updated 9/1/2010 7:29:15 PM ET 2010-09-01T23:29:15

Once a bright spot in the economic recovery, U.S. auto sales stalled last month to the worst levels in 27 years.

The bleak results were a reminder that, for all the good news about the turnaround of the Detroit automakers, the market for cars and trucks in the U.S. remains frail. Initial data showed sales came in at about 997,000, down 5 percent from July, according to AutoData Corp., the worst August sales figures since 1983 when the country was at the end of a double-dip recession.

"Coming in below a million units is eye-opening for August," said Paul Ballew, a former chief economist for General Motors. "I never thought I'd see that. That's a tepid month for August, which is supposed to be one of the top months of the year."

The pain was widespread. Big car companies GM, Ford and Toyota all saw sales slip. Smaller automakers like Subaru suffered too, as did companies that appeal to the budget minded, such as Kia and Hyundai.

"There hasn't been enough horsepower behind the recovery to motivate consumers to regain their confidence and purchase vehicles at a higher rate," says Jeff Schuster, executive director of global forecasting for J.D. Power and Associates.

Last August, the government's "Cash for Clunkers" program offered rebates of up to $4,500 for trade-ins and helped sales, especially for fuel-efficient cars. There is no such incentive now.

Most automakers are making money at lower sales levels because they've cut production. They no longer need to offer cars at below break-even prices just to move them off lots. The average discount per vehicle fell 3 percent in August to $2,681 per vehicle, according to auto research website Edmunds.com.

"We know it's going to be a modest recovery, it's going to be bumpy," said Don Johnson, GM's vice president of U.S. sales. "What we don't want to do is get back to putting incentives on the vehicles."

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GM's August sales fell 7 percent from July, and an even sharper 25 percent from August of 2009. All four of GM's remaining brands saw sales drop from July. Pricier brands Cadillac and Buick led the way, falling 15 percent. Chevrolet and GMC sales also fell.

Ford saw sales slip 5 percent from July. In response, the Dearborn, Mich.-based company said it will make 4,000 fewer vehicles in the fourth quarter.

The other big auto manufacturer, Toyota, saw sales figures drop 12 percent in August.

Subaru sales slipped 7.2 percent. Kia Motors sales fell 8 percent and Hyundai Motor's were essentially flat.

August to August comparisons looked even worse for the industry, although that was expected because a third of the cars and trucks sold back then — 1.3 million — were driven by the government discounts.

Sales at GM's four brands dropped 11 percent from August of last year, dragged down by Chevrolet. The brand's small Cobalt and Aveo cars sold well under the clunkers program, which encouraged buyers to trade in older cars for more fuel-efficient rides.

The clunkers hangover also hit Toyota. August sales plunged 34 percent from a year earlier, led by declines in its smaller cars like the Corolla and Camry sedans.

Toyota's problems have been broader. Its sales also have been slowed by recalls of more than 10 million vehicles for an array of problems. But Edmunds.com analyst Jessica Caldwell said the automaker's troubles go beyond recalls and so-called clunkers, saying a lack of exciting new products is also to blame.

"Unlike Hyundai, Ford, GM and even Chrysler's Jeep Grand Cherokee, Toyota has no exciting product news to speak of," she said.

The clunkers comparison also hurt small-car specialists like Subaru, where sales fell 22 percent in August. Subaru was unable to match big sales last year of its smaller Impreza and the Legacy models.

Small cars sold well last August because of the $2.8 billion clunkers program, which ran in 2009 from July 27 to Aug. 25. It gave government rebates to people who bought new vehicles with better gas mileage than their old vehicles. Buyers got either $3,500 or $4,500, depending on how much the mileage was increasing. All trade-ins had to get 18 mpg or less. Nearly 700,000 new vehicles were bought under the clunkers incentive.

Separately, Chrysler Group said its August sales rose 7 percent over July as many of its models saw gains. The automaker's sales also increased 7 percent over August of 2009. But last year the company was just restarting factories after closing them during its stay in bankruptcy court.

Chrysler got only a small sales boost last year from the Clunkers program. Sales of the new Jeep Grand Cherokee nearly doubled over July.

Other companies reporting August sales on Wednesday:

  • Honda Motor sales fell 33 percent due to weaker demand for small cars like the Accord, Civic and Fit. Sales fell 3 percent from July.
  • Nissan Motor sales dropped 27 percent on sharply lower sales of its sedans. Compared with July, Nissan sales fell 7 percent from July.

Automakers figure total sales for this year will come in at about 11.5 million. In 2007, the last year before the recession struck, sales came in at about 16 million.

High unemployment and the shaky housing market have made Americans reluctant to spend money. But Ford's senior U.S. economist, Emily Kolinski Morris, noted that households are saving more money, cash that will be ready when they need a new car. Also, more vehicles have been scrapped than sold over the last 18 months, indicating pent-up demand, she said.

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

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