August New Car Sales Show First Month-to-Month Increase Since 2007

The federal government’s recent Cash for Clunkers program is being credited with the first month-to-month increase in new car sales since October 2007.

August sales figures show that in August new vehicle sales were up 1.0% over August 2008. Although the increase was modest, it was the first in 21 consecutive months.

Demand for new vehicles reached an annual rate of 13.7-million-units, which was the highest it’s been since August of last year. Sales amounted to 1.3 million units, surpassing the 1 million unit mark for the first time since August 2008.

The biggest winners were Ford, Hyundai-Kia and Subaru. For Chrysler and GM, still reeling from their recent bankruptcy proceedings and tainted public opinion, the news was not good. Sales for both were down by double digits and worse than the previous month.

Referring to the Cash for Clunkers initiative, Patrick Archambault, an analyst for Goldman Sachs, said, “This was a very short-lived `booster shot’ of a program.” He said that sales reports for the majority of automakers were worse than most analysts had expected because demand dropped precipitously once the program ended on August 24.

Ford Motor Company’s light vehicle sales numbers for August rose by 17.2%. This was their largest single month increase since July 2005. In July, Ford posted a year-over-year increase in sales of 2.4%.

Sales of its F-series pickups increased by 12.8% to 45,590 and marked the first monthly increase since October 2006. Ford’s vice president for U.S. marketing, sales and service, Ken Czubay, claims that the increase in sales of midsize pickups is “an indication that small business owners are seeing signs of recovery.”

The Ford Focus and Escape SUV were among the most popular new vehicles, coming in at number four and number ten respectively in the federal government’s list of top ten Cash for Clunkers purchases.

For Hyundai-Kia, August was a banner month as Cash for Clunkers buyers drove up sales by 52.1%.

Subaru is now 11.2% ahead of its sales pace for the same period in 2008 and saw a 51.5% jump in sales in August.

The new GM saw its sales drop by 20.1% in August on the heels of a 19.4% decline the previous month.

GM’s executive director of global market and industry analysis, Mike DiGiovanni, says that the year-over-year numbers are skewed by the company’s introduction of “employee pricing” incentives in August 2008. Even allowing for what DiGiovanni claims were inflated numbers, the automaker saw a 20.3% year-over-year decline in sales in August 2008.

For Chrysler, the news was not much better. Sales in August fell by 15.4% which was worse than the 9.4% drop the company experienced the previous month. Kathy Graham, a Chrysler spokesperson, said the decline was due to low inventories on dealer lots and added that the company ended the month with an estimated 10-day inventory of five models. Some models, she said, had as little as a three-day inventory.

Volkswagen Group of America saw its sales rise by 14.2% in August, which was the largest monthly increase since May 2006.

Honda claims that August was its best sales month ever, with sales of its light vehicles totaling 161,439 units.

Toyota garnered the title of best-selling brand according to Department of Transportation data, and the automaker saw a 6.4% spike in sales during August.

Archambault says, “What’s most meaningful is what’s going to follow August.” He expects to see sales in September and October remain near 10 million units before spiking to between 11 million and 12 million units before the end of the year.

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