BANDON, Ore. — In July, thanks to very strong incentives, including special lease deals and used-car trade-in promotions, two automakers smashed through the average industry sales increase of 6.8 percent.

While August sales were down significantly year-over-year, many analysts are pointing to last year's Cash for Clunkers as the reason for the large downswing.

Many are suggesting that a month-over-month analysis is a more realistic picture to how sales are performing.

Taking a closer look at July sales, according to CNW Research, Toyota and Nissan both broke through the July 6.8 average sales increase.

For Toyota, month-over-month sales showed a significant 20-percent climb, while Nissan soared 27.5 percent. Furthermore, the company revealed a Kia car in the Hyundai group also showed a strong 20-percent month-over-month climb in sales.

For August, meanwhile, Toyota and Lexus reported sales of 148,388 units. In comparison to last August when Toyota sales were at their peak under Cash for Clunkers, sales were down 31.4 percent on a daily selling rate basis.

Toyota Division passenger cars recorded sales of 75,911 units, a decrease of 44.6 percent from last August.

"While August results trailed year ago levels when the CARS program generated significant incremental sales for the brand, we're pleased with how the month shaped up," said Don Esmond, senior vice president of automotive operations for Toyota Motor Sales U.S.A. "Customer loyalty rates have returned to traditional levels as Toyota continues to lead the industry as the number one retail brand year-to-date."

Also for August, Nissan North America reported August U.S. sales of 76,827 units versus 105,312 units a year earlier, a decrease of 27 percent compared with the Cash for Clunkers that  fueled sales in August 2009. Nissan Division sales were down 30.9 percent for the month, while sales of Infiniti vehicles rose 21.9 over a year before. For all of 2010, NNA sales are up 14.2 percent.

"When you look beyond year-to-year comparisons, there was strength in Nissan's sales, particularly in the body-on-frame and crossover segments," said Al Castignetti, vice president and general manager, Nissan Division. "Consumers continue to look to Nissan for our full lineup of quality cars, crossovers and trucks."

Continuing on, Spinella said that among the Big 3, Buick cars and Cadillac trucks were also big winners in July, up 32 percent and 42.5 percent, respectively.

For August, Chevrolet, Buick, GMC and Cadillac sales decreased by a combined 11 percent to 184,921 units, compared to last August.

Officials noted that combined sales for Buick, GMC and Cadillac were up 37 percent for the month, compared to a year ago. Buick sales increased 66 percent, propelled by retail sales that more than doubled during the month.

Cadillac dealers reported sales that were 83 percent higher than last year, and the brand's retail sales also rose 83 percent. GMC total sales were up 12 percent during the month, driven by strong retail sales. Chevrolet, which benefited the most from last year's federal stimulus, had a total sales decline of 22 percent compared to last year, while retail sales were down 31 percent.

"Last year's Cash for Clunkers program spiked industry sales in 2009, so results this August were, not surprisingly, a bit mixed," said Don Johnson, vice president, GM U.S. sales operations. "Importantly, three of our four divisions showed solid gains. This is further evidence that our performance is the result of balanced contributions across our brands."

Meanwhile, no Ford nameplate except for Lincoln truck showed a July increase compared to June. For August, Ford, Lincoln and Mercury dealers delivered 157,503 new vehicles, down 11 percent versus a year ago, when Ford outpaced the industry during the Cash for Clunkers sales program.

In August, Ford had several models show year-over-year gains, including the Ford F-Series, Ford E-Series van, Taurus and Mustang. However, total sales were down from last August.

Ford Sales analyst George Papas said, "Our strategy is to continue what we have been doing, in addition to developing and introducing great products, it's to keep a close watch on what demand is and what demand is on certain products and in that way we will be able to have the right product, at right levels, at our dealerships and not get caught into a situation where we have to use excessive price discounting to get out from heavy inventory."

Discussing the July trends, Spinella explained, "European brands had mixed results with some percentage increases, such as Saab, more a result of small June sales numbers than any underlying increase in demand. Porsche is the exception as the intender base for this brand has been showing significant strength of late after the introduction of the Panamera."

He went on to note, "Clearly the market is responding to incentives of all stripes. While automakers have pulled back in general, consumers are focused on those who remain in the incentive game. Toyota is a prime example of high response to high incentives at this point in time.

