September auto sales are on track to top August levels by a small margin after a boost from end-summer sales events even as economic uncertainty crimps a fuller recovery for the industry.

On average, 46 analysts and economists surveyed by Reuters forecast that the September sales rate would hit 11.51 million vehicles on an annualized basis.

That would be up narrowly from a sales rate of 11.47 million vehicles in August and up sharply from the depressed levels of September 2009 when the market was reeling from the expiration of government-funded sales incentives.

Analysts and auto executives say that deep-seated consumer anxiety around housing prices and employment prospects are keeping the pace of the recovery in U.S. auto sales much slower than had been expected heading into 2010.

In addition, the restructuring by General Motors Co and Chrysler in government-funded bankruptcies and the separate but parallel cost reductions by Ford Motor Co have left Detroit automakers profitable at much lower sales levels.

As a result, none of the automakers has attempted to kick-start sales with the kinds of sweeping discount programs that have marked the end to previous sales slumps.

When automakers offered more limited Labor Day sales events in early September, consumers responded, said Jeff Schuster, chief forecaster at auto industry tracking service J.D. Power and Associates.

The vigorous start to September is an indication that vehicle buyers delayed some of their purchases in late August, Schuster said.

Schuster said he expects a September sales rate of 11.8 million vehicles, at the high end of expectations. The range of forecasts in the Reuters survey was 11.1 million to 11.9 million vehicles on an annualized basis.

September sales are expected to easily top those from 2009, when the sales rate was an anemic 9.2 million vehicles in what analysts called a hangover from the expiration of the cash-for-clunkers sales incentives a month earlier.


Analysts were divided on whether September would show increased retail demand or whether the slight gains expected would come from lower-margin sales to fleet operators. Showroom or retail sales are considered both more profitable for the automakers and a better indicator of consumer demand.

Chrysler, operating under the management control of Fiat SpA, has relied most heavily on fleet sales, according to vehicle registration data.

The pace of light vehicle sales appears to have improved modestly on a sequential basis in September, with a strong rebound in retail offset partially by lower fleet sales, Barclays Capital analyst Brian Johnson said in a research note.

Johnson, who sees the September sales rate at 11.7 million vehicles, said he expected that U.S. automakers would avoid competing on sales incentives to drive sales volumes as they have in the recent past.

The overall industry in North America should continue to support price discipline in our view, said Johnson, noting that trend would be particularly positive for Ford.

JP Morgan analyst Himanshu Patel said in a note for clients that he expected a gain to an 11.9-million unit sales rate in September. But he said that gain would represent month-to-month volatility and said it would take a sustained gain above 12 million vehicles to call a recovery.

Meanwhile, sales tracking firm said retail sales in September could slip from August levels because of the lack of incentives. Auto sales are stagnant right now, said Edmunds analyst Jessica Caldwell.

With largely flat sales expected for the fourth quarter as well, some analysts have raised concerns that production could slip in 2011 since most automakers ramped up output this year to restock vehicles.

Industrywide vehicle inventories were equivalent to 52 days of average sales in September, flat from August, according to J.D. Power.

September sales for the first time will include GM's much-vaunted new compact car, the Chevy Cruze.

Although sales will be limited in September because production of the new car is still ramping up, sales of the Cruze will be a key indicator for GM heading into an initial public offering expected in November.

The Cruze represents GM's attempt to compete against the Toyota Corolla and Honda Civic in a part of the market that Asian automakers have long dominated.

The Cruze will be the newest entrant in the high-volume compact segment until the Ford Focus debuts in early 2011.

(Reporting by Bernie Woodall; Editing by Richard Chang)