US Car Sales Indicate Economic Recovery in August

 
on September 04 2012 5:30 PM
US Auto Sales
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Global carmakers reported dramatically increased U.S. sales for the month of August on Tuesday as improving macroeconomic conditions and positive consumer sentiment combined with a strong vehicle mix to create big gains for the major automakers.

Ford Motor Company (NYSE: F) particularly benefited from strong pickup truck sales, while the Japanese automakers Toyota Motor Corporation (NYSE: TM), Honda Motor Co. (NYSE: HMC) and Nissan Motor Co. (Tokyo: 7201) all recovered their market share lost after the 2011 natural disasters in Japan and Thailand.

U.S. car sales surged in August, reaching a seasonally adjusted annual rate (SAAR) of sales around 14.5 million, according to Jesse Toprak, vice president of Market Intelligence at TrueCar.com. Chrysler Group LLC, a subsidiary of Italian Fiat S.p.A. (Milan: F), made its own prediction of 14.6 million. The SAAR had slumped to a little below 14 million earlier in the summer, and the August rebound augers well for the U.S. economy and automotive industry.

The automotive industry appears to be in full recovery mode following the 2008 financial crisis, bankruptcies of General Motors Company (NYSE: GM) and Chrysler, and last year's earthquake and tsunami in Japan and floods in Thailand. The recovery that is taking shape is built on strong consumer demand and a relatively high quality mix of vehicles, rather than the high incentive levels automakers have relied on in the past, indicating improving economic fundamentals and profits for the carmakers.

The combination of economic factors and vehicle mix combined in August to create a "perfect storm" for car sales, according to Toprak. The biggest gains for all manufacturers were small cars and full-size pickup trucks, a further indication of improving economic conditions in the U.S. Strong sales of passenger cars in August indicate that private consumers are feeling confident about making large purchases, although they are still acutely aware of high gas prices and are straying away from larger cars and SUVs as a result.

Big gains in pickup truck sales likewise indicate bullishness on the parts of small-business owners and contractors who have benefited from an uptick in new housing starts. Strong pickup truck sales are generally "seen as a harbinger of broader economic recovery," according to Toprak.

"The auto industry continued to outperform the general economy in August," Toyota Group Vice President and General Manager Bill Fay said Tuesday. "The driver force behind our growth continues to be strong consumer response to the new models we've launched over the past 12 months and the added value those vehicles represent."

Honda Motor Co. (NYSE: HMC) reported U.S. sales up 59.5 percent in August as the company came roaring back from last year's natural disasters in Japan and Thailand. Honda sold 131,321 vehicles overall, with the Honda brand increasing sales 57.9 percent and Acura gaining 72.8 percent.

Sales of Honda's leading passenger cars, the Accord and Civic, were up 89 percent and 106 percent respectively, while sales of the Acura RDX and MDX SUVs rose 156.9 percent and 77.5 percent.

Honda Motor Co. (NYSE: HMC) shares fell 27 cents to $31.62 Tuesday.

Nissan Motor Co. (Tokyo: 7201) reported U.S. sales rose 7.6 percent in August 2012 compared to the year before. Nissan brand sales rose 5.9 percent, while the Infiniti luxury mark gained 23.6 percent for a total of 98,515 vehicles sold. Total sales for the company are up 13.7 percent for the year to date.

The Altima sedan led the way for the Nissan marque with sales up 12.5 percent following the launch of a heavily redesigned model in July. The Nissan Rogue crossover gained 10.1 percent and the Pathfinder and Frontier trucks both gained double digits. Sales of the Nissan LEAF electric car plummeted 49.7 percent, though. Nissan sold 82,517 Nissan-brand vehicles overall in August.

Infiniti's gains were driven by a 20.1 percent increase in sales of the G sedan, with 5,123 units sold, and the brand had its best August sales month in seven years with 11,155 units sold overall.

Nissan Motor Co. (Tokyo: 7201) shares rose 0.96 percent to 736 yen ($9.38) Tuesday.

Subaru, the automotive subsidiary of Fuji Heavy Industries Ltd. (Tokyo: 7270), reported U.S. sales rose 35 percent in August as the Japanese carmaker continued to recover from last year's natural disasters in Japan and Thailand. Subaru's U.S. sales are up 24.7 percent year to date.

