Aug. 3 (Bloomberg) -- Ford Motor Co. will post its first monthly U.S. sales increase since 2007 as the government’s “cash-for-clunkers” incentives boosted industrywide deliveries of new vehicles to the highest levels of this year.

Details will be released today when Ford joins automakers in announcing July deliveries, said Ken Czubay, the company’s U.S. sales and marketing chief. He disclosed the year-over-year improvement in an interview yesterday without giving specifics.

Industry sales probably ran at an annual rate of more than 10 million autos, 2009’s best showing, after the trade-in credits stoked consumers’ interest, said George Pipas, Ford’s sales analyst. Such a result may indicate a bottom in the market’s worst slump since 1976.

“There was a lot of pent-up demand,” said Michael Robinet, an analyst at consultant CSM Worldwide Inc. in Northville, Michigan. “Whether we can continue this after the program ends is going to be interesting to see.”

In less than a week, buyers almost exhausted the $1 billion available under the federal Car Allowance Rebate System, taking advantage of subsidies of as much $4,500 for swapping older models for new cars and light trucks with better fuel economy.

The U.S. House approved $2 billion more in funding for the program on July 31, and Transportation Secretary Ray LaHood told C-SPAN yesterday that the Obama administration will continue the incentives until the Senate acts this week.

Rebate Demand

Czubay said the rebates drove most of the July gain at Dearborn, Michigan-based Ford. The second-largest U.S. automaker sold 156,406 vehicles a year earlier and last posted a monthly sales increase over a year earlier in November 2007.

Ford rose 66 cents, or 8.3 percent, to $8.66 at 10:28 a.m. in New York Stock Exchange composite trading. The shares have more than tripled this year.

The automaker’s 7.45 percent bonds due in July 2031 gained 0.63 cent to 75.63 cents on the dollar at 9:54 a.m. in New York, according to Trace, the bond-pricing service of the Financial Industry Regulatory Authority. The yield fell to 10.3 percent.

Chrysler Group LLC will report that sales slid less than 10 percent, a person familiar with the results said. The person declined to be named because the results aren’t final. Jodi Tinson, a spokeswoman, declined to comment.

Ford’s and Chrysler’s performance suggests that an annualized sales rate of 10.1 million autos, the average estimate of 7 analysts, may be too low. Sales declines at Ford and Chrysler were projected to be 6.1 percent and 33 percent, based on estimates from 6 analysts, with a decline of 24 percent for General Motors Co.

Toyota, Honda, Nissan

Toyota Motor Corp., based in Toyota City, Japan, probably will say U.S. sales fell 20 percent, the average of 3 analysts’ estimates. Honda Motor Co.’s decline may be 19 percent, while Nissan Motor Co. may say sales tumbled 29 percent, according to the estimates. Both companies are based in Tokyo.

U.S. sales have languished at an annual rate of less than 10 million vehicles since December and have fallen from a year earlier for 21 consecutive months, damped by a lack of credit, tumbling housing prices and the recession. July had the same number of selling days as a year earlier.

An annual sales pace of 10 million units would have helped Detroit-based GM and Chrysler, which tried to adjust their costs through government-backed bankruptcies to break even at that rate. U.S. deliveries totaled 13.2 million last year and averaged 16.8 million from 2000 through 2007.

GM emerged from Chapter 11 protection on July 10, a month after Auburn Hills, Michigan-based Chrysler.

Market Share

Ford, the only U.S. automaker that didn’t take a federal bailout, added domestic market share in July as the clunkers credits lured buyers to showrooms, said Pipas, the analyst. Ford’s share of U.S. sales rose to 17 percent in June from 14 percent a year earlier, ahead of Toyota and second to GM.

The improvements came even as Ford pared its spending on incentives, a step toward meeting Chief Executive Officer Alan Mulally’s target for posting an operating profit in 2011.

“It’s a continuation of what Ford has been working on for the last year -- gaining better-quality market share,” said Robinet, the CSM analyst.

Chrysler’s $4,500 rebate offer on top of the clunker program’s incentive will end tomorrow, to be replaced by cash offers that vary in size depending on the vehicle purchases, the Wall Street Journal reported yesterday.

The promotion drove traffic to dealerships and sales increased, the Journal said, citing Tinson, the Chrysler spokeswoman.

“There will be some adjustments in incentives,” Kathy Graham, another spokeswoman, told Bloomberg News. She said the changes aren’t final yet.

To contact the reporters on this story: Mike Ramsey in Southfield, Michigan, at mramsey6@bloomberg.net; Craig Trudell in Southfield, Michigan, at ctrudell@bloomberg.net

Last Updated: August 3, 2009 10:32 EDT