U.S consumers continued buying new cars and trucks at a torrid pace in August as easy credit and a wave of new products fueled showroom traffic, likely driving the industry’s annualized rate above 17 million — the fastest pace since 2006.
With most automakers having reported, industry sales were expected to reach an annual rate of 17 million vehicles, a rate not seen since the frothy days of last decade’s housing bubble.
“We had an early Labor Day weekend that fell into the end of August and it really pumped up the sales for the month,” said John Felice, Ford’s president of U.S. sales and marketing
Automakers are bumping up sales with incentives that were about $300 more, on average, per vehicle than they were last August, according to Kelley Blue Book. Still, new cars and trucks are now selling for $32,495 — about $851 more than the average sale price last August — reflecting the strength of higher priced pickup trucks, large SUVs and luxury cars.
“We are seeing a lot of promotions,” said Michele Krebs, an analyst with AutoTrader.com. “Yes incentives were up, but there also was a lot of excitement driven by a lot of advertising.”
Chrysler sales jumped 20 percent in August, while General Motors posted a 1 percent drop and Ford sales were flat from a year earlier.
Among Asian automakers, sales increased 11.5 percent at Nissan, 6.3 percent at Toyota, 6 percent at Hyundai, 5 percent at Kia and 0.4 percent at Honda. Volkswagen’s sales fell 12.8 percent.
Chrysler’s strong performance again was led by Jeep Cherokee and Ram trucks. Jeep sales surged 49 percent while Ram sales rose 39 percent. Sales increased 4 percent for Chrysler brand, while Dodge and Fiat sales tumbled 6 percent and 20 percent respectively.
GM sales of Silverado pickups increased 13 percent and GMC Sierra sales rose 10 percent, but Cadillac sales dropped 18 percent, Buick slipped 10 percent and Chevrolet was down 1 percent. GMC with sales up 10.4 percent, was GM’s only brand to beat year-earlier levels.
Ford sold 222,174 vehicles, up 0.4 percent, recording its best August in eight years despite a 6 percent decline in fleet sales 6 percent. Ford brand sales edged up 0.4 percent while Lincoln was down 0.6 percent.
“Both Fusion and Escape set records in August, each continuing on a strong pace toward 2014 being a best-ever sales year,” Felice said. “It also was another solid month for F-Series, which again topped 60,000 sales and maintained its lead as the best-selling pickup in the U.S.”
But F-Series sales were down 4.2 percent from a year ago as dealers sold off remaining 2014 models in anticipation of the 2015 aluminum-bodied replacement coming later this year.
Ford executives describe it as a tale of three industries: full-size trucks are strong in both demand and pricing; crossovers, especially small ones, are a growth segment that shows no signs of slowing; but cars, especially the high-volume mid-size segment, have seen sales go flat and prices start to deteriorate, Felice said.
Pricing on cars was flat in August amid signs of deterioration for a segment “trying to hold its head above water.” But the average transaction price for crossovers is $1,000 higher than a year ago and pickups are $2,800 higher for the industry, said Erich Merkle, Ford’s U.S. sales analyst.
Ford incentives overall are up $250 from last year but down $30 from July. The average Ford vehicle sells for $31,000, or $1,000 more than the industry average.
Ford said its average sales price is down $450 from a year ago and down $120 from July, largely because the automaker is selling off its 2014 F-Series pickups and its mix of higher priced trucks to cars is not as rich as a year ago. When the new 2015 model goes on sale at the end of the year the mix will be skewed to high-end models again.
Even though total industry sales are expected to maintain their strongest pace since the Great Recession there is some evidence is showing that the rate of monthly increases has plateaued.
The August results will be compared to a very strong year ago month a year ago so don’t expect a huge increase.
“We continue to believe that the pace of sales for the industry has likely plateaued, leading to increased jostling for (market) share,” said Brian Johnson, automotive analyst for Barclays.
Automakers, banks and other lenders are making more longer loans — as long as 7 or 8 years — to people with low credit scores. The industry is producing more. While the average price of a car keeps rising, some customers are demanding and getting substantial discounts.
Talk to us
> Give us your news tips.
> Send us a letter to the editor.
> More Herald contact information.
