Automakers report sales up double-digits in August (Update)
Toyota, Ford, Nissan, Chrysler and General Motors all posted double-digit U.S. sales gains last month as people snapped up pickup trucks and small cars to lead the industry toward its best month in six years.
Toyota posted the biggest gain, with sales up nearly 23 percent over August of last year. Nissan sales were up 22 percent, the best August in company history. At General Motors, sales were up almost 15 percent for the company's best month since September of 2008. Chrysler and Ford each reported 12 percent gains.
Auto stocks rose, with Ford and GM up more than 3 percent. U.S.-traded shares of the Japanese automakers all rose more than 1 percent.
Chrysler and GM each forecast that total U.S. sales in August ran at an annual rate above 16 million, a pace not seen since November of 2007, a month before the start of the Great Recession.
Mustafa Mohatarem, GM's chief economist, predicted that rate of sales is here to stay. History, he said, shows that auto sales follow a trend, and that trend is now back above pre-recession levels.
"With the underlying economy fairly solid and with the still very high average age of the fleet, I have full expectations that we will continue to see a fairly steady industry," Mohatarem said.
The average age of a vehicle on U.S. roads today is a record 11.4 years according to the Polk research firm. That means more people have to replace cars and trucks that they kept through the recession.
While GM didn't officially raise its sales forecast for the year from 15.5 million, Mohatarem said he expects the year to end with sales closer to 15.8 million vehicles.
Also, the industry is on better footing than it was in 2007. Prices are high and automakers aren't resorting to huge discounts to pull customers into showrooms, Mohatarem said.
Consumers are spending at record levels to buy loaded-up vehicles, according to the TrueCar.com auto pricing web site. The average U.S. vehicle sold for an estimated $31,252 last month, up almost $1,000 over August of last year and $24 higher than the previous record in December of 2012. Five automakers, Chrysler, Ford, Honda, Nissan and Volkswagen, all had record-high selling prices last month, according to TrueCar.
High trade-in values are allowing automakers to offer attractive low-cost lease deals. And low interest rates are giving buyers room to add options and still keep monthly payments relatively low. The industry tracking firm Experian said earlier this week that nearly 28 percent of people who financed cars in the second quarter leased them, a record high.
LMC Automotive, an industry consulting firm, is predicting that total U.S. sales last month were close to 1.5 million, about 12 percent higher than a year ago. That's the highest number since May of 2007.
Ford sold more than 70,000 F-Series pickups last month, the second month this year that sales have topped 70,000 for the nation's top-selling vehicle. Sales of Chrysler's Ram pickup rose 31 percent to more than 33,000. GM's Chevrolet Silverado was up 14 percent to nearly 44,000.
At Chrysler, Jeep sales rose 8 percent for the brand's best August in 11 years. Grand Cherokee SUV sales were up 40 percent. Chrysler recorded its 41st straight month of year-over-year sales gains.
Sales of truck-based vehicles were extremely strong for Chrysler, at more than 120,000. That's nearly three times the company's car sales and may indicate that Chrysler is once again becoming overly reliant on trucks for its profits.
Ford reported sales of more than 221,000 vehicles. Fusion midsize car sales were up almost 14 percent to nearly 25,000.
At GM, sales rose to nearly 276,000, led by pickups and the Sonic subcompact with sales up 31 percent. The Buick and Cadillac brands posted sales increases of more than 36 percent.
Toyota passed Ford in August sales to take the No. 2 spot behind GM. Toyota sales rose to nearly 232,000 vehicles for the month.
At Nissan, the company set an August sales record at just over 120,000.
Of automakers to report sales on Wednesday, only Volkswagen posted a decline, down nearly 2 percent after posting huge gains last year.
Some Americans still find $3-plus gasoline reason to buy a small car. Others have noticed that smaller vehicles are better designed, far quieter and safer with more features, said Tom Libby, lead North American analyst for the Polk automotive research firm. Analysts from Kelley Blue Book predict that compact and subcompact cars could challenge midsize cars as the largest segment in the U.S.
Still, gas prices aren't the sales catalyst they were back in 2007 and 2008. Gas this August was the cheapest in three years, averaging $3.57 a gallon, compared with $3.62 in 2011 and $3.69 last year.
Last month, Toyota had to discount the Prius gas-electric hybrid to boost sales. Toyota discounted the average Prius by $1,462, more than triple the incentives from a year ago, according to TrueCar.com, an auto pricing website.
Compare that to 2007, when the price of gasoline jumped from $2.15 a gallon at the end of January to more than $3 in early May. That May, sales of the Prius nearly tripled as consumers flocked to a vehicle that got 46 miles per gallon in city and highway driving.
"Consumers like stability," said Jeff Schuster, senior vice president of sales forecasting for LMC. Now that they're used to higher gas prices, "it's less of a shock than in May of 2007," he said.
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