April 2 (Reuters) - General Motors ( GM ) on Tuesday

reported a drop in first-quarter U.S. auto sales on lower

deliveries to commercial customers but strong retail demand

helped it stay ahead of rival Toyota Motor ( TM ).

The Detroit automaker's sales fell 1.5% to 594,233 units

in the first three months of the year. Toyota's ( TM ) sales jumped 20%

to 565,098 vehicles in the quarter.

Automakers have seen strong sales over the past quarters,

helped by a surge in consumer interest toward new vehicles for

personal mobility after the pandemic.

However, industry experts expect prices to taper off from

the year-ago levels as vehicles inventory at dealer lots

improve.

"While the sales and expenditure performance are impressive,

it is coming at the expense of reduced retailer and manufacturer

profitability as inventories of unsold vehicles rise and

competitive pressures intensify," said Thomas King, president of

the data and analytics division at J.D. Power.

U.S. new-vehicle sales volume in the first quarter is

expected to grow by 5.6% to 3.8 million units from a year

earlier, according to industry consultant Cox Automotive.

March seasonally adjusted annual rate is expected to finish

near 15.5 million units, up 0.6 million over last year's pace,

but down slightly from February, Cox added.

Average transaction prices are expected to be $44,186 in

March, down 3.6% from a year ago, according to J.D. Power.

"Since the second quarter of 2023, the pace of sales has

been in a prolonged holding period, given the current purchase

environment facing auto consumers," said S&P Global Mobility.

Top executives of GM and Ford gave upbeat outlooks for

the U.S. auto market and their profit plans last week, saying

U.S. consumer demand remains strong.

Ford, however, said demand for electric vehicles is "much

lower than the industry expected," and added that it would rely

on demand for hybrid models "as an important part of that bridge

over the next five years."