By Sholnn Freeman
Washington Post Staff Writer
Wednesday, August 2, 2006

Toyota Motor Corp. surpassed Ford Motor Co. in monthly sales in the United States for the first time on a surge in July, according to a report yesterday from Autodata Corp.

The Japanese automaker sold 241,826 cars and trucks during the month, up 11.7 percent from a year ago. Ford Motor Co. had sales of 239,989, down 34 percent. General Motors Corp., the No. 1 U.S. automaker, reported sales yesterday of 406,298, down 22.5 percent.

Jim Lentz, Toyota's top U.S. sales executive, said market conditions are playing to "traditional Toyota strengths" of fuel efficiency and a competitive lineup of cars.

Globally, Toyota crept closer to GM's sales lead. In the first half of the year, Toyota sold 4.36 million vehicles, up 7.1 percent. In the same period, GM's worldwide sales fell 2 percent, to 4.6 million.

Jesse Toprak, executive director of industry analysis at the vehicle-review Web site Edmunds.com, called the July sales report a "psychological milestone" for Toyota. "In July they were the No. 2 automaker in the U.S.," Toprak said. Rival automakers, he said, will have "to deal with the momentum of Toyota in the marketplace."

Overall, automakers sold 1,493,078 vehicles in the United States in July, down 17.4 percent from a year ago, according to Autodata, an industry research firm. Sales were off sharply from a year ago, when the industry had a blockbuster month because of Detroit's employee-pricing incentive deals. The July sales pace of 17.24 million vehicles on a seasonally adjusted annualized basis was generally in line with industry forecasts for the year.

In a worrisome trend for the industry, sales of minivans, pickup trucks and sport-utility vehicles, collectively known as light trucks, fell 30 percent. Last month, passenger cars made up 48 percent of the market, compared with 39 percent a year ago, Autodata said.

At GM, truck sales dropped 31 percent, while car sales were down slightly. In cars, GM reported improving sales of the Pontiac G6 and Chevrolet Impala. The Cadillac Escalade, GMC Yukon and Chevrolet Tahoe all had double-digit sales declines in the month, compared with a year ago.

Ford reported major declines across the board. Sales of its flagship Ford brand tumbled 35.7 percent. Its other brands, Mercury, Lincoln, Jaguar, Volvo and Land Rover, also experienced steep sales drops in the month. Sales of Ford F-Series pickup trucks, a money-maker for the company, slumped 45 percent. Ford said the declines were a distortion caused by the high sales levels spurred by incentives a year ago. George Pipas, Ford's sales analyst, said the numbers that Ford will report next month would look depressed for similar reasons.

Art Spinella, president of CNW Marketing Research Inc., said middle-class buyers, who make up the bulk of Detroit's consumer base, are growing more concerned about gasoline prices, personal finances and job security.

"If you squeeze them on gas prices, that's also going to squeeze them on some of the other stuff as well," Spinella said. Those consumers were becoming more worried about taxes, food prices and education costs, he said. Japanese automakers tend to have a more affluent customer base and are somewhat more insulated from the same type of pressures, he said.

At Toyota, the increase was led by Corolla, sales of which amounted to 41,800 vehicles in the month, up 37 percent. The Corolla came within striking distance of outselling its larger, pricier relative, the Camry, the country's best-selling passenger car. Toyota sold 10,137 Yaris subcompact cars in July.

Honda Motor Co. also outperformed Detroit automakers in July. Honda's sales grew 6 percent, to 151,804, lifted predictably by the Civic and Accord and also by the Pilot, a car-based SUV. Nissan Motor Co. said sales dropped 20 percent from a year ago, to 84,408. Unlike its Japanese rivals, Nissan is more dependent on gas-guzzling trucks and large cars for sales.