Incentives combined with inventory overhang will lift July U.S. light-vehicle sales to their best results since January.

Ward’s forecasts July to post a 17.5 million seasonally adjusted annual rate (SAAR), well above June’s 16.3 million and the highest since January’s 17.6 million.

Related document: <i>Ward's</i> U.S. Light Vehicle Sales & Inventory Forecast

However, that still is well below year-ago’s 20.7 million, when employee discounts offered by the Big Three struck a chord and lifted sales to the second-best monthly SAAR ever. The result was that the rest of the year ran at a tepid 16.1 million SAAR.

Sales for this year’s second half should surpass year-ago, although total 2006 results are forecast to finish at 16.8 million compared with 2005’s 16.9 million.

Actual volume is pegged at 1.51 million units, compared with year-ago’s robust 1.804 million. Adjusted for selling days, deliveries will decline 12.7% in July to a daily rate of 60,554 from like-2005’s 69,394. There are 25 selling days in July vs. 26 a year ago.

Toyota Motor Sales U.S.A. Inc. will lead the major auto makers with a forecast gain of 11.4% over year-ago. American Honda Motor Co. Inc. also will see an increase.

General Motors Corp. will help boost July’s SAAR to a 6-month high by posting strong enough sales to lift its market shares above year-ago. But due to prior-year’s phenomenal upward spike brought on by employee discounts, the auto maker will record a double-digit loss on a year-to-year basis.

Of the remaining Top Six auto makers, DaimlerChrysler AG and Nissan North America Inc. will post losses from year-ago, although Ford Motor Co. and DC also are being compared with year-ago’s sales spike.

Slower-than-anticipated demand in the second quarter caused some auto makers to overbuild, and inventory started to stockpile. Inventory ended June at 3.84 million units, 3.5% above year-ago and equal to a 67 days’ supply, compared with 63 the prior month and 58 year-ago.

Related document: <i>Ward's</i> U.S. Light Vehicle Inventory by Group

Market leader GM is expected to be the catalyst for the 6-month-high SAAR by pumping its July sales through stronger incentives and marketing programs, thereby lifting its market share for the month to more than 28% for the first time since year-ago’s 29.1%.

Inventory is forecast to end the month at 3.31 million units, 13.8% below the prior month, but 15.9% above year-ago.

Days’ supply is forecast at 55, compared with prior-year’s 41. Inventory of domestically made vehicles will end July at 2.73 million units, 17.2% above year-ago, and a days’ supply of 57 vs. 41 in like-2005.