U.S. auto sales power ahead in August despite turmoil

After being buffeted by wild stock market gyrations, unsettling economic news and Hurricane Irene, automakers are looking for some relief this Labor Day weekend — and that could mean good deals for consumers.

The industry believes sales will quicken in September, bolstered by growing inventories of cars that were in short supply for much of the summer, bigger discounts and an economy that looks less likely to fall back into recession.

“Marketing and incentive focus has already shifted to September with the upcoming Labor Day weekend, so with improved inventory, the sales pace could show marked improvement,” said Jeff Schuster, an analyst with J.D. Power and Associates.

Jessica Caldwell, an analyst with auto information company, also believes the outlook for car sales is improving.


“The next few months will be stronger. Lower gas prices will help. And used-car pricing is so high right now that it will steer people into new cars,” she said.

General Motors Co., whose sales rose a strong 18% to 218,479 vehicles in August compared with the same month a year earlier, believes its fortunes will continue to turn up.

“We’re carrying good momentum and we’re cautiously optimistic that we’ll see U.S. economic growth improve in the months ahead,” said Don Johnson, GM’s vice president of U.S. sales.

Through the first eight months of the year, GM has sold one out of every five vehicles purchased in the U.S., and has gained market share on its rivals.

Ford Motor Co. also believes the economy is improving gradually, and that will help the auto industry, said Jenny Lin, the automaker’s senior U.S. economist.

She pointed to slowly declining claims for jobless benefits and a manufacturing sector that is growing rather than contracting as positive economic indicators.

But sales in August were a mixed bag for import brands as Japanese manufacturers struggled with inventory shortages resulting from that nation’s earthquake in March. Nissan North America saw sales rise 19% to 91,541 vehicles while American Honda Motor Co. fell 24% to 82,321 vehicles.

Toyota Motor Corp. sales fell 13% to 129,483 vehicles but it said that its U.S. production is now up to full speed.

The automaker’s factories are ramping up to produce about 15% more cars through the fourth quarter than they were originally scheduled to assemble to make up for lost production, said Randy Pflughaupt, Toyota’s vice president for sales administration. He said all of the factories are on overtime, either operating on extended hours daily or adding a Saturday work shift.

Toyota also is hiring 2,000 workers as it gets ready to open a new factory in Tupelo, Miss., in November to make Corolla compact sedans.

Ford’s August sales totaled 174,800, up 11% from a year earlier, Autodata reported.

The automaker’s “Fiesta and Focus are selling over 20,000 units combined with little to no help from incentives. This builds a stronger profitability case for these small cars, which have been criticized for bringing little profit to automakers,” Caldwell said.

Chrysler Group sales grew 31% to 130,119 vehicles, Autodata said.

“Considering all that is going on — the stock market gyrations, the federal debt talks and at the end of the month the hurricane — it could have been much worse,” Caldwell said.

There are other signs that the auto industry is turning up.

Sales of auto dealerships are up sharply in 2011, according to the Presidio Group, a financial services advisor for such deals.

Publicly held auto dealer chains made $411 million in acquisitions through the end of July, a 92% increase over all of 2010, Presidio said, and stronger auto sales, fewer marginal dealerships, lower operating costs and record dealership profitability are making acquisitions more attractive. Low real estate prices and interest rates also are contributing to the rebound.

Most buyers are trolling for Toyota, Honda, Lexus, BMW and Mercedes-Benz dealerships, though Korean and domestic dealerships also are becoming more attractive, Presidio said.

Sales of electric cars were anemic.

GM sold only 300 of its Chevrolet Volt plug-in hybrid sedans in August, bringing its total for the year to 3,172. Nissan sold 1,362 of its battery-electric Leaf models in August and 6,187 since its December launch. Nissan said its Leaf supply is stable and that it will be able to sustain the sales rate.

Combined, the cars account for not quite 10,000 sales this model year. Meanwhile, the industry sells more than 1 million gasoline-powered vehicles a month.

“Shopper consideration for the Leaf and the Volt is flat, and down from earlier in the year. Consumer awareness just doesn’t seem to be significant yet,” said analyst Ivan Drury.