Car sales fall as consumers' credit woes worry carmakers
Automakers sold 0.6% fewer vehicles in August than they did a year ago.
DETROIT -- August auto sales were topsy-turvy, as stalwart Toyota posted a rare decline and General Motors gm showed an unlikely increase.
Overall, waning consumer confidence and persistently high fuel prices eroded shoppers' willingness to buy, and automakers sold 0.6% fewer vehicles than they did a year ago, according to data tracking firm Autodata.
Automakers continue to worry about the potential impact of the credit problems that have hurt home sales. Tighter credit means homeowners might not have easy access to money from refinancing or home-equity loans — cash that helps fuel auto sales.
"The uncertainty around the present credit environment is really quite substantial," says Ellen Hughes-Cromwick, Ford Motor's fchief economist. The automaker is watching closely to see how the credit squeeze will affect other industries.
Although sales were down, the seasonally adjusted annual sales rate was up slightly, to 16.27 million, from 16.15 million a year ago. David Lucas, vice president of Autodata, says calculations for the seasonally adjusted number change monthly, as dictated by the Bureau of Economic Analysis. If the factors had stayed the same as last year, the seasonally adjusted rate also would have been down.
Full-size pickups and SUVS were the biggest battleground in August. Incentives averaged about $4,300 on big trucks and about $3,900 on big SUVs, according to car-shopping website Edmunds.com. Suggesting a renewed interest in fuel economy, compact cars had the lowest average incentives: $873.
GM and Toyota have some of the newest pickups and SUVs on the market, and their sales jumped 16.4% and 2%, respectively. Ford and Chrysler truck sales fell.
"The truck market overall did better than we expected," says Jesse Toprak, director of pricing and market analysis for Edmunds.com. "GM was the biggest story and the biggest surprise in August. Their new crossovers and trucks did really well." GM's crossover SUVs are Saturn Outlook, GMC Acadia and Buick Enclave. Consumer Reports magazine recently called them "the most competitive GM products in years."
Toprak says he expects automakers to continue offering big incentives on trucks to avoid losing ground in a fiercely competitive segment.
Paul Ballew, head market analyst for GM, says the automaker was hurt when it cut back on truck incentives in June and posted a 21% sales decline. "We took it on the chin," he says. "When we let the competition get ahead on pickups, we lose our edge. They are our No. 1 asset in this market."