AP News

Ahead of the Bell: Auto sales to stay strong

DETROIT (AP) — Americans likely ignored discouraging economic news and headed into car showrooms last month, drawn by model-year closeouts and appealing new cars.

Analysts are predicting sales of more than 1.2 million vehicles for August, up around 20 percent from a year earlier. The annual pace is expected to reach 14.2 million to 14.5 million vehicles, making August the second-best month of the year.

Automakers report sales figures throughout the day on Tuesday.

The numbers will likely show that car and truck sales continue to be a bright spot in the U.S. economy, which is struggling to grow. The economy expanded at a tepid 1.7 percent annual rate from April through June. On Friday, Chairman Ben Bernanke made clear that the Federal Reserve will do more to boost the economy because of high unemployment and a recovery that remains "far from satisfactory."

Pent-up demand is expected to drive the strong sales, said Jeff Schuster, senior vice president of forecasting for LMC Automotive, an industry consulting firm. The average age of a vehicle on U.S. roads is approaching 11 years because many people have kept older cars and trucks due to economic uncertainty. Now they have to replace them.

Customers likely found good deals on 2012 models last month, especially for leases and pickup trucks. Chrysler, for instance, is offering $4,289 in discounts on the Ram 1500 pickup, Edmunds said. Also, Honda raised its incentives 27 percent in August from July to an average of $1,666 per vehicle.

Buyers also were drawn out by exciting new models such as the midsize Nissan Altima and the Dodge Dart subcompact, Schuster said.

Low interest rates also were pulling people in. A 48-month new-car loan averaged 2.98 percent last week, according to Bankrate.com. And automakers were offering no-interest loans on some models.

Honda and Toyota once again are expected to lead the way in sales increases. Last year at this time their dealers had few models to sell because a March earthquake in Japan hobbled their factories. This year they're back to full supplies.

Sales started the year strong, backed off a little in May, but came back during the summer. Schuster expects to end the year at 14.3 million, more than 1.5 million above last year. Sales hit a recent high of 17 million in 2005. The bottomed at a 30-year low of 10.4 million during the recession in 2009.

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