US August auto sales weakest since 1983
DETROIT- Automakers posted their weakest US August sales in 27 years, underscoring uncertainty about the strength of the recovery in the world’s largest economy.
Sales dropped 21 percent from the government incentive-fueled boom a year ago.
Monthly auto sales data represents one of the first and broadest-based snapshots of consumer demand.
"The hesitation by the consumers to spend their hard-earned money continues," said TrueCar.com analyst Jesse Toprak.
On an annualized basis, the sales rate fell slightly from July and was well below what most analysts had expected by now, 18 months after sales hit bottom.]
The US sales figures were broadly in line with the cautious expectations of analysts and came as vehicle sales declined in Western Europeas government incentives ended in some countries.
Taken together, the results contributed to concerns that private consumption was faltering or stalled in the mature markets major automakers and established parts suppliers rely on for the largest share of their sales.
Major automakers posted double-digit sales declines in the US market, led by Toyota Motor Corp and Honda Motor Co, which saw results plunge by a third from the subsidy-fueled gains of August 2009.
The US auto sales rate of 11.47 million vehicles was down sharply from the 14 million-plus rate in August 2009 when the US government’s "cash for clunkers" sales incentives touched off a short-lived boom.
In general, automakers had been expecting the industry to sell 11.5 million to 12 million vehicles in the United Statesthis year.
General Motors Co, which is readying a stock offering intended to reduce the US government’s majority stake, posted a 25 percent sales drop for August.
Ford Motor Co reported an 11 percent sales decline, while Nissan Motor Co posted a sales drop of 27 percent. Toyotasales were down 34 percent; Honda dropped 33 percent.
Chrysler, now operating under the control of Fiat SpA, posted a 7 percent sales gain. The No. 3 US automaker has relied more heavily than its rivals on less-profitable fleet operators, led by car rental agencies.
The risk of a reversal in the US economic recovery is a potential threat to GM’s plans for an initial public offering expected to reduce the US Treasury’s nearly 61 percent ownership stake.
GM sales chief Don Johnson said the automaker expected that American consumers would remain "cautious" given a weak job market but that the industry would continue a slow recovery from the 10.4 million vehicle sales of 2009.
"We still see a low risk of any double-dip recession unless there’s some unforeseen shock to the system," Johnson said on a conference call.
Paul Ballew, chief economist at US insurer Nationwide and a former GM and Fed economist, said the August US auto sales figures confirmed "an exceptionally slow recovery under way."
"The way we are describing it is as a crawl-stagger-crawl recovery," Ballew said. "Vehicle sales are very much in a line with what we have seen with retail sales and a hesitancy that is out there with consumers."
Jeff Schuster, director of global forecasting for J.D. Power and Associates, said the August US sales results pointed toward a "flat-lining" for the world’s most lucrative vehicle market and second-largest by volume behind China.
"The economy is underperforming expectations, but pieces of it are moving in the right direction," he said.
In one sign of a caution, Ford said it expected to build 570,000 vehicles in the fourth quarter, unchanged from its third-quarter production forecast.
That forecast bucked expectations that fourth quarter output would move higher. Ford said the cautious outlook reflected both the expected pace of industry-wide sales and the need to shut down lines to prepare for the launch of new vehicles, including a new Focus sedan coming in 2011.
The downturn in US auto sales in August extended to the brands that have outperformed and taken market share from rivals amid the recent downturn.
Sales for Hyundai Motor Co and affiliate Kia were down almost 15 percent on a combined basis. US sales for the Subaru brand dropped 23 percent.
Despite the weak overall sales, automakers were helped in August by a shift toward more profitable sales of larger vehicles, the full-size pickup trucks and SUVs that American drivers had pulled back from during the recession.
– Reuters