Higher car prices and a shortage of fuel-efficient vehicles likely threw a roadblock in the U.S. auto industry's recovery path in May, when the Japan crisis had its biggest impact on U.S. sales so far.

Economists polled by Reuters projected the industrywide annualized sales rate would be around 12.6 million in May, 8.6 percent higher than May 2010.

If forecasts prove true, this will be the first time the annualized sales rate has dropped below 13 million since February. The sales figures, expected Wednesday, come as analysts are raising concerns about a slowdown in the broader economy.

One factor contributing to the slowdown in auto sales is a steep drop in incentives that automakers use to lower vehicle prices and attract buyers. This decline may have prompted some consumers to defer their car purchases, analysts said.

On average, automakers offered incentives of $2,002 per vehicle in May, down 5.1 percent from April and nearly 26 percent lower than a year earlier, according to Edmunds.com.

If nothing changes on the incentive front ... it's going to be tough to break that 13 million front, at least in June, said TrueCar.com analyst Jesse Toprak. TrueCar.com said incentive spending May was the lowest in nearly nine years.

Toyota Motor Co <7203.T> and Honda Motor Co <7267.T>, two of the automakers hardest hit by the March 11 earthquake and tsunami in Japan, are expected to have lost market share in May after cutting back on incentives, analysts said.

That share is expected to be picked up by the U.S. automakers General Motors Co , Ford Motor Co and Chrysler Group LLC , as well as Korea's Hyundai Motor Co. <005380.KS>

But the sales report, one of the first snapshots of U.S. consumer demand in May, will likely reinforce fears of a weakening macroeconomic outlook, ConvergEx analyst Nicholas Colas said.

Lost auto output due to the Japan disaster may hurt second-quarter growth in the United States, some economists have projected.

The fact that a modest price increase (that $350 on a +$20,000 car purchase) is enough to slow demand in May is a worrisome point, Colas wrote in a note.

Ford CEO Alan Mulally would not discuss May sales figures as the company closed out the month, but he told reporters in Washington that the company remains upbeat about the economy.

Clearly sales go with the economy, and the economy is slowing down, Mulally said. We're still very positive about the growth in the economy even though it's slower.

DUDE, WHERE'S MY CAR?

Adding to the issues facing the U.S. auto industry in May are tight supplies of highly coveted small cars and trucks.

The earthquake that rocked northeastern Japan in March disrupted the flow of auto parts and supplies to the global auto industry, forcing many automakers to curtail production.

Pre-existing inventories of vehicles provided a cushion, but that started to dry up in May as consumers look for vehicles with better gas mileage in the face of rising fuel prices.

There are a number of smaller cars, primarily Japanese, that are going to be in really tight supply, IHS production analyst Mike Jackson said.

Automakers on average like to have a 60-day supply of their cars and trucks in inventory. The companies have plenty of light trucks and larger SUVs on hand, but small cars and trucks are growing more scarce.

Toyota ended April with 37 days of inventory on its Corolla, while Honda had 25 days on its Civic. The Cruze had 39 days of inventory, while Ford's Focus had 34 days.

With fuel prices around $4 a gallon, trucks should normally make up a little more than 40 percent of overall auto sales, Credit Suisse analyst Chris Ceraso said in a note.

But Ceraso forecast that trucks, SUVs and minivans would make up 47 percent of overall sales because consumers are unlikely to find enough cars.

If our estimate is right, it would support the notion that insufficient car supply is hurting SAAR, Ceraso wrote in a note, referring to the auto industry acronym for the seasonally adjusted annualized rate of auto sales.

Ceraso projected that annualized auto sales would range from 12.2 million to 12.4 million, as did several other Wall Street analysts. J.D. Power and Associates forecast a rate below 12 million units.

(Reporting by Deepa Seetharaman, editing by Matthew Lewis and Gunna Dickson)

Japan Price Toyota Ford Motor Company