Dogged By Ailing Economy, August Auto Sales Slump

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auto sales car lotAs expected, automakers Wednesday reported sluggish sales for August. The nation's anemic economic recovery kept consumers away from dealerships, despite generous end-of-model-year incentives on the part of many manufacturers.

Making sales look worse than they might have otherwise were comparisons to figures from a year ago, standard in the industry, when sales were driven higher by the federal government's "cash-for-clunkers" rebate program that was in effect during much of August 2009.

General Motors, the first to report U.S. sales figures Wednesday, said it sold 25% fewer cars than during the same period a year ago, despite significant sales improvements at three of its remaining four divisions -- Buick, Cadillac and GMC. Chevrolet, a big beneficiary of last year's "clunkers" program, saw sales plunge 21.5%. Among its four core divisions, GM said sales fell 10.6% compared to a year ago.

Comparing August's results to those of the previous month, sales at Detroit-based GM fell 7.3%, marking the first time in 12 months that the resurgent automaker failed to post month-to-month sales gains. So far this year, GM said it has sold 1.465 million vehicles, up 5.4% from the first eight months of 2009.

Ford

Crosstown-rival Ford Motor (F) reported sales fell 11% in August compared to last year. The Dearborn, Mich., automaker said it sold 157,503 new cars and truck, down from 176,373 in August 2009. When compared to July, Ford sales dropped 5%. Year-to-date, Ford said its sales reached 1.28 million, up 18% compared to 2009, and double that of the overall industry.

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Two of Ford's highest volume models, the Ford Focus compact car and Escape small SUV, reported sharp sales declines. The automaker moved 40% fewer Focuses and 29% fewer Escapes off dealer lots, Ford said, owing the drop to record sales a year ago during the "clunkers" rebate program.

Still, Ford said sales of its redesigned Taurus family sedan rose 50% above those of its less-popular predecessor and sales of E-Series full-size vans rose 92% compared to a year ago, to 10,251 units.

Greater demand for the vans, popular among commercial clients including trades-workers, suggests that some sectors of the economy feel secure enough to spend on new-vehicle purchases, despite the sluggish recovery.

In response to current lackluster demand, Ford said it is slightly lowering production in the fourth quarter, which begins Oct. 1.

Toyota

Another big beneficiary of last year's "clunkers" program, Toyota Motor (TM), reported its overall sales fell by more than a third. The Japanese automaker sold 148,388 units in August, putting it behind Ford yet again in monthly sales volume in the U.S. Within its namesake Toyota division, sales fell 36%, while those at its Lexus luxury-car unit fell 15%, the company said.

Sales comparisons to August 2009 took particular toll on Toyota's mainstay Camry and Corolla sedans, which consumers snatched up during the "clunkers" program. Camry sales last month dropped by 43% compared to a year ago, while those of the Corolla fell my more than half to slightly more than 20,000 units.

Continuing safety recalls have also hurt Toyota sales. The latest of those, announced late last month, involved the recall of 1.13 million Corolla and Matrix models to fix a faulty electronic component that could allow the cars suddenly stall. So far this year, Toyota said, it has sold 1.16 million vehicles, nearly unchanged from sales during the first eight months of 2009.

Honda and Other Manufacturers

Honda Motor (HMC) reported similar sales losses during the month. The No. 2 Japanese automaker posted August sales of 108,729 vehicles, a drop of of 32.7% from the 161,439 sold during the month last year. Honda blamed the decrease on elevated sales caused by "cash for clunkers." Year-to-date, Honda has sold 815,075 cars and trucks, an increase of 1.5% versus last year.

Among other Asian automakers, Mazda Motor and Nissan Motors (NSANY) both reported August sales fell by at least 25%, while Germany's Volkswagen said U.S. sales fell 7.9% and those at BMW Group, which includes both BMW and Mini vehicles, fell 1.6%.

In a surprising outcome, Hyundai Motor said its sales fell 11.4%, largely due to the effect of last year's "clunkers" rebate program, which boosted demand. Sales at Hyundai's sister make, Kia Motors, also dropped, but by a greater percentage. The South Korean automaker reported a decline of 19.2% for the month.

Still, the industry wasn't without its winners. Chrysler Group said it sales rose 7% last month, giving the struggling automaker its fifth consecutive month of sales gains. Chrysler saw increased sales among three of four its makes -- Dodge, Jeep and Ram, although sales of the recently redesigned Jeep Grand Cherokee, unveiled in July, fell 17%.

Sales of Chrysler brand vehicles slipped 4% in response to lower demand for the aging 300 sedan and the discontinued PT Cruiser utility vehicle. For the month, the Auburn Hills, Mich.-based company said it sold 99,611 vehicles.

Among other winners, Japanese automaker Subaru reported its U.S. sales rose by more than 9% in August, helped by demand for its popular Outback sports-utility vehicle, which rose 37%. And German luxury make Mercedes-Benz said its sales rose 15% on higher demand for its entry-level C-Class sedan.
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