General Motors Co and Ford Motor Co both reported weaker-than-expected U.S. sales gains in June as they again dialed back deals for car buyers despite the shaky economy.
GM also tempered its full-year forecast for the industry as some consumers were still holding back on buying cars.
Tightening supplies of vehicles after the March 11 Japan earthquake have emboldened some automakers to raise prices, a strategy that analysts and investors said has backfired in May and June.
The consumer's still struggling out there, said Gary Bradshaw, a portfolio manager with Hodges Capital Management, which owns Ford shares. Car buyers have paused a little.
These car prices have really gone up an awful lot, he added. They probably need to tone that back a little bit if they can. I know their commodity costs are rising, but there's a fine line in there.
GM and Ford trimmed the incentives they offered buyers in June to buy new cars by 2 percent and 2.4 percent, respectively, from May, according to TruCar.com.
Monthly car sales figures are among the first snapshots of consumer demand. Investors hope the industry can reverse May's disappointing results, which raised fears the U.S. recovery was running out of steam.
Investors received good news more broadly as the pace of growth in the U.S. manufacturing sector picked up for the first time in four months in June, a sign of optimism for the sputtering economy.
However, GM's U.S. sales chief, Don Johnson, pointed to the impact of the Japan crisis as the main driver of June's disappointing auto sales results.
Some consumers have decided to sit on their hands and delay their purchasing, he told reporters on a conference call. We view this as temporary.
It is much less to do with the economy than it is simply with the levels of inventory that some of our competitors, particularly our Japanese competitors, have. They're reaching the low point of their inventory during this crisis, Johnson added.
MAY AND JUNE SUFFER
May and June were the months analysts said the industry, especially Japanese automakers, would suffer most on sales due to the earthquake and tsunami which caused parts shortages and tighter availability of cars.
We think the recovery will get back on track despite the slow housing market and the stubborn levels of unemployment, Johnson said.
However, he said the U.S. auto industry was likely to finish at the lower end of the company's forecast for 2011 sales of 13 million to 13.5 million.
GM reported sales last month, excluding four brands it dropped, of 215,358 cars and trucks, up 10.5 percent from last year. GM sold or discontinued Pontiac, Saturn, Saab and Hummer.
Several analysts had expected GM to report a gain in the range of 11 percent to almost 20 percent. The U.S. automaker also came in below expectations in May.
Ford's sales rose 13.6 percent to 194,114 vehicles, an outcome that also fell short of several analysts' estimates. Chrysler sales rose 30 percent.
Nissan Motor Co reported an 11.4 percent jump in sales, falling short of some analysts' estimates of a rise of more than 24 percent. Al Castignetti, head of the Nissan brand in the North America, said he was disappointed by the results.
U.S. auto sales in June were expected to rise only 2 percent from May -- but by a healthier 8 percent on a year-over-year basis. The May figures reflected tighter inventory caused by Japan's earthquake, which caused vehicle prices to spike and led more consumers than expected to hold off on buying cars.
For June, the average forecast of 41 economists surveyed by Reuters was for a sales rate on a seasonally adjusted annualized basis of 12 million vehicles, up from 11.1 million last year and 11.8 million in May.
That is below an average of 13.1 million new light vehicles sold on an annualized basis in the first four months of the year, before the Japan earthquake significantly affected sales.
In Japan, new vehicle sales in June slumped by more than a fifth, while in South Korea Hyundai and Kia Motors extended their strong run with double-digit growth. French car sales fell for the third straight month, while Brazil car sales rose 15.9 percent.
GM shares were up 1.2 percent at $30.73 on Friday afternoon, while Ford shares were up 1.8 percent at $14.04. The broad S&P 500 Index was up 1.1 percent.
(Reporting by Deepa Seetharaman and Ben Klayman in Detroit, editing by Matthew Lewis)