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After a catastrophic earthquake that led to the Fukishima incident in Japan, which crimped supply levels for Japanese automakers Honda (HMC) and Toyota (TM), they have rebounded to lead the way in the auto industry. To offset the Japanese success were Ford (F) and competitor General Motors (GM), which saw decreases in sales the previous quarter.

The industry as a whole reported sales of 1.15 million vehicles in July, which was an 8.9 percent increase for the industry, meaning as a whole things improved not just for Ford. However, this is not the rate the industry grew in the first six months of the year, which accounted for 14 million vehicles, and a 14.8 percent increase which means that the industry may be slowing.

Ford reported abysmal sales of only 173,000 vehicles a 3.8 percent drop, while pickup trucks also fell 9 percent. "Fuel economy continues to be a top consumer purchase driver across our lineup," said Ken Czubay, head of Ford's United States sales and marketing.

As a result of the poor sales reported, profits fell 39 percent for the American automaker, representing a 6 percent drop in revenues to $33.3 billion, caused by lower North American demand. The company is now expecting market share in both the US and Europe to be less than 16.5 percent and 8.3 percent, respectively, compared with 2011. The company has also shown high structural costs, and the inability to compete economically.

Thankfully Ford did not post as poorly as rival GM who had the worst performance among automakers, selling 201,000 vehicles in July, down 6.4 percent from last year.

GM outlined that sales to rental fleets declined 40 percent, and retail sales rose slightly. "This was a one-month issue," said Alan Batey, who took over this week as GM's interim head of global marketing.

Thankfully for GM investors, the company will not be rolling back a program that allows buyers to return any car if they are not satisfied.

Japanese automakers took the show, however, as Toyota jumped 26.1 percent, with 164,000 vehicles, while Honda registered at 45.3 percent, with 116,000 vehicles.

German automaker Volkswagen (VW) also climbed with a 27.5 percent increase in car sales combining both the Volkswagen and Audi (NSU) brands.

The Electric Battle

While much remains to be said about the margins and marketability of electric vehicles, Ford has developed an all-electric car called the Focus EV.

Unfortunately, the Focus EV has only been sold 38 times in the month of July, with 89 sold in June, and zero in February, March, and April.

To put things into context, I want to stress that the vehicle is only on sale in New Jersey, New York, and California, portions of the US that may be a little less squeamish to drive a fuel economy-based car. But these are still large states with large populations, of which Ford has manufactured 884 vehicles for.

It's not like this car hasn't been promoted either, with the car maintaining a large focus from the automaker, no pun intended!

The company is having trouble keeping pace with the more popular Nissan (OTC:NSANY) Leaf, which sold 395 vehicles in July. The sales still have a way to go before closing the gap on Nissan's 20,000 vehicle sales goal, though.

Depending on what you consider electric, the Chevy Volt pulled in 1,849 in July, up 89 over the previous year's 1,760. While GM had a bad quarter, at least its riskiest investment is pulling weight. The company has so far managed to sell 10,666 Volts, a 270 percent increase over 2011.

Not surprisingly, the Volt sold better in California, which currently accounts for 1 in 3 vehicles. This was also helped by the state's incentives to let Volts drive in the carpool lane which is typically faster than the rest of the freeway.

So while many Americans may still prefer a large vehicle or something faster, there's no denying that there is a demand for these fuel efficient vehicles, even if it was a little ambitious at first.

So the question remains, can the automaker that brought us the F-150 bring something as exciting but efficient? Are they even compatible?

There is certainly something the American automaker needs to do in order to maintain competitiveness with foreign automakers.

Fuel efficiency is not the only thing that drives people to the lot, as the Germans at Volkswagen (OTC:VLKAF) have managed to make amazingly built cars to perfection, albeit slightly less fuel efficient. Ford should take note.

Source: Japan Leads The Way In American Auto