Stronger-than-expected August car sales stunned automakers and analysts as volume totaled more than 1.5 million vehicles for a 16-million Seasonally Adjusted Annual Rate (SAAR) of sales, the best for any month since 2007.
The surprisingly strong August sales were the result of a highly successful close of the month, which fell in the midst of the Labor Day weekend — a weekend that saw a flurry of holiday advertising and promotions by automakers and their dealers.
Fred Diaz, Nissan division's vice president of sales, marketing, service and parts, told Edmunds.com. he was in awe as he watched bigger and bigger numbers rolled in after the holiday. "It was an incredibly strong close," he said. Indeed, Nissan Division reported some of the best results with sales up 24 percent from a year ago, significantly above expectations.
Almost every automaker outperformed analysts' projections. Industry sales totaled 1,500,387 vehicles (excluding medium and heavy-duty trucks). That was a 17-percent increase from August 2012, when sales volume was 1,285,310 vehicles and the SAAR was 14.5 million vehicles. August sales were 14 percent higher than July. August 2013 goes into the history books as the best volume since May 2007 when sales were 1,555,945 vehicles and the best SAAR since November 2007 when it last hit 16 million.
A deep-dive of the numbers is even more impressive. Strength was across brands and across vehicle types. Long-standing records fell. Fleet sales were low, inventories were in line and extremely low in some models, and transaction prices were hefty.
Low Fleet Sales: Individual retail customers going into their local dealership to buy vehicles one by one, not vehicles bought en masse by corporations, governments or rental car companies, fueled August sales as pent-up demand continued to unleash. The average age of vehicles on U.S. roads continues to be the highest in history, and improving sales since 2008 has not put a dent in that average. Instead, the age of the typical vehicle actually rose in 2012 to 11.4 years from 10.8 years in 2011, according to Polk. The typical August trade-in was more than 6 years old, Edmunds.com data shows. The trade-in age has been above 6 years old for many months now — an unprecedented number of consecutive months.
Fleet sales accounted for an estimated 15 percent of August sales, according to Edmunds.com's calculations. That's the lowest August fleet level at least since 2007. Lower fleet sales are due, in part, to the government sequester, which is limiting purchases for local and federal government fleets. It is also due to strong retail demand that is more lucrative for automakers. In addition, automakers are deliberately lowering their dependence on fleets and trying to boost retail interest in specific models, such as GM's strategy to shift the buyer mix of the heavily fleet-dependent Chevrolet Impala.
Incentives Not Outlandish: While individual car buyers may have been lured into dealerships by big promotions, but the incentives weren't that huge. Incentives have held relatively steady of late, as customer demand has matched or outstripped supply. Incentives across the industry totaled an average of $2,366 per vehicles, down from July's $2,455 per vehicle and up only a bit from $2,298 per vehicle last August, according to Edmunds.com's proprietary Total Cost of Incentives (TCI) calculations.
Credit Available, Cheap: Customers were drawn in by widely available car loans at extremely low interest rates and by attractive lease deals. About three-fourths of consumers acquiring a new car used financing. In August, 50 percent used financing through the dealer and 25 percent leased. The rest paid cash or had a check from a credit union or bank.
"In August, we saw average interest rates at 3.9 percent, the lowest since December, 2012 which was the lowest since we started collecting data in 2002," said Edmunds.com Senior Analyst Jessica Caldwell. She pointed out that in pre-recession 2007, resale values were not as high as today and interest rates were not as low so that monthly payments now are actually slightly lower than when consumers bought their vehicles six years.
Truck buyers are increasingly taking advantage of cheap credit, added Caldwell. Traditionally, truck buyers in larger numbers than car buyers pay cash. But, likely due to cheap credit, they are financing. Leasing, however, still remains a miniscule part of the truck- buying equation.
Strength Across the Board: The sales gains were largely across the board in terms of brands and market segments.
"The diversity of purchased vehicle types is helping to raise auto sales," said Caldwell. She pointed out that even hybrids and advanced-drive models, including the Chevrolet Volt and Nissan Leaf, had strong sales — in some cases, their strongest ever — albeit still small volume. Some of that is due to recent price cuts on the Volt and Leaf and big incentives on models like the Toyota RAV4 EV. "Except for the Tesla EV buyer, this is a price-sensitive part of the market," Caldwell added.
At the opposite end of the spectrum, truck sales were up again. Full-size pickup trucks have been the fastest growing segment in the auto industry this year, thanks largely due to improvement in the housing and construction industries as well as the energy and agriculture sectors. Further, trucks are garnering big transaction prices.
Similarly, luxury vehicle sales were strong as the race for luxury sales crown becomes more dramatic. In August, Lexus regained the No. 1 spot, which it had long held but lost in the aftermath of Japan's historic earthquake and tsunami that limited vehicle inventory. Mercedes-Benz continues to hold the No. 1 spot for the year followed by BMW.
