August sales aren’t exactly good news for most automakers, but they’re not exactly a surprise either. When you have a record-setting previous year there is bound to be some adjustment.
Ford and Nissan posted their biggest U.S. sales declines in years last month in an industry that’s showing further signs of running out of steam. On the other hand, Subaru is one automaker that knocked it out of the park.
Overall U.S. Sales Drop
Overall, auto industry sales fell 3.5 percent, and the seasonally-adjusted annual sales rate came in at 16.97 million, the third-lowest total of the year. So at this point, the big question is whether the industry can continue the sales gain streak it’s been on for the past seven consecutive years.
August marks the third month this year that volume has declined, the most monthly drops in any year since recession-wracked 2009, when volume slumped in eight individual months.
August had the same number of selling days as in 2015 — at 26 — but there was one less weekend this year which definitely impacts how many vehicles moved off lots.
- Ford Down / Lincoln Up
Ford was dragged down by a 9.4 percent drop at its namesake division. Sales fell 8.8 percent to 213,411 with retail volume off 8 percent and fleet shipments dropping 10 percent. A 7 percent rise at Lincoln offset some of the decline at the bigger Ford division. The results marked Ford’s biggest monthly setback since August of 2010.
- GM: Chevrolet – GMC – Buick Down / Cadillac Up
General Motors says August sales dropped 5.2 percent to 256,429 cars and light trucks. Deliveries slipped 3.9 percent at Chevrolet, 14 percent at GMC and 2.7 percent at Buick. Meanwhile, sales rose 3.9 percent at Cadillac.
- Toyota – Lexus Down
At Toyota, volume dropped 5 percent to 213,125 cars and light trucks last month. It’s Toyota sixth drop in 2016. Interestingly, the Land Cruiser’s sales shot up 65 percent. The Highlander was up over 12 percent.
- Honda Down
Honda deliveries dipped 3.8 percent, something Honda blames on fewer weekends last month. But Honda trucks set a new August record, rising 4.3 percent on sales of 76,140 thanks to the CR-V, HR-V and Ridgeline, along with the refreshed Acura MDX.
- Fiat Chrysler Up
Fiat Chrysler chalked up another gain aided mainly by the strength of Jeep. Overall, FCA posted a 3.1 percent August gain. Sales rose 12 percent at Jeep, 5.1 percent at Dodge and 1.6 percent at the Ram brand. Deliveries dropped 22 percent at the Chrysler brand, 21 percent at Fiat and 62 percent at low-volume Alfa Romeo.
- Kia / Mini / Mazda / Mitsubishi Down
Sales fell 7.9 percent at Kia, 2.7 percent Mini, 13 percent at Mazda, and 12 percent at Mitsubishi.
- Volkswagen Down
Sales dropped 9.1 percent at the VW brand, where U.S. volume has slid every month beginning with November as the company struggles to move past violations of U.S. diesel emissions rules.
- Hyundai Up / First Genesis Sales Posted
The Hyundai brand’s volume rose by just three vehicles over August 2015. Hyundai says it delivered its best August ever thanks to sales of its CUVs. Meanwhile, the company posted the first sales of its new luxury division after kicking off sales of the G80 sedan. Genesis sold 1,497 G80 luxury models in August.
“It’s exciting to see our first G80s being delivered to customers and we’re very happy with the reception it’s receiving,” said Erwin Raphael, general manager of Genesis in the U.S. market. “And I expect we’ll see the first G90s getting to our dealers later this month, another milestone moment for our nascent brand.”
- Subaru Posts Record Sales
One brand that is not on a downward trend is Subaru. It posted record U.S. sales of 60,418 in August. That’s the first time the brand has topped the 60,000 mark in a month, for a gain of 15 percent over August 2015. Thomas J. Doll, president and COO of Subaru of America, described the August results as “epic.”
- Nissan Down
Nissan recorded its sharpest monthly decline in more than three years. The automaker posted a 6.5 percent decline in August U.S. sales, with demand falling 6.9 percent at the Nissan division and 1.8 percent at Infiniti. It was only the second time this year deliveries at the Nissan group dropped. Sales had been up 7.3 percent through July. Nissan last recorded a tumble as steep as August’s in February 2013.
- Most Luxury Brands Up
Among luxury brands, August sales rose 189 percent at Jaguar, 15 percent at Land Rover, 3 percent at Mercedes-Benz, 2.5 percent at Audi and 31 percent at Volvo.
However, volume slid 8 percent at BMW and 7.6 percent at Lexus. But Lexus was still the top-selling luxury brand in August. (However, Mercedes-Benz leads both Lexus and BMW in year-to-date volume.)
The Industry Reacts
U.S. sales have now risen just 0.5 percent for the year. Analysts were divided over whether demand can top 2015’s record tally. For the remainder of the year, automakers face a tough comparison to the second half of 2015.
“Looking forward to the next few years, we continue to see industry sales as strong but at a lower level than this year,” said Mark LaNeve, head of U.S marketing, sales and service for Ford.
While profitable trucks, crossovers and SUVs continue to top consumer shopping lists, there are signs pent-up demand that’s fueled sales gains recent years has been exhausted, according to some analysts.
“Shopping on dealer websites was down 2 percent in August compared to a year ago, and only up 3.5 percent from July 2016, another indication that new-car sales may be plateauing,” said James Grace, director of analytics product management for Dealer.com.
On the other hand, some analysts believe growth is still possible in the remainder of the year due to low gasoline prices, widely available credit and low financing costs and employment gains.
“Despite sales beginning to cool off, the industry is still on pace for a record year,” said Eric Lyman, TrueCar’s chief industry sales analyst. “2015 delivered a 10-year high in August sales, so automakers faced a high hurdle to show year over year gains in August 2016.”
Industry sales continue to be driven by light trucks, notably compact crossovers and even large utility vehicles.
“All the economic factors continue to point toward a strong second half of the year and another potential record year for the industry,” said Mustafa Mohatarem, GM’s chief economist. “We think the industry is well positioned for a sustainable high level of customer demand.”
TrueCar says incentive spending averaged an estimated $3,331 per vehicle in August, an increase of 7.7 percent from a year earlier. That figure was down 2.2 percent from July 2016, as automakers launched sales to clear out 2016 models.
As the market shows signs of reaching a sales plateau, automakers aren’t chasing U.S. sales at any cost. That practice helped force GM and Chrysler to restructure in bankruptcy in 2009.
While discounts have, at least on paper, crept back up to pre-recession levels, there’s more cushion than ever: Average transaction prices are at a record high as buyers opt for bigger vehicles with plusher interiors, more electronics and driver-assist features. With profits largely protected, automakers don’t mind if the industry snaps a streak of six straight annual sales increases.
“It may or may not be a record but, look, any time you’re above 15 million is good,” said John Mendel, Honda’s head of U.S. sales. “I’m bullish on the rest of the year.”