Record high petrol prices and the power cut that darkened much of the eastern United States did little to dim US new vehicle sales in August, which are expected to hit their strongest level of the year, Reuters reported.

Steve Lyons, the head of Ford Motor's Ford division, on Thursday told the news agency that US new car and light truck sales could hit a seasonally adjusted annual rate of 18.2 million to 18.7 million in August, far above July's strong rate of 17.2 million.

"Certainly the deals are good and customers are responding," Lyons told Reuters, citing the strengthening US economy and high incentives for fuelling sales.

Reuters noted that Lyons' forecast topped Wall Street estimates, which ranged from 17.5 million to a high of 18.7 million, with several pegged at 18.2 million. Car makers are scheduled to report August sales on September 3.

Jacques Moore, who owns Cadillac, Saab, Hummer and Subaru dealerships around Richmond, Virginia, told Reuters that many elderly buyers who live on fixed incomes have been encouraged by the recent strength of stock markets.

"They've got money, things are stable, and they're saying: 'we owe it to ourselves, we're ready for new wheels'," Moore told Reuters. "(Sales) were very strong, surprisingly strong."

Busy showrooms in places such as Virginia appeared to counter the impact of the power outage, which forced many dealerships in the eastern United States close for a day or two in mid-August, Reuters noted.

"When (consumers) lose $US500, $600 of stuff from their freezer, that's a down payment for their car," one Michigan car salesman whose sales were hurt by the blackout, told the news agency.

Reuters said that, despite the surprisingly strong sales this month, results could still be below last August's exceptionally strong 18.6 million, which was the strongest month of 2002.

As in past months, the news agency added, many analysts expect Detroit's General Motors, Ford and DaimlerChrysler to lose market share to Toyota and Honda.

Reuters said that much will depend on the strength of sales over the Labour Day holiday weekend as some of Labour Day's sales figures will be included in August's results.

Peter Glassman, a senior economist with Bank One, told Reuters the Bush administration's tax cuts, including the child tax credit checks, which put hundreds of dollars in the pockets of parents, boosted sales in July and August.

Despite rising interest rates, many automakers continued to offer zero percent financing loans throughout August and consumers still have extra cash from refinancing their mortgages, Reuters added.

According to the news agency, some car makers have said they see signs Detroit's price war is moderating but CNW Marketing Research, which tracks the motor industry, reported that automakers offered incentives averaging $4,194 on every vehicle sold during the first two weeks of August, up from $3,983 in July.

Reuters said car makers raised some incentives to clear out the 2003 models to make way for the new 2004 vehicles, which have fewer incentives - for example, GM this month offered its dealers $2,000 on every Hummer H2 to help boost sales.