Auto sales post double-digit gains in August


Strong August auto sales numbers revealed a problem last month that Ford, GM and Chrysler once would have begged for — not enough cars to sell.

Automakers sold 1.5 million vehicles last month, a 17% gain over the same month a year ago and one of the best showings since 2007, before the Great Recession set in, according to Autodata Corp.

The sales were higher than expected, said Michelle Krebs, an analyst with auto information company, and were “even more positive than the overall numbers imply, as individual car buyers, not fleet sales, are behind the surge.”


Each of the U.S. car companies also posted double-digit gains and reported tight inventories on some models.

Ford Motor Co., for instance, can’t build enough Fusion sedans and Explorer and Escape crossovers. In Los Angeles, San Francisco and Miami, a Fusion is lasting just 13 days at a dealership. Typically cars can sit on a lot for two months.

“We are selling them as fast as we can get them,” said Daemeth Rooney, the general manager of Sunrise Ford in North Hollywood. “We have had trucks and SUVs that sold well, but we have never had a passenger car like this.”

Rooney said he has about 60 Fusions on his lot but would like double that amount.

Chevrolet has only a 35-day supply of the Cruze and can sell every newly redesigned Impala it makes. Chrysler needs more Jeeps and Fiat 500Ls.

It’s quite a turnabout for the domestic brands, which just five years ago had to offer huge discounts and incentives to move vehicles out of dealer showrooms.

“Keeping things on the lean side is a much better place to be,” said Jeff Schuster, an analyst at LMC Automotive.

The car companies might miss out on some sales because of a lack of vehicles, but that beats offering the friends-and-family discount to everyone with a driver’s license, he said.

It’s a conundrum for the automakers.

“You don’t want to go back to the bad-old days when you had too many cars to sell, but you also want to have enough inventory so that customers can find the vehicles with the options they want,” said Elaine Kwei, an analyst at investment firm Jefferies.

“It’s hard to imagine that the Detroit guys find themselves in this position,” she said.

Ford plans to increase production by about 50,000 vehicles during the fourth quarter, a 7% gain from the same period a year earlier. It also hired 1,400 new workers at its Flat Rock, Mich., assembly plant to build more Fusions. GM also said it is making some adjustments in its factories to meet an expected rise in demand heading into winter.

Tighter supplies are translating into higher prices and greater profits for the automakers, said Jesse Toprak, an analyst with auto price company

The average transaction price for Ford vehicles last month rose 6.9% to $33,460, its highest ever, Toprak said. GM saw its average transaction price rise 4.3% to $33,492 in August.

“Based on everything we see, the economy is on solid footing, which means the industry should remain strong,” said Kurt McNeil, vice president of GM’s U.S. sales operations.

GM sold 275,847 vehicles in the U.S. last month, up 14.7% compared with the same month a year earlier, Autodata said. Ford said it sold 220,404 vehicles in August, a 12% increase.

“This was the best retail [sales] of any month for Ford Motor Co. going back to August 2006,” said Ken Czubay, Ford’s vice president of U.S sales and marketing.

Chrysler Group sold 165,552 vehicles last month, an 11.5% gain. Six of the automaker’s models set sales records in August.

Toyota Motor Corp. sold 231,537 vehicles in the U.S. last month, a 22.8% increase from August a year ago. Honda Motor Co. reported U.S. sales of 166,432 vehicles, a 26.7% jump from a year ago. It was its best August ever.

Nissan Motor Co. sales hit 120,498 vehicles last month, a 22.3% gain. Hyundai sold 66,101 vehicles, an 8.2% increase from August 2012.

Market research firm J.D. Power & Associates said that consumer spending on new vehicles in August will approach $36 billion, which would be a record.

Still, the industry should temper its excitement, said Jack Nerad, an analyst at auto information company Kelley Blue Book.

Aging cars that need replacing and low interest rates have enabled the auto industry to beat overall economic growth, Nerad said.

“But that doesn’t mean that sales will continue at the strong pace we’ve seen in August,” he said. “The overall economic recovery is weak and fragile, so another shock could send sales back.”