August 1, 2011 / 12:57 PM / in 6 years

US new-car sales slow in late July-J.D. Power

* Annualized sales estimated at 11.8 mln vehicles in July

* Higher prices, fewer incentives hurt sales in May-June

* Automakers to report July sales on Tuesday

DETROIT, Aug 1 (Reuters) - U.S. new-car sales, which got off to a strong start over the Independence Day weekend, slowed during the second half of July, repeating a pattern seen in June, research firm J.D. Power and Associates said on Monday.

The sales rate for July on an annual basis looks set to reach 11.8 million vehicles, the third straight month below the 12 million level, according to J.D. Power, which collects data from 8,900 U.S. dealers. Thirty-nine economists polled by Reuters also expect a July sales rate of 11.8 million vehicles. [ID:nL3E7IT3EH]

May and June U.S. new-car sales came in weaker than expected as many automakers reduced the incentives they offered consumers or raised prices, a move analysts said backfired in the weak economy. Industry inventories were reduced in both months because of the March earthquake in Japan, which led to parts shortages and production cuts by automakers.

"The auto industry is having a difficult time shaking off adversity, as vehicle sales start the second half of the year better than June, but not as strong as many people had hoped," Jeff Schuster, executive director of global forecasting at J.D. Power, said in a statement.

"A recovery pattern is still expected," he added, "but the pace could be in question as reported weaker GDP growth in the first half of the year may dampen the outlook."

The U.S. economy stumbled badly in the first half of 2011 and came dangerously close to contracting in the January-March period. [ID:nCAT005481]

Output increased at a 1.3 percent annual pace in the second quarter as consumer spending barely rose, the Commerce Department said on Friday. In the first three months of the year, the economy advanced just 0.4 percent, a sharp downward revision from the previously reported 1.9 percent gain.

The automakers are scheduled to report July sales on Tuesday. (Reporting by Ben Klayman; Editing by Lisa Von Ahn)

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