Volume dips on weaker car demand, declines at GM, Toyota

UPDATED: 9/4/18 4:29 pm ET

U.S. auto sales fell in August as truck-fueled advances by many automakers couldn’t make up for plunging demand for passenger cars and an estimated double-digit drop at General Motors.

The seasonally adjusted, annualized rate of sales for August came in at 16.69 million, the lowest in a year, signaling an expected second-half slowdown in the market is underway. The SAAR was 16.58 million in August 2017 and 16.73 million in July.

Until July, the SAAR had topped 17 million every month dating back to August 2017, when Hurricane Harvey disrupted demand in Texas and neighboring states.

FCA US, Ford Motor Co., American Honda and Nissan Motor posted higher U.S. sales behind strong light-truck deliveries. GM's August sales slumped 13 percent after the automaker trimmed discounts, Bloomberg reported, citing people familiar with the matter. GM now reports U.S. sales results on a quarterly basis.

At Fiat Chrysler, August volume rose 10 percent behind gains of 20 percent at Jeep and 27 percent at Ram. Volume fell 3.4 percent at Chrysler, 18 percent at Dodge and 35 percent at Fiat.

August increases at Ford, Honda, Nissan and Jaguar Land Rover reversed declines for each automaker in July, one of the year’s weakest months. Toyota Motor Corp. was unable to limit its skid, with U.S. sales falling 2 percent in August after a 6 percent drop the month before.

Volume rose 0.8 percent at the Volkswagen brand, its eighth straight monthly gain year over year,  behind another strong month for new and redesigned crossovers. 

High incentives and a healthy U.S. economy continue to support light-vehicle demand, which has risen 1.1 percent through the first eight months of the year. Most analysts expect sales to taper off in coming months and drag the industry to its second-straight annual decline by year end.

Company by company

Deliveries rose 4.1 percent at Ford Motor behind strong light-truck demand, a 15 percent increase in fleet shipments and a 1.1 percent gain in retail volume. Sales rose 4.2 percent at the Ford division and 2.7 percent at Lincoln.

Sales slipped 2 percent at Toyota Motor on weaker car demand, with deliveries down 1.2 percent at the Toyota division and 7.1 percent at Lexus.

American Honda was carried to a 1.3 percent gain by a 15 percent surge at Acura. Volume at the Honda brand dipped 0.1 percent. The company’s light-truck sales soared, with Acura up 31 percent and the Honda brand up 17 percent. Combined car sales for the brands plunged 15 percent.

At Nissan, volume rose 3.7 percent behind a 4.4 percent gain at the Nissan division. Volume dipped 1.7 percent at Infiniti.

Among other brands, August sales rose 8.4 percent at Hyundai, 1.4 percent at Subaru, 1 percent at Kia and 3.1 percent at Mitsubishi.

JLR volume rose 2 percent to 9,648, behind a 14 percent gain at Land Rover, the company said Monday. Jaguar deliveries fell 20 percent to 2,469. At other luxury brands, August U.S. deliveries increased 1 percent at BMW, 5.5 percent at Audi and 12 percent at Volvo, but volume skidded 66 percent at Genesis, 17 percent at Mercedes and 13 percent at Porsche.

Pickups, crossovers and SUVs

Light trucks -- led by pickups, crossovers and SUVs -- continue to drive the U.S. market, while car deliveries remain on track to fall for the fifth straight year. Car sales skidded 19 percent in August, representing just 28.9 percent of the market, while light-truck volume rose 10 percent. August marked the first time U.S. car sales, as a share of the overall light-vehicle market, dropped below 30 percent. 

Light trucks accounted for 68 percent of industry sales in the first several weeks of August -- a record level for the month -- and the 26th straight month truck volume has topped 60 percent of the overall market, J.D. Power says.

Macro factors

U.S. employment growth is steady and consumer confidence remains high, but rising interest rates and growing supplies of off-lease vehicles are expected to dampen consumer demand in coming months, analysts say.

Incentives

Average incentives per vehicle in the first several weeks of August were tracking at $3,744, down $141 from August 2017, J.D. Power says, reflecting lower spiffs on cars. ALG estimates average incentive spending per unit grew by $26 to $3,757 for the month, with the Detroit 3 the biggest spenders among major automakers.

Odds, ends

• There were 27 selling days last month, the same as in August 2017.

• The average transaction price for a new light vehicle was $33,179 in August, up 1.7 percent from a year earlier. The ratio of incentive spending to average transaction price is expected to be 11.3 percent, down from 11.4 percent a year ago. ALG estimates.

• Days to turn, the average time a new vehicle sits on a dealer lot before it is sold, stood at 66 in early August, down four days from August 2017, J.D. Power says

• August U.S. fleet shipments are forecast to rise 0.8 percent to 216,200, or 14 percent of the overall market, J.D. Power says.

Quotable

“For the first time in U.S. automotive history, monthly car share is on pace to dip below 30 percent. This is a dramatic shift -- car share was near 50 percent just 5 years ago. With the drop, it’s tough to forecast where share will finally level out, as consumers have decidedly killed the car. Our initial idea of the floor being somewhere in the low-30-percent neighborhood appears to be too high in a market that loves its trucks and SUVs.”

Zo Rahim, research manager for Cox Automotive

"The auto industry still faces a prolonged and elevated level of trade risk, but overall sales are holding steady. We no longer expect fleet sales to be ratcheted back in the second half, but we do see stronger competitive pressure on the volume brands fighting for share. The result is a total light-vehicle market that we expect to eke out a very slight increase -- 0.1% -- over 2017."

Jeff Schuster, head of forecasting at LMC Automotive

"Automakers have done a decent job this year at aligning inventory with demand, so there’s no need for dealers to have a fire sale. Manufacturers seem to be more comfortable with a longer selldown period that leverages targeted incentives, instead of an aggressive 'everything must go now' mentality."

Jeremy Acevedo, manager of industry analysis at Edmunds