CARS: Taxpayer financed; Automaker approved.
With Subaru leading the way with a big increase, vehicles sales reached a new high for the year in August. Analysts said the annualized sales rate last month topped 14 million units.
It was the industry’s strongest showing since the spring of 2008 and was driven by the success of the Cash for Clunkers or CARS program, which boosted sales for all but the luxury brands.
Toyota, Honda, Volkswagen, Hyundai, Kia and the Ford Motor Co. all posted double digit sales increases. Subaru did even better posting a 52% increase for the month. Even smaller Japanese brands, such as Mazda, Suzuki and Mitsubishi, which have struggled this year, reported they got a sales lift.
Among the luxury makers, Audi reported strong sales, but BMW and Mercedes-Benz reported sharp drops. The magic may have worn off Smart as well as it reported a drop in sales in August despite an aggressive Clunkers push.
Meanwhile General Motors Company reported its sales increased by 3 % in August when measured against the previous month. However, they dropped 20% when measured against August 2008, when GM was winding up a major “employee cost” incentive campaign.
“The Cash for Clunkers program was certainly a success, but our momentum continues to build on the strength of our new cars and crossovers such as the Chevrolet Malibu, Equinox and Camaro. Now we have the Buick Lacrosse, Cadillac SRX and GMC Terrain hitting the market,” said Mark LaNeve, vice president, U.S. sales.
“We believe the program was a strong shot in the arm for the economy and that our four core brands – Chevrolet, GMC, Buick and Cadillac – are well positioned with new products to take advantage of the ongoing recovery in the market,” he said. A closer analysis though shows that GM is just treading water in terms of market share.
Chrysler LLC, however, didn’t have enough inventory to cash in on the Cash for Clunkers. It reported that sales dropped 15% in August ,and sales were up only 5 % from July to use that invidious comparison. Thus, it finished a distant sixth in overall sales behind not only GM, Ford and Toyota but also Honda and even Nissan, which watched its sales drop too. Chrysler also dropped behind the South Koreans, Hyundai and Kia.
Kia and Hyundai combined to sell more than 100,000 vehicles or more than Chrysler thanks to a record boost in sales.
Chrysler executives, however, insisted the numbers really weren’t that bad. “Chrysler Group’s large car, minivan, crossover and truck segments all posted increases in retail sales in August,” said Steven Beahm, Vice President-Sales Operations, Chrysler Group LLC, adding Chrysler now has a 28-day supply of vehicles on dealer lots – the lowest figure in decades.
Meanwhile, carmakers expect to see a drop in sales in September given the fragile state of the economy and depleted inventories. However, they are still hoping for better sales numbers for the balance of the year being the optimists that sales executives always are.
The next boost for the car market could come from the housing market, which is finally showing signs of life, according to Robert Carter of Toyota Motor Sales, which had its best sales month since May of 2008 as it virtually sold out all of its high-mileage vehicles such as the Prius.
“House prices went up last month for first time in three years last month,” said Carter, and new construction leads to the sales of new trucks. “We think there is going to be a short term drop off in September and we think the (annualized rate) is going to be in the low 11s as we finish the year,” Carter said.
Ford, which saw its trucks sales rise in August and has added truck production at plants in Michigan and Missouri, also is relying on a recovery in housing. George Pipas, Ford sales analyst, also said the relatively strong sales of commercially oriented vehicles such as the F-150 and the new Transit Connect suggest that small business owners are beginning to feel more confident about prospects for an economic recovery in the next six to 12 months.