet sales weak

Thu Aug 1, 2013 7:48pm EDT
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By Ben Klayman and Deepa Seetharaman

DETROIT Aug 1 (Reuters) - U.S. auto sales to individual U.S. consumers beat expectations in July and major automakers reported low inventories for many hot-selling models, such as Ford Motor Co's Fusion mid-size sedan, suggesting sales would strengthen further this year.

The stronger so-called retail sales boosted the share prices of Ford and General Motors Co on Thursday, but overall sales were weaker than expected.

Analysts said less profitable fleet sales to governments and businesses had been disappointing, and Wall Street expectations after a strong June had been overly optimistic.

"The industry appears to be tightly supplied, which is just good for pricing and future production and so that's helping to offset the headline (annual sales rate) disappointment," Morgan Stanley analyst Adam Jonas said.

Another positive development in July that helped push up the share prices Thursday of the U.S. automakers was the strong sales for highly profitable full-size pickup trucks like Ford's F-150 and GM's Chevrolet Silverado.

U.S. new-vehicle sales in July rose 14 percent to more than 1.3 million cars and trucks, according to Autodata. The annual sales rate in the month finished at 15.67 million vehicles, below the expected 15.8 million rate. It was the second strongest month for the year after June's 15.96 million rate.

This fall, Ford will boost production capacity of its Fusion midsize sedan, which saw a 12 percent drop in sales last month. The Fusion is currently running at a 40 day supply but in some regions, supply is closer to 30 days including cars not yet on dealer lots.   Continued...