The Passat helps VW deliver a 62% sales bump.
The analysts have been forecasting a downturn in the U.S. auto industry for months, and the dire forecasts have only grown worse as much of the rest of the economy has soured. But August sales once again showed there is unexpected life left in the American automotive market.
Pent-up demand and improved credit access helped boost August sales by an estimated 16% compared to year-earlier levels, with declining incentives and rising vehicle prices suggesting, if anything, that the market may still be building more steam.
“We’re not seeing anything drastically changing at this point,” said Frank Trivieri, sales chief for Volkswagen of America, which reported a 62.5% increase for the month. “I haven’t seen anything to indicate (a) softening” of the market.
Some makers reported positively massive gains, including not only VW but Honda, up 59.5%, and Toyota which reported a 49.6% jump compared to August 2012.
Hyundai was one of the few makers to post a single-digit increase and that appears to have been the result of supply issues – especially in the wake of six weeks of on-and-off strikes at the maker’s Korean production facilities. Hyundai nonetheless had its best-ever August and its highest-ever transaction prices, according to data tracking firm TrueCar.com, at $22,378 compared with $21,144 a year earlier.
VW was the only one of the top eight makers to actually see its average transaction price, or ATP, decline compared to July. It also increased its incentives by 39.3% year-over-year, to $2,568 per vehicle. On the whole, automakers cut incentives 6.0% from August 2011, to an average $2,457, according to TrueCar.
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Analyst Joe Phillippi, of AutoTrends consulting, credited “pent-up demand” for much of the August climb. That was especially apparent among Japanese brands who suffered from severe shortages most of last year as a result of that country’s devastating earthquake and tsunami.
But product also worked in Toyota’s favor, insisted Bill Fay, the maker’s group vice president. Pointing to new models such as the Prius V and redesigned Camry, he said, “The driving force behind our growth continues to be strong consumer response to the new models we’ve launched over the past twelve months.”
Toyota is by no means alone. The industry is flooding showrooms with a wide array of new products. That includes a wide range of higher-mileage offerings that analysts believe are scoring well at a time when fuel prices are again on the rise after a brief, early summer respite. Though Nissan only gained a moderate 7.6% for the month – including the luxury brand Infiniti, Nissan reported a 12.5% increase for the all-new Altima sedan, which delivers up to 38 mpg.
The maker has declared its goal of turning Altima into the best-seller in the midsize segment, which would be bad news for the long-time front-runner, the Toyota Camry. But the segment is getting plenty of other new competitors including totally redesigned versions of the Honda Accord, Chevrolet Malibu and Ford Fusion.
Other key segments are also undergoing big changes. The Ford Escape recently migrated from a conventional truck-like platform to a car-based crossover “architecture” that delivers better handling and significantly improved mileage. The new 2013 Nissan Pathfinder will adopt a similar approach when it rolls into showrooms later this year.
Even conventional, full-size pickups did better than expected in August, Ford alone rolling up sales of more than 58,000 F-Series models – and leading analyst Joe Phillippi, of AutoTrends consulting, to suggest that this “might bode well for (the) construction” industry, as most full-size pickup trucks today are sold for professional, rather than personal, use.
The new car market appears to have gained back some momentum from the used car side of the business, some observers suggested, in part due to the major run-up in used vehicle prices during the first half of the year. But Ricky Beggs, managing editor of the used car reference guide, the Black Book, cautions that used car prices are likely to dip a bit, at least in some key segments, in the months ahead.
“Consumers’ preferences concentrated on the two extreme ends of the segments in August: small cars and large trucks both enjoyed market share gains,” said Jesse Toprak, Vice President of Market Intelligence for TrueCar.com.
Pickup sales helped all three of the Detroit-based maker – helping General Motors reverse an embarrassing decline in volume in July. The maker delivered a 10% gain for the month, all four of its North American brands improving from August 2011. The Chevrolet brand, which recently introduced a new love-it-or-return-it policy, delivered an 11% gain.
Ford was up 13% for the month, with the F-Series and Escape delivering much of the momentum along with the outgoing 2012 Fusion sedan.
Chrysler also did well in the truck market, its new Ram 1500 benefiting from a redesign delivering up to 25% better mileage. The little Fiat 500 also continued to gain momentum after a disastrous 2011 launch. But it could be the new 2013 Dodge Dart that helps Chrysler maintain sales gains that have routinely outpaced the industry overall for more than a year. The new Dart delivered more than 3,000 sales in August, continuing a monthly 300% growth rate.
The maker doesn’t expect that to continue much longer – it simply wouldn’t be able to maintain the pace at its Illinois assembly line – but products like the Dart will not only boost sales but also drive down above-industry-average incentives, promised Chrysler CEO Sergio Marchionne.
“As we continue to refresh our product portfolio, you’ll see that number (continue to) shrink,” said Marchionne. According to TrueCar.com, Chrysler paid out incentives averaging $3,088 per vehicle in August – down nearly $300, or 8.8%, from a year earlier.
With the U.S. economy continuing to sputter, most analysts have backed down on their forecasts for the full year, but it still appears 2012 will be the best the industry has seen since the market bottomed out at 10.4 million in 2009 – and is likely to come in somewhere between 14.0 million and 14.5 million. That would be at least 1 million vehicles ahead of 2011’s results.