Overall auto sales rose to 148,184 last month, compared to 141,472 in the year-earlier period, according to data from DesRosiers Automotive Consultants.
In total, Canadian auto makers have sold 1,013,094 vehicles this year, up 6.7 per cent from the 949,244 they sold by this time a year ago.
Carlos Gomes, a senior economist at Scotiabank, says sales remained strong in July, with annualized sales rates softening only slightly after an exceptional June.
"We are at very healthy levels," said Gomes.
"It highlights that the industry is doing well, but it is being supported by the generous incentive levels."
Those incentives — such as zero per cent financing and employee discount programs offered by Ford — helped buyers shrug off worries about the European financial crisis that weakened sales in April, said Gomes.
At the Detroit big three automakers —GM, Ford and Chrylser — sales were up a slight 0.4 per cent as they continued to lose market share to import nameplates, which saw a 9.1 per cent rise over last August. Foreign brands now corner the bigger share, 54.6 per cent, of the Canadian market.
Japanese automakers made strong gains in sales last month, compared to a year ago when they couldn't supply enough models to showrooms after production was hobbled by a March earthquake.
"They lost significant share last year because they didn't have product to sell," said Gomes.
"You're seeing them make that up this year, so that's why they're leading the way in terms of big gains."
Toyota Canada Inc. says its sales were up 30 per cent from last July. The automaker sold 15,819 Toyota, Lexus and Scion passenger cars, SUVs and trucks last month.
Meanwhile, Honda's sales were up 27 per cent from a year ago, with gains helped by record sales of the CR-B sport utility vehicle and the Acura RDX and TL.
Combined sales by Honda and Acura in July totalled 11,184 vehicles.
However, Nissan Canada Inc. reported sharp drop in July sales to 5,316, down 29.3 per cent from a year ago when the company sold 7,523 vehicles.
Analyst Dennis DesRosiers said Nissan and Mitsubisi were caught at weak points in their product cycles and "have yet to join the Japanese rally."
"While the story of Japanese recovery has been told primarily through the larger brands, lower volume original equipment manufacturers Subaru and Suzuki flexed their market muscles last month," said DesRosier.
Subaru's sales shot up 23.3 per cent compared to a year earlier, while Suzuki's were up 9.8 per cent, said DesRosiers.
Ford Motor Company of Canada Ltd. also had a strong month for sales, posting its best July in more than three decades as it laid claim to the title of the country's top-selling automaker for the month.
The automaker said it sold 27,940 vehicles last month, up 2.2 per cent from 27,344 in July last year, marking the company's best July since 1979.
The gains were helped by sales of the Explorer and F-Series trucks that gained 18 per cent and 20 per cent respectively. Sales of crossover utility vehicles Edge and Flex also jumped 44 per cent and 72 per cent.
"It is encouraging to see continued strength in the industry and we are certainly very proud to be the best selling automotive brand in Canada," said Dianne Craig, president and CEO, Ford of Canada.
Chrysler Canada also posted its best July sales as it reported a three per cent increase from a year ago.
The company said it sold 24,162 vehicles in the month, up from 23,385 a year ago, helped by strong sales of its Grand Caravan, Ram, and Wrangler.
Meanwhile, General Motors Canada sold 19,206 vehicles, down 5.6 per cent from the 20,345 it sold last July.
South Korean automaker Hyundai posted a record for July and sold 12,850 units, up 0.8 per cent over the same month last year.
Kia sold 7,683 vehicles for the month, up 20.4 per cent compared with July 2011.
In the U.S., General Motors and Ford also lost ground to Japanese automakers last month.
GM's July sales fell six per cent from a year earlier, while Ford's slipped four per cent. By contrast, Honda sales leaped 45 per cent while Toyota posted a 26-per cent gain. Chrysler also did well, notching its best July in five years.