July 31 (Bloomberg) -- U.S. auto sales may reach a 2009 high in July after the government’s $1 billion “cash-for- clunkers” incentives program lured shoppers back to showrooms.

Industrywide deliveries will run at a seasonally adjusted annual rate of 10.1 million cars and light trucks, based on 7 analysts surveyed by Bloomberg. Sales will fall 24 percent at General Motors Co., 33 percent at Chrysler Group LLC and 6.1 percent at Ford Motor Co., according to 6 estimates.

A sales rate matching the analysts’ projections may signal a possible bottom to the worst slump in demand since at least 1976. Buyers drained most of the initial “clunkers” funding in less than a week, spurring the U.S. House to approve an emergency measure today to add $2 billion more.

“The incentives coupled with already high car company discounts have put a new automobile within reach of consumers that would have shopped for a used vehicle,” said Joe Barker, an analyst at consultant CSM Worldwide Inc. in Northville, Michigan.

Automakers report July sales on Aug. 3. The results will show the industry suffered its 21st consecutive month of declines. A 10.1 million annual rate would be 19 percent less than a year earlier.

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.

Federal Incentives

The so-called clunker plan, formally known as the Car Allowance Rebate System, provides subsidies of as much as $4,500 on purchases of autos with better fuel economy when buyers trade in older, less-efficient models.

Demand for the credits proved greater than expected after the rules were published July 24. President Barack Obama said he was “very pleased with the progress the House has made.” The administration is “working with Congress to ensure the program can continue,” he told reporters at the White House.

The Senate will try to act on the bill next week, said Jim Manley, a spokesman for Majority Leader Harry Reid, a Nevada Democrat.

‘Unleashed a Surge’

“Cash for clunkers has unleashed a surge” of buyers, AutoNation Inc. Chief Executive Officer Mike Jackson said today in a Bloomberg Television interview. “It’s also brought in a lot of other traffic, sort of like a signal that it’s safe to come back into the marketplace.”

AutoNation, the largest new-vehicle retailer in the U.S., has done “just under” 3,000 cash-for-clunkers sales, Jackson said.

“Any doubt that the CARS program would jump-start auto sales is completely erased,” said Greg Martin, a GM spokesman. Detroit-based GM left a U.S.-backed bankruptcy on July 10, 39 days after predecessor General Motors Corp. filed for Chapter 11.

Chrysler said about 70 percent of visitors to its dealerships last weekend were attracted by the U.S. trade-in credits. The Auburn Hills, Michigan-based carmaker finished its restructuring in June, leaving court in an alliance with Turin, Italy-based Fiat SpA.

‘Elevated’ Sales Pace

Ford, the only U.S. automaker that didn’t take a federal bailout, also drew more customer traffic because of the incentives, said George Pipas, a company sales analyst. Dearborn, Michigan-based Ford increased its U.S. market share in June to 17 percent from 14 percent a year earlier, second to GM.

The industrywide “sales pace definitely has been elevated from the sales pace that we saw in June, and for most of the first half for 2009,” Pipas said.

Ford rose 61 cents, or 8.3 percent, to $8 at 4 p.m. in New York Stock Exchange composite trading. The shares have more than tripled this year.

Ford’s 7.45 percent bonds due in July 2031 gained 0.5 cent to 75 cents on the dollar yesterday, yielding 10.4 percent, according to Trace, the bond-pricing service of the Financial Industry Regulatory Authority.

GM and Chrysler both sold more vehicles to bulk buyers such as rental companies and governments, after cutting off most of that business during their bankruptcy reorganizations, said Gary Dilts, senior vice president at Westlake Village, California- based research firm J.D. Power & Associates.

“Fleet sales have improved slightly after several months of weakness and production cuts,” Dilts said in a July 24 statement.

Jobless Benefits

Automakers were buoyed this month as the number of Americans collecting jobless benefits fell, and the drop in new weekly claims reported yesterday by the U.S. Labor Department indicated that firings are slowing as the economy stabilizes.

U.S. nonfarm payrolls still probably shrank this month by 340,000 jobs, according to economists surveyed by Bloomberg, which thins the ranks of prospective auto buyers.

Rising sales because of the U.S. trade-in incentives may indicate only a rush to take advantage of the cash, not an industry recovery, David Leiker, a Robert W. Baird & Co. analyst in Milwaukee, wrote in a July 27 note.

Himanshu Patel, a New York-based analyst for JPMorgan Chase & Co., said the response to the clunkers program may herald an auto-market recovery, because sales typically rebound before any peak in unemployment.

“It seems to confirm a very large degree of pent-up demand in the U.S. marketplace for new vehicles,” Patel said today in a note to investors.

Hyundai Motor Co., No. 7 in the U.S. by sales, may be the only large automaker with a July increase, rising 8 percent, according to Santa Monica, California-based auto-research company Edmunds.com. Seoul-based Hyundai’s first-half sales slid 11 percent, the best results among its peers.

“Hyundai has become one of the most important companies to watch,” Michelle Krebs, senior editor of the Edmunds AutoObserver.com Web site, said in a July 23 statement. “To show improvement over last year is remarkable.”

     The following table provides estimates for car and light-
truck sales in the U.S. Estimates for companies are a percentage
change from July 2008. Forecasts for the seasonally adjusted
annual rate, or SAAR, are in millions of vehicles.
     The SAAR average is based on forecasts from 7 analysts. The
estimates are based on daily selling rates. July had 26 selling
days, the same as a year earlier.

                         GM        Ford      Chrysler       SAAR

Patrick Archambault      -23%      -1%       -18%            9.9
(Goldman Sachs)
Joseph Barker            N/A       N/A       N/A            10.1
(CSM Worldwide)
Gary Dilts               N/A       N/A       N/A            10.0
(J.D. Power)
Rod Lache                -25%      -10%      -26%           10.2
(Deutsche Bank)
Erich Merkle             -27%      -9%       -38%           10.2
(Autoconomy LLC)
Himanshu Patel           -25%      -9%       -35%            9.9
(JP Morgan Chase)
John Sousanis            -21%      -3.2%     -39%            N/A
(Ward’s Automotive)
Jesse Toprak             -25%      -4.2%     -39%           10.5
(Edmunds)

Analysts’ average        -24%      -6.1%     -33%           10.1

To contact the reporter on this story: Alex Ortolani in Southfield, Michigan, at aortolani1@bloomberg.net

Last Updated: July 31, 2009 16:09 EDT