Fewer cars on dealer lots and higher prices -- factors that led to disappointing U.S. auto sales in May -- look to hold June results in check.

Auto sales are expected to rise only 2 percent from May -- but a healthier 8 percent on a year-over-year basis -- a month after tighter inventory caused by Japan's earthquake and a spike in vehicle prices led more consumers than expected to hold off on buying cars, industry analysts and economists said.

Light-vehicle sales ticked up only slightly in June as many potential buyers continued to defer their purchase amid high car prices and limited inventories, Barclays Capital analyst Brian Johnson said in a research note.

Despite some indication last month that Japanese (automakers) were ready to cut prices as post-quake production resumed, pricing has remained strong in June, likely leading many buyers to defer purchases, he added.

Toyota Motor Corp <7203.T> and Honda Motor Co <7267.T> sales fell in June from a year ago as the March 11 earthquake and its aftermath was still being felt, analysts said.

Incentives fell slightly for the industry again in June, raising fears of a repeat of May when lower incentives may have played a role in disappointing sales results for General Motors Co and Ford Motor Co.

The average forecast of 41 economists surveyed by Reuters was 12 million vehicles on a seasonally adjusted annualized basis, up from 11.1 million last year, and 11.8 million in May.

That is below an average of 13.1 million new light vehicles sold on an annualized basis in the first four months of the year, before the impact of the Japan earthquake significantly affected sales.

Auto sales, to be reported on Friday, are an early indicator of consumer spending each month.

While some economists, including Peter Morici at the University of Maryland, see signs that a second recession may be in the wings, Ford sees a double-dip recession as extremely unlikely, Ford sales analyst George Pipas said on Wednesday.

Inventory of new vehicles is tight, particularly for small cars, which has allowed automakers to lower consumer incentives in the past several months. In May, incentives offered by Toyota and Honda fell drastically from April, a strategy many analysts said backfired.

Jesse Toprak of TrueCar.com said Japanese automakers offered generous incentives to keep from losing loyal customers in June.

The average sales incentives offered in June by Toyota, Honda and Nissan Motor Co <7201.T> rose from May by 9.3 percent, 4.5 percent and 7.8 percent, respectively, according to TrueCar.

The average incentive was down 0.2 percent for the industry in June as the U.S. automakers cut their offers by a range of 1.9 percent to 2.4 percent and Korea's Hyundai Motor Co <005380.KS> cut its offers by 3.6 percent, TrueCar said.

Still, Edmunds said it expects Honda sales of new vehicles in June to show a drop of 17 percent from a year ago, and for Toyota sales to slide 14.5 percent.

Edmunds forecast that June sales will rise 17 percent for General Motors Co , 11 percent for Ford and 26 percent for Chrysler Group . Chrysler is under the management of Italy's Fiat SpA .

Hyundai is expected to show double-digit gains for June sales.

Nissan has been the least affected of the Japanese automakers from the March earthquake, Edmunds said. It forecast Nissan sales will show a 25 percent rise in June from a year ago.

In May, Toyota sales fell 33 percent, Honda sales were down 23 percent and fellow Japanese automaker Nissan experienced a 9 percent sales decline.

BETTER 2ND HALF OF YEAR

New vehicle sales in the second half of the year will rise as consumers begin to replace old cars and trucks, said Paul Taylor, chief economist for the National Automobile Dealers Association.

Also helping boost sales will be the lower gasoline prices and a wider availability of consumer credit, Taylor said.

The drop in gasoline prices will help avoid a summer run on small cars and hybrids, both in short supply in the current market, as well as lead to increased sales of larger cars and light trucks, Taylor said.

Pipas of Ford said industry sales will remain relatively weak in July, and not rebound to more than 13 million vehicles sold until August at the earliest. He did not offer a forecast on July sales.

Full-year forecasts by analysts are generally in the 13 million-vehicle range. This pales compared with the 10-year average of almost 17 million vehicles sold per year prior to 2008 when the recession hit.

Edmunds.com economist Lacey Plache said that prices and inventory levels will return to normal by September, and it is from September on that sales lost by deferred consumer purchase decisions will be made up.

Falling gasoline prices helped boost full-sized pickup truck sales, Toprak said, and Taylor said commercial sales of pickup trucks are rising in part because businesses need to replace worn-out work trucks.

U.S. average gasoline prices were $3.54 per gallon on Wednesday, down about 40 cents since early May.

(Reporting by Bernie Woodall and Ben Klayman, editing by Matthew Lewis)

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