U.S. auto sales rose more than expected in August, as Ford Motor Co. reported a 3.6% increase on strong sport-utility vehicle sales, partly offset by weak sales of the car models it will stop making.
Ford said sales of North American-built cars fell 4.6% from the year-earlier period, to 123,206 units, and that pickup truck, sport-utility and minivan sales rose 9.6% to 170,491. Analysts had expected Ford's sales to be up 5%.
The company's results boosted the industry's U.S. sales to 4.9% in August compared with the year-earlier month, to 1.3 million units. Analysts had predicted a 2% increase and said hefty incentives helped sales.
"To sell passenger cars, you've either got to have something dramatically new or rebate the hell out of it," said David Healy, a Burnham Securities analyst. "On the other hand, consumers are paying up for light trucks without too much complaining."
The continued strength in auto sales, particularly GM's stronger-than-expected 7.4% increase reported Wednesday, raised fears of rising inflation, as did Thursday's reports of stronger-than-expected retail sales in August and a record level of factory orders in July.
By itself, the August vehicle sales total "doesn't look like the runaway, reckless sort of thing that could get any great amount of attention" from Federal Reserve Board policymakers considering whether to raise interest rates, Healy said.
Auto makers are using higher rebates and lower loan financing rates and other incentives to draw customers to showrooms. Chrysler on Thursday announced it was doubling rebates on its Neon small cars and Cirrus and Stratus mid-size cars to $2,000, and fattening incentives on other vehicles, including the 1998 Jeep Grand Cherokee Laredo and Limited models.
Ford said it is optimistic about sales for the remainder of 1997 and into next year and that it is boosting its third-quarter production plans by 15,000 cars and 10,000 trucks.
Ford's stock rose $1.56 to close at $45.19 a share after reaching an intraday all-time high of $45.88 in New York Stock Exchange trading.
GM shares rose 25 cents to close at $65.50 and Chrysler shares rose 44 cents to $36.19, also on the NYSE.
Ford's August performance was dragged down by a 13% drop in sales of Thunderbirds and a 42% drop in sales of Probes, two cars that are being discontinued. Taurus sales fell 1.4% to 24,270 units, and Contour sales rose 6.5% to 10,754.
In trucks, Ford was buoyed by sales of 13,845 Expeditions, a fivefold increase from a year ago, and of 4,114 Navigators, which weren't sold a year ago. The vehicles are Ford's two largest and most profitable sport-utility vehicles. Sales of Ford's F-series pickup dropped 1.8% to 54,930, and sales of its Windstar minivan fell 26% to 12,920.