GM Paces Strong July Demand for New Autos

U.S. auto sales rose more than expected in July, led by General Motors Corp.’s surprisingly strong performance, as big incentives attracted consumers to late-model-year vehicles.

GM on Friday recorded its best July ever for light truck sales, helping its total sales rise 6.7% from the year-earlier month. Toyota Motor Corp. and Honda Motor Co. also posted stronger-than-expected gains, but Chrysler Corp.’s sales fell 9.3%, a bigger drop than analysts had expected and its sixth straight month of slower sales.

Among foreign auto makers reporting Friday, Honda said its sales increased an impressive 32% on strong demand for its Accord and Civic cars. Toyota’s U.S. sales grew 15%.

But it was GM’s strong showing that caught Wall Street analysts off guard, coming as it did after a dismal June performance that saw the auto maker’s market share for that month fall to 28.4%.

“These are surprising numbers,” said analyst David Healy of Burnham Securities Inc. “It makes last month look more like a fluke.”

GM shares soared $2.56 to close at $64.44, while Chrysler shares fell 75 cents to close at $36.44. Both trade on the New York Stock Exchange.

Mike DiGiovanni, GM’s market research chief, said the company was surprised in June by how aggressively its domestic competitors had played the rebate game. GM’s sales momentum also was hurt that month by major assembly plant strikes in Oklahoma City and Pontiac, Mich.

GM executives said a change in incentive strategy also was paying dividends. In the past, the company offered dealers a “carry-over allowance,” a 5% discount on the previous year’s models left on lots after the new model year began Oct. 1.

This year, the auto maker is instead targeting that money on rebates and other incentives on older, slower-selling models during the summer.

Demand for GM and Chrysler minivans continued to improve in July, with Chrysler posting a July record at 50,547 units. GM said sales of its three minivan models, redesigned for ‘97, were up 80% for the first seven months of the year compared with the same period of 1996.