2013 Outlook and Beyond: September could be a quirky month, having fewer selling days than last September and with the Labor Day holiday being shared with August when it usually falls fully in September.
Still, August's better-than-expected results and anticipated robust sales through year-end prompted some automakers to say the industry likely will outpace their 2013 forecasts, though the double-digit year-over-year sales increases will probably taper back. Automakers say "marginal buyers" and Millennials have yet to fully participate in the current car market, but they expect that they will. In general, pent-up demand is expected to continue unleashing, and interest rates aren't likely to rise significantly.
Ford CEO Alan Mullaly was quoted last week, saying he sees 17 million sales annually coming in the next few years. Toyota Vice President Bob Carter told the Automotive Press Association in Detroit on Thursday, the day after August sales results were announced, that he expects U.S. vehicle sales to range from a low of 15.5 million to highs in the mid-16 million for the next three to five years. "We won't see 10 percent year- over-year sales increases, but we'll see moderate growth and moderate declines," Carter said.
On the profit side, automakers' upcoming reports should show very healthy earnings from the U.S. with incentives and less-profitable fleet sales down while overall sales volume and transaction prices increase.
GENERAL MOTORS: General Motors sold 275,847 vehicles in the U.S. in August, up 15 percent from a year ago for its best month since September 2008 — the month in which Lehman Brothers collapsed, sending the economy into a downward spiral and GM, along with Chrysler, into bankruptcy court.
Like the rest of the industry, GM's sales were fueled by individual retail sales, which were up 22 percent, not fleet sales, which dropped by 8 percent. Incentives also were down from July an estimated $3,297 per vehicle, not much higher than a year ago, according to Edmunds.com's TCI calculations.
Lower incentives are due to a couple factors: inventories and new models. Inventories are in check. GM's total inventories are in the range of 60 to 65 day's supply, about the industry norm and maybe even low considering strong customer demand. Further, GM boasts that 80 percent of its vehicles are new with more to come.
Fleet sales accounted for 19.9 percent of all GM sales, down from the 24.7 percent year-to-date and significantly lower than a year ago. For cars alone, GM's retail sales were up 27 percent as a result of trying to shift the emphasis to retail on fleet-dependent cars like the Chevrolet Malibu and Chevrolet Impala. Malibu retail sales rose 93 percent form a year ago; retail sales of the highly acclaimed redesign of the Impala rose 76 percent.
By segment, GM's crossover sales were up 34 percent with the GMC Terrain and Cadillac SRX enjoying their best-ever August sales and the Chevrolet Equinox and Buick Encore posting their best months ever. Full-size pickup sales were up 15 percent. Large SUV sales rose 29 percent. Car sales edged 8 percent higher.
All four GM brands posted double-digit total and retail sales increases. Some brands saw sales records fall.
Chevrolet sold 187,740 vehicles for a 10 percent increase. Chevrolet's retail sales rose 22 percent. Chevrolet Volt, the list price for which was lowered by $5,000 in August, had its best month ever with 3,351 sold, up 18 percent. Chevrolet Malibu posted a 17-percent increase to 16,890 cars. Chevrolet showed continued momentum in its small cars: Chevrolet Sonic, up 31 percent to 11,354 cars, to lead the subcompact car segment; Chevrolet Spark, up a whopping 72 percent to 4,534 cars) and Chevrolet Sonic.
Chevrolet Cruz sales were still a hefty 23,909 cars sold, though that was down 8 percent likely due to lower fleet sales. Sales of the Corvette dropped 46 percent as Chevrolet winds down the current one to make way for the new one this fall. Camaro sales rose a hefty 33 percent to 8,875 cars. Chevrolet Impala sales were down 22 percent to 13,274 cars, though it still led all large car sales. GM is trying to shift the newly redesigned Impala from a fleet to retail car, reversing the mix from more than 70 percent fleet and 30 percent retail.
On the truck and utility side, Chevrolet sold 43,606 Silverado pickup trucks for a 14-percent gain. Chevrolet Traverse crossover sales rose 35 percent. Sales of the Suburban and Tahoe SUVS, which will be replaced within the year, also climbed double digits.
Cadillac sold 20,255 vehicles, up 38 percent from a year ago for its best August since 1989. Cadillac's retail sales rose 38 percent. Cadillac XTS, introduced June 2012, posted a 63-percent gain to 3,533 cars. Cadillac ATS, launched last fall, pitched in 3,380 sales. Cadillac SRX sales rose 39 percent. Cadillac CTS sales were down 23 percent as the brand prepares for the upcoming launch of the new version. Various versions of the Cadillac Escalade posted a mixed bag of results as those models will be replaced soon.
