4 Lessons From August Auto Sales

by Susan J. Aluise | September 7, 2012 7:00 am

Despite higher gas prices and a hazy economic outlook, U.S. vehicle sales surged nearly 20% in August[1] to their highest levels since the “Cash for Clunkers” program drove buyers into dealerships back in 2009. But while Americans’ perennial passion for pickups continued last month, passenger cars — particularly attractive, new fuel-efficient models — shifted into high gear.

Pent-up demand for new vehicles finally showed up in force last month as sales hit an annualized rate of 14.5 million, the automakers’ best August since pre-recession 2007. The Detroit Three — General Motors (NYSE:GM[2]), Ford (NYSE:F[3]) and Fiat’s (PINK:FIATY[4]) Chrysler unit — all posted double-digit sales growth in August. Japanese manufacturers Toyota (NYSE:TM[5]) and Honda (NYSE:HMC[6]) chalked up sales growth of 46% and 60%, respectively, over their paltry post-earthquake numbers a year ago.

Here’s the breakdown by manufacturer:

GM: The U.S. sales leader held onto its top spot by delivering a total of 240,500 vehicles in the month, up 10% over last August’s numbers, according to industry tracker Autodata. Passenger car sales soared 23.5%, led by the Chevy Cruze and the new Sonic subcompact. Rising gas prices also helped boost the plug-in hybrid Chevy Volt, which saw sales hit 2,800 in August up from a mere 300 a year ago.

Ford: 12.6% sales growth was good enough — barely — to keep it in second place in August. But the 196,750 vehicles Ford delivered last month bucked the passenger-car trend with sport utilities like the Explorer and pickups like the ever-popular F-Series leading the volume. Still, fuel efficiency remained the theme as sales of Ford’s new Escape compact SUV rose 37%, making it the fastest-selling vehicle in the company’s lineup. The Fusion and Focus compact also experienced strong sales growth.

Toyota: TM continued its pedal-to-the metal rebound[7] from the production havoc wreaked by the 2011 disasters in Japan with sales of 188,500 vehicles last month — a 46% rise over the same month last year. Passenger cars, led by the fuel-efficient Camry, Camry Hybrid and Prius, and light trucks like the RAV4 compact SUV and Tacoma midsize pickup posted equal growth.

Chrysler: The Fiat subsidiary continues to gain ground in the U.S. with a 14% rise in sales to nearly 148,500 vehicles — the best growth rate among the Detroit Three. The new Dodge Dart hit its stride in August as Chrysler now has an attractive entry in the compact class. The Chrysler 300 sedan also helped drive growth in passenger car sales, and the Jeep Wrangler and Ram pickup continued generating strong sales growth.

Honda: HMC delivered 131,300 vehicles last month, a 60% boost over its quake-ravaged totals a year ago. Passenger-car sales surged more than 77% in August, fueled by the Civic compact, the midsize Accord and the small CR-V sport utility.

So what did we learn from August’s vehicle sales data? Here are four takeaways:

1. Fuel-efficient Vehicles Are Gaining Traction. With gas prices hovering around $4, consumers once again are looking for better fuel economy. Of course, one month’s sales data doesn’t signal a permanent paradigm shift in consumers’ tastes. It does, however, illustrate that automakers finally are beginning to deliver exciting new vehicles buyers want — that just happen to be smaller and more fuel-efficient.

2. Ford Trucks Are Still Running Strong. Although most automakers saw slower growth in the light-truck segment, Ford’s full-size pickups continued to rack up solid growth, despite rising gas prices. Although the housing rebound is responsible for some of the demand, even full-size pickups like the F-Series are delivering far better gas mileage these days.

3. Toyota Could Recapture the Lead Sooner Than We Think. Ford and GM need to keep one eye on the road ahead and the other on the rear-view mirror because TM is rebounding fast. The Japanese automaker’s production is back on track, and its Camry, Corolla/Matrix and Prius passenger cars continue to attract buyers. The RAV4 remains strong, and the Lexus luxury marque outpaced BMW and Daimler’s Mercedes.

4. Sales Growth Doesn’t Necessarily Mean Stock Growth. Despite all the good sales news, the industry is still facing powerful headwinds — slower economic growth, the looming U.S. fiscal cliff, persistent challenges in Europe and a slowdown in China. True, pent-up demand and attractive, more fuel-efficient models are driving hotter sales growth. But remember: This is 2012, not 2007. The industry’s rebound still faces potholes on the road ahead.

As of this writing, Susan J. Aluise did not hold a position in any of the stocks named here.

  1. U.S. vehicle sales surged nearly 20% in August: https://investorplace.com/2012/09/automakers-see-rising-u-s-sales-in-august/
  2. GM: http://studio-5.financialcontent.com/investplace/quote?Symbol=GM
  3. F: http://studio-5.financialcontent.com/investplace/quote?Symbol=F
  4. FIATY: http://studio-5.financialcontent.com/investplace/quote?Symbol=FIATY
  5. TM: http://studio-5.financialcontent.com/investplace/quote?Symbol=TM
  6. HMC: http://studio-5.financialcontent.com/investplace/quote?Symbol=HMC
  7. TM continued its pedal-to-the metal rebound: https://investorplace.com/2012/08/toyota-hits-the-straightaway-at-full-speed/

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