By Michael Ellis
DETROIT, Aug 28 (Reuters) - Record high gasoline prices and the blackout that darkened much of the eastern United States did little to dim U.S. new vehicle sales in August, which are expected to hit their strongest level of the year.
Steve Lyons, the head of Ford Motor Co.'s Ford division, said on Thursday that U.S. new car and light truck sales could hit a seasonally adjusted annual rate of 18.2 million to 18.7 million in August, far above July's strong rate of 17.2 million.
"Certainly the deals are good and customers are responding," Lyons told reporters, citing the strengthening U.S. economy and high incentives for fueling sales.
Lyons' forecast topped Wall Street estimates, which ranged from 17.5 million to a high of 18.7 million, with several pegged at 18.2 million. Automakers are scheduled to report August sales on Sept. 3.
Jacques Moore, who owns Cadillac, Saab, Hummer and Subaru dealerships around Richmond, Virginia, said many elderly buyers who live on fixed incomes have been encouraged by the recent strength of stock markets.
"They've got money, things are stable, and they're saying: 'we owe it to ourselves, we're ready for new wheels'," Moore said. "(Sales) were very strong, surprisingly strong."
Busy showrooms in places such as Virginia appeared to counter the impact of the power outage, which forced many dealerships in the eastern United States close for a day or two in mid-August.
"When (consumers) lose $500, $600 of stuff from their freezer, that's a downpayment for their car," said one Michigan car salesman whose sales were hurt by the blackout.
Despite the surprisingly strong sales this month, results could still be below last August's exceptionally strong 18.6 million, which was the strongest month of 2002.
As in past months, many analysts expect Detroit's General Motors Corp. , Ford and DaimlerChrysler AG to lose market share to Toyota Motor Corp. and Honda Motor Co.
Much will depend on the strength of sales over the Labor Day holiday weekend. Some of Labor Day's sales figures will be included in August's results, automakers said.
Peter Glassman, a senior economist with Bank One, said the Bush administration's tax cuts, including the child tax credit checks, which put hundreds of dollars in the pockets of parents, boosted sales in July and August.
Despite rising interest rates, many automakers continued to offer zero percent financing loans through August and consumers still have extra cash from refinancing their mortgages.
Some automakers have said they see signs Detroit's price war is moderating. But CNW Marketing Research, which tracks the auto industry, reported that automakers offered incentives averaging $4,194 on every vehicle sold during the first two weeks of August, up from $3,983 in July.
Automakers raised some incentives to clear out the 2003 models to make way for the new 2004 vehicles, which have fewer incentives. For example, GM this month offered its dealers $2,000 on every Hummer H2 to help boost sales. (Additional reporting by Justin Hyde)