Video: Automakers racing into the fall?

updated 9/4/2007 7:47:28 PM ET 2007-09-04T23:47:28

Auto sales rebounded a bit last month after a two-month summer slump, but few in the business think the flat numbers are a sign of recovery for the rest of the year.

“August was a limited-scale recovery,” said Jesse Toprak, chief analyst for the automotive research site Edmunds.com. “It’s not really a turnaround of events. I think the pressures the industry felt in June and July are still with us.”

Still, after taking a beating earlier this summer, many automakers, especially General Motors Corp., were expressing relief and even some hope.

“It’s a solid month against a subpar industry,” Paul Ballew, GM’s top sales analyst, told investors and reporters Tuesday during a conference call after his company surprised analysts by posting a 6 percent August sales increase.

The annualized U.S. sales rate for August was 16.3 million vehicles, the first time that number topped 16 million vehicles since May, according to Autodata Corp. The rate shows what sales would be if they continued at the same pace for the full year.

The sales figures follow a lousy start to the summer, due mainly to high gasoline prices, falling home values and uncertainty in financial markets.

GM’s surprise was fueled by a 16.6 percent rise in light truck sales, and part of its overall increase came from a 24 percent jump in sales to rental car companies. GM and other U.S. automakers have been trying to cut those sales because they hurt brand image and resale values. Ballew said August was a one-time increase and GM will reduce sales to rental fleets through the rest of the year.

Ballew said the industry still is being hit by the macroeconomic factors that have caused people to delay auto purchases or exit the market altogether. Lending standards for auto customers also may be tightening, although there’s little evidence of that so far, he said.

Toprak said GM showed the increase without significantly raising use of incentives. And since the sales jump was made up of higher-profit sport utility vehicles, pickup trucks and crossover vehicles, that should show up in GM’s profits this quarter.

“What matters for the bottom line is what type of vehicles you sell,” he said.

Ballew said GM used incentives to defend its turf in the pickup market, but that GM’s incentive spending was down $200 per vehicle compared to July.

The domestic automakers, who saw their U.S. market share dip below 50 percent for the first time in history last month, fought their way back to 51 percent in August, according to Autodata.

Toyota Motor Corp. beat out Ford Motor Co. in sales for the month and overtook Ford for the first eight months of the year. The Japanese automaker sold 1.788 million vehicles during the January-August period compared to 1.784 million at Ford. Many analysts have predicted Toyota will overtake Ford for the No. 2 slot for the full year in 2007.

Ford posted a 14.4 percent decline for the month. Top sales analyst George Pipas said that was partly due to a 44 percent decrease in sales to rental car fleets. Pipas also said last August was stronger because Ford was offering zero-percent financing.

In an effort to boost September sales, Ford said Tuesday it will offer up to $1,000 in cash on most 2007 and 2008 models through Oct. 1. Chrysler LLC said it also plans to introduce a new incentive program Wednesday that likely will involve extending zero-percent financing.

Chrysler’s sales were down 6.1 percent in August, the same month the company finalized its breakup with DaimlerChrysler AG and transferred into private ownership. Chrysler said its sales to rental, government and industry fleets were down 20 percent, part of the company’s effort to wean itself from fleet sales.

Toyota’s sales were down 2.8 percent. Bob Carter, Toyota’s general manager for U.S. sales, said volatility in the housing and credit markets is challenging consumer confidence, particularly in Toyota’s stronghold of California. He added that Toyota would welcome intervention from the Federal Reserve, which will consider cutting the benchmark federal funds rate when it meets on Sept. 18.

Carter said Toyota sales also were hurt by supply problems. Sales of the subcompact Yaris plunged 31 percent, for example, as Toyota failed to keep up with growing demand for a hatchback version.

Honda Motor Co. and Nissan Motor Co. also posted gains in August. Nissan sales were up 6.3 percent, while Honda reported a 4.7 percent increase.

Toprak predicted that the annualized selling rate for this year would be 16.2 million. That would be the lowest annual sales level since 1998 and more than 1 million vehicles lower than the peak of 17.3 million in 2000, according to Ward’s AutoInfoBank.

In response, GM said Tuesday it plans to cut third-quarter production by 2 percent, or 25,000 vehicles, compared with last month’s guidance. It also plans to cut fourth-quarter production by 10 percent, or 150,000 vehicles, compared with the fourth quarter of 2006.

Ford said it plans to make 640,000 vehicles in the fourth quarter, up 6 percent from the same quarter of 2006. Third-quarter production plans also are 640,000 vehicles, the same as previously forecast, Ford said.

GM shares rose $1.18, or 3.8 percent, to close at $31.92 Tuesday. Ford shares rose 18 cents to $7.99, Toyota’s U.S. shares rose $1.27 to $116.95. Honda’s U.S. shares were up 59 cents to 33.51.

© 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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