U.S. new car sales appear to have reached a six-year high as buyers raced back to showrooms in hot August – but the news wasn’t all good from a consumer standpoint. While car sales are adding momentum to an economy still looking for traction, buyers may have wound up paying record prices for new vehicles last month, according to a preliminary analysis.
Sales of new cars, trucks and crossovers appear to have run at a 16 million annualized pace, according to industry analysts, with General Motors, Ford, Chrysler, Toyota and Nissan among the many brands to show double-digit gains. Hyundai, set another sales record despite the impact of capacity problems worsened by a labor dispute in South Korea.
"August capped a great summer for new vehicle sales,” says Bill Fay, Toyota division group vice president and general manager, who suggested that, "The auto industry continues to be a bright spot in the economic recovery.”
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The global sales leader reported a 22.8 percent gain for the month in the U.S. market. Up 22.3 percent, Nissan had an August sales record. With a 21.5 percent gain, Audi of America blew past the previous record it set in August 2012 and recorded its 32nd consecutive monthly gain.
J.D. Power and Associates and other analysts project total sales for the month will have come in at a 16.1 million Seasonally Adjusted Annual Rate, or SAAR. The figure would have come in even higher had it not been for shortages of some key products, such as the Hyundai Elantra and Ford’s Fusion sedan and F-Series pickup – the latter model rolling out of showrooms, noted Ford sales chief Ken Czubay, “every 42 seconds, 24/7.”
The F-Series saw its 25th consecutive monthly sales gain, with sales now running at a pace not seen since 2006. Pickups, in general, have been the industry’s hot ticket this year, analysts suggesting that indicates a strong upturn in the housing and construction industries.
Ford recently added a third shift at a key truck plant while adding additional Fusion production capacity at its plant in the Detroit suburb of Flat Rock.
Ford reported a 20 percent sales increase during August, with company economist Ellen Hughe-Cromwick suggesting new vehicle sales benefited from improving economic conditions. "We have a demand for vehicles because people are getting back to work," she said. "We just don't want to get irrationally exuberant at this point."
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Little more than four years out of bankruptcy, Chrysler reported its 41st consecutive monthly sales gain, the Ram Truck brand leading the surge with a 29 percent bump. But all five of the maker’s brands, including little Fiat were up for August.
“All aspects of our business continue to improve as evidenced by our streak of 41-consecutive months of year-over-year sales gains,” said Reid Bigland, head of Chrysler’s U.S. sales
GM reported a 15 percent increase in sales and said Cadillac's retail sales were the best since August, 1989 when George H.W. Bush was president and the Berlin Wall was still standing. Overall, GM’s sales were the best since September 2008, when the global financial crisis went into meltdown and the company started preparing for an increasingly likely bankruptcy.
“The second half of 2013 is off to a very solid start for GM and our model-year change over and new product launches are going smoothly,” said Kurt McNeil, vice president, U.S. sales operations, adding that the maker expects even bigger gains as it rolls out an array of new models such as the new Cadillac CTS and Chevrolet Corvette Stingray.
"Most automakers are seeing double-digit sales increases compared to last year as retail sales remain a bright spot, even with more new models entering the market," said Alec Gutierrez, senior analyst at Kelley Blue Book.
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There were exceptions. With an increase of only 8 percent, Hyundai actually struggled to keep up with the overall market, losing a bit of market share for the month. Meanwhile, Volkswagen sales slipped 1.6 percent even though the brand’s sales topped 40,000 units for only the third time in the last 40 years.
Diesel sales have been gaining ground after years on the back burner. Like hybrids, diesel models generally command a premium of several thousand dollars. Indeed, buyers seem to be willing to invest in much more highly contented vehicles than they have in recent years – a factor that may be buoyed by the increasing availability of credit to even marginal new car buyers. In turn, a new study by Experian Automotive reveals that buyers have significantly increased the length of the car loans they are now taking out.
Whatever the reason, a preliminary study by TrueCar.com found that the Average Transaction Price, or ATP, in August came to an all-time record $31,252, up 3.2 percent from a year ago. The tracking service reports that five makers, Chrysler, Ford, Honda, Nissan and Volkswagen, all set records.
Helping drive up what consumers paid, TrueCar also noted that incentives continued to dip and now average less than $2,500 for the typical new vehicle, a 2.6 percent decline just since July.