Incentives help lift Canada auto sales in July

TORONTO (Reuters) - Canadian auto sales bucked the negative trend in the United States in July, rising 5 percent on the month, and are now up 2.7 percent so far this year.

Automakers sold 149,515 vehicles in Canada in July, nearly canceling out June's 5.7 percent drop, industry figures showed on Friday. The rise came largely on the back of dealer incentives and longer financing terms, which lower monthly payments.

"Basic economics says that if you reduce the price of goods than consumers buy more ... and buy more they certainly did in July, and indeed most of the year," Dennis DesRosiers, president of DesRosiers Automotive Consulting Inc wrote in a note.

The Canadian market contrasts with the situation in the United States, where July auto sales slumped to their worst showing since April 1992.

General Motors of Canada (GM.N), Canada's biggest automaker, saw July sales rise 5.2 percent to 33,893 units, with truck sales -- which includes minivans and SUVs -- posting a surprisingly healthy gain.

GM's car sales rose 0.8 percent to 16,187, while truck sales jumped 9.7 percent to 17,706.

Ford Motor Co. of Canada (F.N) sold 18,131 vehicles in the month, down 13.8 percent from a year ago. Car sales tumbled 18.5 percent to 4,617 units, while truck sales fell 12.2 percent to 13,554.

Chrysler Canada CBS.UL saw its 23-month winning streak snapped, as sales fell 6.8 percent to 17,818 units. Car sales slipped 1.1 percent to 4,749 units, while truck sales fell 8.7 percent to 13,069 units.

Import namebrands, which have traditionally focused on smaller, more fuel efficient vehicles, fared better than the Detroit-based Big Three.

Toyota Canada Inc (7203.T), the country's No. 2 automaker, reported record July sales, up 18.3 percent from a year earlier to 21,990 units.

The automaker said sales at its Toyota division increased 17.8 percent to 20,663 units, while its luxury Lexus division moved 1,327 vehicles off the lots for a 27.6 percent rise. The company said sales of its hybrid Prius rose by 137 percent over last July.

Honda Canada Inc (7267.T) reported record sales as well, up 17 percent over the previous July.

The automaker said sales at its Honda division jumped 19 percent to 14,465 units, while sales at its Acura division were unchanged at 1,531 units.

Honda Canada said its fuel efficient Accord, Civic and Fit vehicles had a combined year over year increase of 20 percent.

(Reporting by John McCrank; editing by Rob Wilson)