Truck deals, pent-up demand boost September U.S. auto sales

U.S. auto sales will likely rise 8 percent or more in September as dealers offered generous cash incentives on pickup trucks that amounted to as much as $10,000 a vehicle in some areas of the United States, analysts said.

The annual sales rate is expected to be around 14.5 million in September, according to a Reuters poll. That would mark the fourth straight month the sales rate has held above 14 million, buoyed by pent-up demand and attractive credit terms.

Automakers, led by General Motors Co , are offering the cash incentives to help sell down excess truck inventory at a time when truck sales typically accelerate, analysts said.

Truck demand been slightly weaker than usual this year, due in part to high gasoline prices that have stayed near $4 a gallon this year, Kelley Blue Book analyst Alec Gutierrez said.

"There are some pretty sizable incentives out there," he said. "All the manufacturers overestimated the strength of the truck market this year and probably overproduced."

Analysts were quick to point out that the incentives are not large enough to signal a return to Detroit's historic pattern of offering steep discounts to meet outsized sales targets.

In fact, incentive spending overall fell 6.7 percent this month as cars and crossovers commanded higher prices, auto research firm TrueCar.com said.

But investors are concerned about high truck inventory levels. GM has 122 days of trucks on lots, well above the roughly 80 days considered optimal. Ford Motor Co has roughly 77 days, while Chrysler Group LLC has 99 days.

GM is offering as much as $3,500 cash back on its 2012 Chevrolet Silverado to cut inventory. In response, Ford is providing up to $5,500 back on 2012 F-150, while Chrysler is offering up to $4,000 in rebates on its Ram 1500, according to KBB, which tracks vehicle pricing.

Some GM dealers are offering as much as $10,000 cash back, Jefferies analyst Peter Nesvold said. For example, Jim Ellis Buick GMC Atlanta is offering that deal this month on the 2012 GMC Sierra 1500, the Atlanta-based dealer said on its website.

"That's clearly not a sustainable number," Nesvold said. "But right now I think the market will draw some relief that GM is able to sell down excess inventory in a measured way."

MIXED ECONOMIC DATA

Last year, Japanese automakers were hurt by inventory shortages stemming from the March 11 earthquake in Japan. In September, both Toyota Motor Corp and Honda Motor Co are projected to show higher market share and double-digit gains.

The U.S. auto industry is now in its third year of recovery after a scathing economic downturn forced GM and Chrysler to undergo government-funded bankruptcy restructurings in 2009.

During the downturn, Americans postponed new vehicle purchases. Now vehicle sales have benefited as more of these consumers' vehicles push past the point of repair. Attractive credit terms have also helped boost sales.

Edmunds.com, which tracks auto industry data, expects sales to grow about 13 percent this year to 14.4 million. It also predicts sales will grow just 4 percent in 2013 to 15 million.

That would make 2013 "the first year of non-double digit sales growth since the recovery began," Edmunds Chief Economist Lacey Plache said.

"It's economic uncertainty, which we're getting due to the unresolved fiscal issues at home and those actual and feared spillover effects from the slowing economies abroad," she said.

Among the biggest risks is Europe, where sales are falling as austerity keeps potential buyers away from showrooms. In China, the growth in new car demand has also slowed slightly.

The U.S. auto sales report is among the first snapshots of the American consumer each month. In August, the U.S. auto industry posted its best August in five years.

The sales pace indicated that consumers were faring better in the third quarter after weak consumption held back U.S. economic growth in the second quarter.

Still, Americans' assessment of the economic recovery continues to be mixed. On Friday, a key measure of U.S. consumer sentiment rose to its highest level in four months, but it fell short of economists' forecasts.

(Reporting By Deepa Seetharaman; editing by Gunna Dickson)