DETROIT — Take automakers’ inability to finance leases, combined with gas prices, the weak economy and other problems facing the industry, and you have the makings of what could be one of the worst months for auto sales in 16 years.
Auto companies report their U.S. sales for July on Friday, and the results are expected to continue the downward trend that has plagued the industry all year. Auto consulting company J.D. Power and Associates predicts the industry will see its worst July since 1992, with little chance for a recovery in the next 12 months. That forecast is shared across the industry.
Jesse Toprak, the chief economist for the automotive-information website , predicts industry sales will tumble 3.3 percent in July from a year earlier and that Honda Motor Co. will be the only major automaker reporting a sales increase, thanks to its stable of small, fuel-efficient cars. Honda could even overtake Ford as the second-largest carmaker by U.S. sales behind General Motors Corp.
Still, even Honda has been affected by the brewing trouble in the auto-leasing sector, recently taking a $230 million charge because of the decline in value of leased vehicles being returned to the company. High gas prices have accelerated the decline in value of large pickups and sport utility vehicles, making automakers’ lease portfolios less attractive to banks and captive finance companies and leaving automakers to chalk up big losses when they try to sell their off-lease vehicles.
