First discount drop in 55 months sends US car sales off course

Automakers just paid the price for dialing back on discounts for the first time in 55 months.

Almost all major manufacturers reported declining U.S. deliveries for July, led by a 15 percent plunge at Nissan. The industry tempered spending on incentives, snapping a streak of monthly consecutive increases that began 4 1/2 years ago, according to J.D. Power.

The results indicate some payback for promotions that fueled a better-than-expected close to the first half. Underwhelming numbers from Nissan, Ford and Honda suggest the annualized industry sales rate probably trailed analysts' average estimate for 16.7 million cars and light trucks. The rate, which is adjusted for seasonal trends, was 16.8 million a year earlier and 17.5 million in June.

An incentive pullback is rare for this time of year, said Mark LaNeve, the head of U.S. sales for Ford, which was kneecapped by steep drops for the Escape crossover and Fusion sedan. The automaker also was running short of inventory for its highly popular F-Series pickups after a supplier fire disrupted production back in May.

"I don't ever remember a de-escalation from June to July, as you go into the traditional summer sell-down season," LaNeve said on a call with analysts. "June received much more benefit than July in terms of the 4th of July business."

Ford shares dropped as much as 1.7 percent as of 11:50 a.m. in New York. Fiat Chrysler declined as much as 3.2 percent, and General Motors fell as much as 2.1 percent.

--Bloomberg's David Welch, Gabrielle Coppola and John Lippert contributed.