Toyota Motor Corp. in July had its smallest U.S. sales decline this year and outsold Ford Motor Co. for the first time in three months, as government-backed rebates led Asian auto brands to better-than-expected sales.

The so-called cash-for-clunkers program raised overall sales to the highest level this year and slowed Toyota’s decline to 11 percent, compared with June’s 32 percent fall. Honda Motor Co.’s sales dropped 17 percent, Nissan Motor Co.’s fell 25 percent and Hyundai Motor Co. had a 12 percent increase.

The results may signal the start of a recovery for the industry, which has been in the worst slump in demand since at least 1976. Automakers have struggled as average U.S. gasoline prices surged to a record $4.11 a gallon in mid-2008 and tight credit and unemployment sapped vehicle demand.

“Things are looking a lot better. There was increased activity from ‘cash for clunkers,’ but we’re also getting into the car-buying season,” said Jessica Caldwell, director of industry analysis for in Santa Monica, California. “People have been on the sidelines this year. There’s pent-up demand.”

Combined market share for Japan- and South Korea-based brands was 48.7 percent, down 0.3 point from a year ago, according to Woodcliff Lake, New Jersey-based Autodata Corp. Total sales fell 12 percent to 997,824 vehicles, the smallest drop since May 2008, according to Autodata. The annual sales pace was 11.2 million units, the highest this year.

Government Program

The government incentive, which offers as much as $4,500 for trading in older, less fuel-efficient vehicles, ran through the $1 billion available in six days. The U.S. Senate this week may consider adding $2 billion to the program, a move passed by the House last week.

Ford, the second-largest U.S. carmaker, had a 2.3 percent sales increase, its first monthly gain since November 2007.

Toyota sold 174,827 Lexus, Scion and Toyota brand vehicles, led by a 30 percent gain for the new Prius, the world’s best- selling gasoline-electric hybrid.


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