US auto sales fall back in August – USA TODAY
U.S. auto sales cooled off in August amid signs that the industry may not break last year’s all-time record despite a strong first half of the year.
Plummeting car sales offset surging sales of crossovers, sport-utility vehicles and pickup trucks — a paradigm that’s just fine for the industry because it generally equates to higher profits.
Industry vehicle sales fell 4.2% in August, compared with a year earlier, for an annualized rate of 16.98 million vehicles, according to Autodata. Analysts at Edmunds.com and Kelley Blue Book had projected an overall auto industry sales decline of 2.5% and 2.1%, respectively.
The auto industry has been hovering near 2015’s record pace of 17.5 million vehicles, fueled by strong employment, low gasoline prices and a solid housing market. AutoTrader.com analyst Michelle Krebs said it “looks less likely that we will hit that record,” barring a surge in discounts.
“We think sales have reached a plateau, and at that plateau we’ll see some month-to-month volatility,” Ford senior economist Bryan Bezold said.
U.S. automakers posted an uneven performance. General Motors’ U.S. sales fell 5.2%, and Ford Motor’s sales declined 8.8%, while Fiat Chrysler recorded a 2.4% sales increase.
GM’s sales totaled 256,429, with its flagship Chevrolet brand slipping 3.9% to 175,965 units. Ford’s luxury Lincoln brand was a bright spot for the automaker, posting a 7% increase to 9,243 vehicles sold. But Lincoln makes up a fraction of Ford’s overall sales, which totaled 213,411 for the month.
For Fiat Chrysler, which sold 196,756 vehicles overall, Jeep continued to lead the way. The SUV brand posted an 11.9% increase to 86,468, nearly double the company’s next best-selling brand.
The three major Japanese automakers recorded sales declines in August, including steep drops in car sales as consumers abandoned the segment. Toyota, Nissan and Honda sales fell 5%, 6.5% and 3.8%, respectively. Car sales plunged 12.5% at Toyota, 11% at Honda and 24.6% at Nissan.
Japanese automaker Subaru continued to outperform the industry, recording a sales increase of 14.7% to 60,418 vehicles.
Despite encountering a plateau, profitability remains strong for the industry. With gas prices at a national average of $2.22 per gallon on Thursday morning, according to GasBuddy.com, highly profitable pickup trucks, crossovers and sport-utility vehicles are flying off dealership lots. Cars, meanwhile, are slumping as fuel efficiency takes a back seat to comfort.
In fact, small trucks — which include certain crossovers — are the hottest commodity in the business, selling in an industry-best average of 44 days, according to Edmunds. The overall industry average is 75 days.
Compact crossovers gained more than a percentage point in market share, compared with a year ago, to 19.2% in August, according to Kelley Blue Book. By comparison, midsize cars — once the stalwart segment in the industry — held only 12.1% market share in August, slipping by more than 2 percentage points.
The segment may have stabilized, Ford sales analyst Erich Merkle said.
“Midsize cars appear to have perhaps found a bit of a bottom,” Merkle said in a conference call, pointing to month-over-month stability in market share.
But Kelley Blue Book analyst Tim Fleming said he’s not convinced midsize cars have hit a floor. “This month stood out as particularly troubling for that segment,” he said.
Automakers boosted incentives by 7.7% in August, compared with a year ago, to $3,331 per vehicle, though that was down 2.2% from July. Analysts are watching closely for signs that the industry is turning to discounts to gain market share.
Follow USA TODAY reporter Nathan Bomey on Twitter @NathanBomey.