Analysis

U.S. auto makers sold 1,055,905 light vehicles in July, a 4.7% uptick in daily sales that lifted the seasonally adjusted annual rate to 12.2 million units.

The results were in line with consensus forecasts and brought the SAAR above 12 million units for the first time in three months.

However, the inventory problems plaguing the industry make it unclear how soon the market can return to the 13 million-unit SAARs logged during the first quarter.

July’s daily sales – calculated over 26 selling days, one less than year-ago – were up just 0.7% over June, which also had 26 selling days. The slight increase over prior-month’s poor performance illustrates sluggishness.

Related document: U.S. Light Vehicle Sales – July 2011

Toyota and Honda, still seriously affected by the March earthquake and tsunami in Japan, dramatically underperformed the industry.

Despite its return to near-normal North American production levels in recent weeks, Toyota’s 130,802 deliveries lagged year-ago 19.7% and translated to a 12.4% market share.

That’s an improvement over May and June and the auto maker is confident end-of-month marketing will point toward a quickening recovery in August and beyond.

There was no improvement for Honda, though, which continues to experience marked production slowdowns. Sales fell 25.6% from year-ago, the company’s worst year-over-year performance since June 2009 in the depths of the recession.

Indeed, Honda’s 7.8% share, its lowest since June 2005, dropped the auto maker to the No.7 sales spot in the U.S. for the first time since October 1981.

Hyundai-Kia fared better, but collectively were stymied by their own supply issues. Both companies experienced substantial double-digit growth over like-2010 but recently have been unable to move the needle from month-to-month.

With the exception of an over-the-top May sales push, Hyundai’s daily rate has hovered in the 2,300-unit range throughout the spring and summer. Similarly, Kia’s DSR has been stuck just below 1,800 units.

Based in Korea, both Hyundai and Kia are limited by low production capacity in North America. And there is fierce competition for vehicle allocation around the globe.

Asia-based auto makers saw their sales dip 6.8%, accounting for 43% of July’s sales – down from year-ago’s 48.3%. In line with expectations, Detroit Three auto makers recorded a 14.8% jump, accounting for 47.7% market share.

General Motors increased deliveries 11.8% in July, compared with year-ago, relatively even with June on a daily basis, while Chrysler outperformed prior-year by an impressive 25.8%.

Ford deliveries rose 12.7%, but were hampered by low sales of its popular Focus C-car, which dipped 30.4% from June due to low availability.

The ongoing inventory crisis has had an inordinate effect on the Small Car sales, as defined by Ward’s segmentation. Scant supplies of models built by Ford, Honda, Toyota and Hyundai-Kia artificially restrained sales, despite growing consumer interest in the segment.

Small Cars accounted for 18.2% of July sales, down considerably from June’s similarly inventory-constrained 19.8% share.

Looking ahead, the combination of pent-up demand and presumably higher supply in coming months easily could boost the segment’s share to more than 20% in fourth quarter.

European auto makers outperformed the market in July. Their combined sales rose 19.7% on the whole, boosted by Volkswagen, which registered its second-highest daily sales total since 2003.

Through July, industry deliveries totaled 10,322,629, up 11.5% over year-ago.

jsousanis@wardsauto.com