Buick sold 24,650 vehicles, up 37 percent for its best August in a decade. Buick's retail sales were up 24 percent, its 16th consecutive month of higher retail sales. All models gained by double digits except for the Regal, which reported a 30-percent sales decline. The volume-leading Buick LaCrosse had sales up 25 percent. The second-best seller Buick Enclave had a 19-percent gain. Buick Verano sales rose 12 percent to 5,826 vehicles. The new Encore kicked in 4,296 sales.
GMC sold 43,202 vehicles, up 14 percent from a year ago. The new GMC Sierra had 24-percent higher sales at 18,017 trucks. Terrain sales were up 22 percent. Sales of the Yukon, to be replaced within the year, were up. Acadia crossover sales dipped 4 percent.
"The second half of 2013 is off to a very solid start for GM and our model-year change over and new product launches are going smoothly," said Kurt McNeil, vice president, U.S. sales operations. "We have a lot of momentum, and we feel good about the direction of the U.S. economy as we prepare to launch even more new products." Among those new products will be the full-size SUVs across multiple brands, the Cadillac CTS and the Chevrolet Corvette.
TOYOTA: Toyota Motor Sales surpassed Ford Motor Co. as the No. 2 seller of vehicles in the U.S. in August, a spot it once held and then lost. The automaker's Toyota, Lexus and Scion brands sold 231,537 vehicles, up 23 percent from a year ago, its best month in more than five years. Toyota executives said fleet sales were low, and incentives were up some, particularly on the Camry. The average Toyota incentives amounted to $1,951 per vehicle, up from July as well as last August.
Toyota Division sold 201,745 vehicles, up 23 percent from a year ago. The Toyota Camry remained best-selling car in America, a title Toyota insists it will retain no matter what. Toyota sold 44,713 Camry models, the highest since the Cash for Clunkers-driven August 2009.
Toyota Prius sales rose 30 percent to 27,358 vehicles for the nameplate's best-ever August, largely on higher fleet sales, Toyota said. Sales of the revamped RAV4 soared 50 percent to 23,502 utes. Sales of the redesigned Toyota Avalon posted triple-digit gains for the sixth consecutive month. Almost every Toyota model pitched in: Sienna minivan sales, up 28 percent; Corolla, being replaced this fall with a new version, up 11 percent; Highlander, which is replaced at year-end, up 14 percent; Tacoma, up 25 percent; and Sequoia, up 28 percent. Toyota missed out on the full-size pickup truck boom with sales flat for the Tundra. Toyota said Tundra sales were hampered by the lack of availability of the revamped 2014 model. Only the FJ Cruiser, Venza and Land Cruiser posted declines.
Enjoying its best month so far this year, Lexus sold 29,792 vehicles, up 23 percent. That was enough to put it in the lead for the month for luxury vehicle sales. The new IS posted an 87-percent gain, ranking it third in volume for Lexus at 4,432 cars sold. The volume-leading RX had a 32 percent increase in sales to 7,628 cars sold. Sales were even with a year ago for No. 2 volume selling ES. GS sales rose 22 percent; SC sales were up 15 percent. GX and LX utilities posted declines.
Scion sales were even with a year ago with only the tC and xD gaining. Sales of the FR-S sports car, introduced last year, were even with last August. iQ sales fell 21 percent to a puny 433 units. Sales of the xB dropped 10 percent.
FORD: Ford Motor Co. sold 221,270 vehicles for a 12-percent increase. Ford executives said the automaker's retail sales rose 20 percent for its best retail sales month since August 2006. Fleet sales dropped to 21 percent of total sales from last August's 26 percent. Ford's incentives averaged $3,018 per vehicle, according to Edmunds.com's TCI calculations, roughly even with July but up from August 2012.
Ford Division sales totaled 213,078 vehicles, up 13 percent, despite tight supply of some models, including the Ford Fusion, which at 24,653 sold, had its best-ever August. Ford recently added Fusion production at its Flat Rock, Mich., assembly plant to ease shortages. Ford's small car sales rose 30 percent in total: Fiesta sales soared 61 percent for the subcompact's best August ever; Focus sales climbed 7 percent; and C-Max hybrids added 3,032 of incremental volume.
Ford sold 71,115 F-Series pickup trucks in August, a 22-percent increase from last August, maintaining its spot as best-selling pickup truck — and vehicle — in America. It was the second month this year that the F-Series topped 70,000 units sold, and the only other year Ford has sold more than 70,000 F-Series in two months was in 2006.
On the utility side, Ford had Escape shortages and lower fleet sales, pushing Escape sales lower but at a still healthy 26,714 units. Explorer sales gained 7 percent. Edge and Flex sales were roughly flat.