"What it does to the company's bottom line is not hard to determine, won't help. But after months of dark clouds because of recalls and government accusations, the upturn for the top Asian brand is the first step in ‘clearing its name.' We expect the incentive levels for Toyota to return to earth as soon as memories fade," he pointed out.

August Incentives Stronger than Typical

Taking a closer look at August incentives, Edmunds.com found there was a heavier dose than usual.

Specifically, automakers placed an average of $2,681 in incentives on each vehicle they sold during the month, marking a 3-percent slide from July, but a 9.2-percent hike from August 2009 when CARS was drawing to a close.

"Historically, August incentives are lower than in July because there is less old-model-year inventory to sell at year-end closeout sale prices," explained Jessica Caldwell, Edmunds.com senior analyst.

"However, this year many automakers are more generous than usual, supporting the bargain-hunting mentality that is driving most car purchases these days and making up for the 'Cash for Clunkers' hangover," she continued. "Meanwhile, inventory is at a remarkably low level: It now takes about 50 days to sell the average vehicle after it arrives at a dealership, where last summer it took more than 70 days to turn."

That said, some OEMs are scaling back on incentives and employing a strategy of selling less, but spending less.

"It appears that some automakers are willing to sell fewer cars while spending less on incentives, thus make more profit per vehicle sold — a sound strategy really," Michelle Krebs, senior analyst for Edmunds.com, pointed out on AutoObserver.com.

"They are learning to live on less — at least in terms of volume — as all Americans are," she added.

Of the six largest OEMs, GM had the highest average spending at $3,738 per vehicle sold, which was down from $4,185 in July, but up from $3,237 a year ago.

Chrysler was second. It clipped its incentive spending down to $3,216 per vehicle sold from the $3,391 in August 2009. However, its August average was greater than its July average of $3,132.

Ford spent $3,127 per vehicle sold, up from $3,111 in July and $3,152 in August 2009.

Nissan posted a record incentive spending average in August of $2,959, which was just slightly higher than the month-ago figure ($2,957) and up from $2,557 a year ago.

Toyota's incentive spending averaged $2,180 per vehicle sold, versus $2,234 last month and $1,622 in the same period of 2009. Honda averaged $1,708 for incentive spending, compared with $1,736 in July and $898 a year ago.

Combined, the Big 3 spent an average of $3,405 on incentives per vehicle sold, compared with $3,589 the previous month. Incentive spending for European OEMs was lifted to $2,643, up from $2,456 in July.

Japanese brands spent an average of $2,083 per vehicle sold, down from $2,127 from the prior month.

Korean brands' spending averaged $1,819 during July, compared with $1,907 the month before.

Continuing on, Edmunds.com estimated that there was roughly $2.76 billion that the industry combined to spend on incentives for the month. This marked a 4.7-percent decline from July's aggregate amount. 

Of August's aggregate amount, $1.5 billion was from Big 3 automakers, which combined spent 55 percent of the industry aggregate.

Japanese automakers commanded a 30.6-percent share as they put a total of $845 million toward incentives. Incentive spending for European OEMs hit $238 million for an 8.6-percent share. Korean automakers represented 5.7 percent of the aggregate as their spending totaled $158 million.

Breaking it down by vehicle category, the segment with the heaviest average spending was the premium sports cars category, which averaged $8,221 per vehicle sold. Second from the top were large trucks ($4,359).

Conversely, automakers spent the least amount, on average, on subcompact cars ($1,215). Second from the bottom were sports cars ($1,422).

When looking at incentive spending proportionately to sticker price, the heaviest category was the large car segment (12.9 percent). Large trucks were No. 2 (11.8 percent).

Meanwhile, the slightest average was in the premium luxury car segment (3.4 percent). Sports cars were next (3.9 percent).

Among brands, Lincoln had the greatest average incentive spending ($4,832) with Saab next ($4,790). Scion was at the bottom ($497) and smart was second from the bottom ($502).

Based on sticker price proportion, Mercury was tops (14.8 percent) and Chrysler was second (13.5 percent). Subaru ranked lowest (2 percent) and Porsche was next (2.7 percent).

Joe Overby, staff writer, contributed to this article.