Consumers bought new vehicles in August at the strongest clip in more than four years — the most convincing evidence yet that the industry’s recovery is sustainable as consumers replace aging vehicles and feel better about borrowing.
Vehicle sales rose 20% in August compared with a year earlier, boosting the industry’s seasonally adjusted annual selling rate to 14.52 million vehicles, according to Autodata.
The key selling rate figure measures the number of vehicles the industry would sell in a year if sales held at that pace for 12 months. To underscore the extent of the industry’s rebound, the industry’s selling rate languished below 10 million vehicles for the first six months of 2009 in the depths of Great Recession.
There was a continued boost from pent-up demand. High gasoline prices helped sales of small cars throughout the industry without hurting truck sales, as small-business and housing-sector growth powered truck sales.
Jesse Toprak, vice president of market intelligence for TrueCar.com, said sales “exceeded our expectations” for the month.
“Small cars did well due to continuously high gas prices and full-size trucks did well,” he said.
Still, a widely followed economic report showed that non-auto manufacturers still face a rough road. The Institute for Supply Management showed that despite the auto industry’s resurgence, many manufacturing executives aren’t optimistic.
“Nobody is doing a lot of thinking about expanding in manufacturing,” said David Cole, chairman emeritus of the Ann Arbor-based Center for Automotive Research, in a recent interview.
Low interest rates help
U.S. auto sales have outpaced the overall economy because consumers who deferred purchases during the last several years are returning to the market with the help of lenders that have eased credit requirements.
Several auto companies are financing vehicles at 0% for buyers with strong credit.
“Consumers have been responding,” said Bill Fay, group vice president and general manager of the Toyota division, which is expanding 0% financing in September to include its best-selling Camry sedan.
Fay said the industry must eventually transition from “mostly need buyers” to “want buyers.”
The Detroit Three automakers each posted double-digit sales increases in August compared with the same month last year. Chrysler was up 14.1%; Ford, 12.6%, and General Motors, 10.1%.
GM’s four brands all enjoyed sales increases. Buick rose 12.4%, Chevrolet, 11.3%, Cadillac, 11.3%, and GMC, 3.7%.
The automaker attributed some of the gains to its marketing campaign during the Olympics, but one of the vehicles featured during the games, the all-new Cadillac ATS, didn’t start shipping to dealers until Friday.
The all-new Ford Escape reported its best August with a 37% gain.
Ford added a third shift in August at the Louisville, Ky., plant that produces Escape. The larger Explorer SUV also had its best August since 2006.
German automaker Volkswagen reported its best August since 1973 with sales up 48.2% from a year earlier.
Honda (up 59.5%) and Toyota (up 45.6%) continued their rebound from 2011, when they cut production following the March earthquake and tsunami.
Sales of the Honda Civic more than doubled to 24,897 units. Chevrolet Cruze sales rose 19.1%.
In the large pickup segment, sales of Ford’s F-Series, the nation’s best-selling vehicle, jumped 19.3% to 58,201 units. Chrysler’s Ram truck sales rose 18.7% to 25,215 units.
Gas prices aid hybrids
With gas prices climbing above $4 in parts of the Midwest and the West Coast, alternative powertrain vehicles did well. Sales of Toyota’s Prius family of hybrids more than doubled their depressed year-earlier level.
“As fuel prices rose again during August, we saw growing numbers of people gravitate toward our fuel-efficient vehicles,” said Ken Czubay, Ford’s vice president, U.S. marketing, sales and service.
GM’s Chevy Volt posted its best-ever month at 2,831 units, up from 302 a year earlier. Nissan Leaf sales fell 50% to 685.
Nathan Bomey, Detroit Free Press