Lincoln sales were flat at 8,192 sold, on the strength of the new MKZ, which had sales up 10 percent to 3,652 cars, and MKS, up 11 percent to 1,134 cars. Navigator sales also rose 13 percent on low volume. MKX and MKT sales dropped.
Including the addition of Fusion production in Michigan, Ford said it would increase production overall by 50,000 vehicles in the fourth quarter, a hike of 7 percent from a year ago. Ford plans to build inventory through year-end and into 2014 to better prepare for next year's spring selling season after being caught short of supply this past spring.
CHRYSLER: Chrysler sold 165,552 vehicles, up 12 percent from a year ago for the automaker's best August since 2007. Chrysler, again, vastly reduced its fleet sales, with an estimated 30,000 vehicle sales going into fleets. Further, Chrysler lowered incentives from July and August 2012 to an average of $2,620 per vehicle, according to Edmunds.com's
All brands posted year-over-year sales increases. The volume-leading Dodge brand sold 52,858 vehicles, up 12 percent from a year ago, led once again by the Dodge Durango, which had sales up 117 percent to 6,246 SUVs. Charger and Challenger had sales increases over more than 30 percent. Journey sales rose 12 percent. Dart pitched in 6,901 car sales. Avenger and Caravan sales dropped more than 20 percent each.
Jeep, still hobbling along without an entry to fill the void left by the Liberty until the Cherokee arrives this fall, posted an 8-percent increase in sales to 46,239 SUVs. Grand Cherokee, Compass and Patriot recorded sales gains of over 40 percent each. Wrangler sales rose 19 percent.
Chrysler brand eked out a 2-percent sales increase to 28,678 units. Sales of the 300 rose 27 percent. Town & Country minivan sales were up 11 percent, and 200 sales edged 3 percent higher.
Ram sales soared 29 percent on the strength of a 31-percent increase in Ram pickup sales.
Fiat recorded its best sales month since the brand launched in 2011. Its strength came from the newly introduced 500L, which had sales of 1,214. The regular 500 saw a 28-percent sales plunge to 2,976 cars.
HONDA: American Honda, which includes the Honda and Acura brands, sold 166432 vehicles, up 27 percent to set a new August record.
Honda Division sold 149,381 vehicles, up 29 percent from a year ago. Its strength came from its three core models — the Accord, Civic and CR-V — which each topped sales of 30,000 vehicles for the month. The Civic, in fact, outpaced the Accord, with sales of 39,458 cars, a 53 percent increase from a year ago. Accord sales climbed 11 percent to 38,559 units. CR-V sales soared 45 percent to 34,654 utilities. It was the CR-V's best month ever. The Pilot had a 40 percent increase and Ridgeline got an 89 percent boost, albeit on small volume, but the Odyssey and Crosstour had double-digit declines.
Acura sold 17,051 vehicles, up 9 percent from a year ago. Its strength came from the revamped MDX, which had a 9-percent sales increase to 6,499 vehicles, setting an all-time monthly record. RDX had its 16th consecutive record month with sales up 50 percent to 4,381 units. RLX sales hit 459 units, up from a scant 41 a year ago. The rest of Acura models posted sales declines.
NISSAN: Nissan Motor Co., which includes the Nissan and Infiniti brands, had sales of 120,498, up 22 percent from a year ago, setting an August record.
Nissan Division sales also set an August record with 108,614, an increase of 24 percent. The company said it also was Nissan's best-ever retail sales month, with more than 100,000 retail deliveries. The Nissan Leaf EV had its best-ever month with 2,420 cars sold, likely attributable to its re-pricing. Altima sales rose 18 percent to 30,976, an August record. Sentra sales rose 19 percent to 12,605 units, though the company said inventories remain low. Versa sales rose 9 percent to 9,991 cars on the strength of the newly launched 2013 Versa Note. Rogue sales set an August record of 17,273 utes sold, up 37 percent. The new 2014 Rogue to be built in Smryna, Tenn., will be unveiled later this year. The Nissan Pathfinder set a new August record of 8,859 units, up 258 percent.
Nissan continues to lose out on the big truck boom with Titan sales down 34 percent to a mere 1,261 copies. Still, Nissan said it is committed to the full-size pickup truck market and will introduce a new one soon — on that will be available with a Cummins diesel engine. Frontier sales rose 21 percent. Quest minivan sales were up 18 percent. Cargo van sales were also up.
Infiniti sold 11,884 vehicles, up 7 percent from a year ago. The luxury line is re-naming and re-positioning its various models and just launched the Q50, which had August sales of 2,434 units. Posting increases were the QX50, QX60 and QX80. Lower sales were reported for the G sedan, Q60, M line and QX70.