Toyota overtakes Ford in monthly US vehicle sales Aug 01 7:28 PM US/Eastern

Toyota has accelerated past another road marker on its way to becoming the second largest automaker in the US vehicle market, as its July sales overtook rival Ford's for the first time.

The Japanese carmaker announced Tuesday that it had posted a 16.2 percent sales gain in July as sales struck 241,826 units, surpassing the Ford Motor Co.'s 241,339 sales pace, and marking the first time Toyota has surpassed Ford on a monthly sales pace.

Riding smoothly on the strong launch of its Yaris small car and continued strong demand for the Corolla, Toyota said its year-to-date passenger car sales have risen 12.5 percent to 846,561 units while light truck demand has spiked 8.4 percent to 618,807 units.

Ford, meanwhile, continues to lose ground as its profit-rich truck sales lagged 16.2 percent at 1,103,520 units last month, and passenger cars are running a mere 3.5 percent ahead at 689,329 units on a year-to-date basis.

George Pipas, Ford's sales analyst, blamed the fall off in demand on a strong sales pace set a year ago when the US automaker initiated its "employee pricing for all" incentive plan.

Combine the lack of the employee pricing plan with rising gasoline prices and higher interest rates, and the climate looks pretty tough, according to analysts.

"Last July, we had the highest monthly sales in Ford history. What comes around, goes around," Pipas said.

Sales of Ford's profit-rich volume leader F-Series pickup truck were off 45.6 percent during the month and are 12.3 percent lower on a year-to-date basis.

Meanwhile, Toyota is gearing up to launch an all-new Tundra pickup later this year.

"Ford is just beginning to experience the tip of the iceberg. They will continue to decline this year," said Erich Merkle, director of forecasting at IRN Inc. in Grand Rapids, Michigan.

Merkle said he is concerned about Ford's future product portfolio, which he said will lack any "quality" for "the next three to four years."

Along with Ford, DaimlerChrysler AG's Chrysler Group posted a 35 percent decline in its overall sales, ending the month at 150,349 units, as consumers balked at buying gasoline-guzzling trucks and SUVs.

Truck demand plummeted 40 percent during the month to 121,081 units, while passenger car demand declined 20 percent to 29,268 units, as Chrysler continued to work through launch problems with its new Dodge Caliber and Jeep Compass small cars.

"Fuel prices continue to have an effect on vehicle sales, as well as increases in interest rates and mortgage rates," Steven Landry, a Chrysler vice president, told reporters during a conference call.

General Motors Corp. also reported lower sales of 410.332 units for the month, although its 19.5 percent decline was better than its cross-town rivals.

Through the first seven months of the year, GM's sales were weaker by 14.1 percent at 2,477,289 vehicles, with truck demand sliding 16.5 percent and passenger car demand weaker by 10 percent.

"July was a slightly stronger month than we expected," Paul Ballew, a GM executive director of market and industry analysis, told reporters optimistically during a conference call.

Still, a number of factors continue to cause headwinds for the industry, according to the IRN's Merkle.

"We expected to see a slowdown in the second half. This has everything to do with what the Fed (Federal Reserve central bank) is doing with interest rates, as well as rising gas prices. These are some pretty strong headwinds," he said.

Merkle expects consumers to remain on the sidelines when it comes to new vehicle purchases, especially as borrowing costs continue to rise on credit cards, home equity loans and mortgages.