US auto sales still below Jan-April pace-J.D. Power

* Annual sales rate seen at 9.8 mln in July

* Annual sales were 9.3 mln in May and June

* Automakers to report July sales on Aug. 2

DETROIT, July 21 (Reuters) - U.S. new-car sales have been improving in July compared with the previous two months but remain below the rate seen earlier in the year, research firm J.D. Power and Associates said on Thursday.

Based on data from 8,900 dealers, the annual sales rate in the retail part of the market is projected to be 9.8 million vehicles in July, up from 9.3 million in May and June when there was a shortage of vehicles made in Japan after the March 11 earthquake, the firm said.

From January to April the annual sales rate ranged from 10.2 million to 11.1 million.

"While July's selling rate is slated to finish higher than June, consumers continue to face obstacles in their willingness and ability to purchase a new vehicle," said Jeff Schuster, J.D. Power's executive director of global forecasting.

"The ongoing debate regarding the debt ceiling and stagnant economy are creating added pressure on top of a generally weaker vehicle sales environment," he said in a statement.

J.D. Power projects retail new-car sales of 913,900 vehicles in July. Retail results exclude fleet sales.

Total light-vehicle sales, including fleet sales, are expected to be almost 1.09 million.

Retail light-vehicle sales in the second half of the year are expected to outpace those in the first half, with an annual selling rate of 10.7 million vehicles, up from 10.3 million, J.D. Power said. Including fleet sales, the sales rate is expected to rise to 13.2 million from 12.5 million.

J.D. Power said it still expected overall light-vehicle sales this year of 12.9 million, which would be up from 11.6 million in 2010.

The research firm said it expected light-vehicle production in North America to rise 9 percent this year, with the pace picking up from the first half's rise of 8 percent.

Automakers are scheduled to report July U.S. sales on Aug. 2.

(Reporting by Ben Klayman in Detroit; Editing by Ted Kerr)