08/01/2011 02:46 EDT | Updated 10/01/2011 05:12 EDT

July expected to be weak month for US auto sales as economic worries discourage buyers

DETROIT - Car shoppers worried about the U.S. economy last month and that kept sales in a funk.

U.S. sales of new cars and light trucks are expected to rise only slightly in July, as the debate over the debt limit and other economic worries kept buyers at home. Automakers are scheduled to report July sales on Tuesday.

July extends a disappointing stretch for automakers after a strong start this year. Sales slowed in May and June after an earthquake in Japan cut into supplies of small cars that were in demand because of high gas prices. Those shortages — and higher prices — turned off many buyers.

Edmunds said supply constraints began to ease for Japanese automakers in July. Sales are forecast at 1.06 million, up 1.6 per cent from last July, according to the automotive website.

Toyota Motor Corp. has been producing eight of its 12 North American-built cars and SUVs at full capacity since the beginning of June, and in July those vehicles reached dealer lots. Toyota's U.S. sales will likely fall compared to last July. But they're up 21 per cent from June.

"Inventory issues are not seriously holding back Toyota anymore," said Jessica Caldwell, a senior analyst at Edmunds.

Honda Motor Co. and Nissan Motor Co. were also expected to sell more vehicles compared with June.

But even as dealers replenished their lots, buyers remained hesitant. Unemployment is high and consumers' confidence in the economy — which is crucial for car sales— remains low. Fueling more unease was the debate between Congress and the White House over raising the nation's debt ceiling.

Car prices remain relatively high, too, for buyers who have become accustomed to big summertime sales.