Subaru's flagship Outback and Legacy models increased sales 49 percent and 18 percent respectively, while the redesigned Impreza boosted sales 84.4 percent compared to last year. Subaru credits brand loyalty and a growing base of new customers with the company's robust U.S. sales growth this year.

Fuji Heavy Industries Ltd. (Tokyo: 7270) shares were unchanged Tuesday at 617 yen ($7.87).

Toyota Motor Corporation (NYSE: TM) reported U.S. sales shot up 45.6 percent in August as the Japanese automaker continues its robust recovery from last year's earthquake and tsunami in Japan and floods in Thailand.

Lexus brand sales rose 33.9 percent, while Toyota brand sales skyrocketed 47.5 percent compared to the previous year. Toyota passenger car sales rose 47.2 percent, while truck sales gained 47.9 percent.

Toyota Motor Corporation (NYSE: TM) shares fell 0.89 percent to $78.73 Tuesday.

Ford Motor Company (NYSE: F) reported August 2012 U.S. car sales up 13 percent over the year before with 197,249 vehicles sold. Ford reported that consumers gravitated to the Dearborn-based company's fuel-efficient vehicles due to rising gas prices in August.

Sales of the Escape small SUV rose 37 percent compared to the year before for the model's best-ever August sales month. Likewise, Fusion sedan sales rose 21 percent and Focus sales rose 35 percent. Sales of the Fiesta, though, fell 28.4 percent. Ford's leading F-series pickup truck increased sales 19 percent, the 13th consecutive month of gains for the model. Overall truck sales at Ford rose 6 percent in August, while passenger-car sales surged 7 percent.

While Ford-brand vehicle sales rose 13.1 percent, the company's luxury marque Lincoln only increased sales 1.7 percent, demonstrating continued competitive difficulties for the company in that segment.

Ford Motor Company (NYSE: F) shares rose 7 cents to $9.41 Tuesday.

General Motors Company (NYSE: GM) reported August U.S. car sales up 10.1 percent compared to the year before, at 240,520 vehicles sold. While the Chevrolet, Buick and Cadillac brands all reported double-digit sales growth, the core GMC brand only increased sales 3.7 percent. Year-to-date sales for the nation's largest automaker are up 3.7 percent compared to 2011, as the lumbering Detroit-based giant regains momentum after its 2009 bankruptcy.

GM credited heavy domestic TV advertising during the Olympics with a 25 percent increase in sales of Chevrolet passenger cars like the Spark, Sonic, Cruze, Volt and Equinox. Chevrolet has increasingly taken center stage as GM's flagship brand, and the marque's small car and passenger car offerings have proven to be popular with consumers.

General Motors Company (NYSE: GM) shares fell 4 cents to $21.31 Tuesday.

Volkswagen AG (Frankfurt: VOW) reported August 2012 sales up 62.5 percent compared to the year before. VW sold 41,011 vehicles in its best August sales month since 1973. Year-to-date sales are likewise up 37.6 percent and are at their highest level since 1973.

The popular Volkswagen Jetta sedan remained the German company's volume leader, while the Passat, the 2012 Motor Trend Car of the Year, followed shortly behind. The two cars made up slightly more than 50 percent of total Volkswagen sales. Sales of the Routan minivan, CC sedan and EOS convertible all fell slightly, while sales of the rest of the company's vehicles surged, with August sales of the Tiguan SUV at their highest level ever at 2,746 units, a 36.9 percent increase.

Volkswagen AG (Frankfurt: VOW) shares fell 2.78 percent to €123.90 ($155.68) Tuesday.

Chrysler Group LLC, a subsidiary of Italian company Fiat S.p.A. (Milan: F), reported August 2012 U.S. sales up 14 percent over the year before, its best August sales month in five years and the 29th consecutive month of year-over-year gains for the rejuvenated Detroit carmaker.

Fiat brand sales led the pack, up 34 percent, while Chrysler brand sales were similarly robust, up 25 percent. Ram Truck sales surged 18 percent and Dodge-brand sales increased 13 percent, while Jeep sales grew a more modest 5 percent.

Fiat S.p.A. (Milan: F) shares fell 1.49 percent to €4.24 ($5.33) Tuesday.

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