The Labor Day weekend helped drive U.S. light-vehicle sales up 6% year over year to 1.59 million in Aug 2014. Sales on a seasonally adjusted annualized rate (SAAR) basis surged to 17.5 million units from 16.1 million units in Aug 2013 and 16.5 million units in Jul 2014. A large part of the increase was driven by the growing demand for light trucks, while sales of cars rose marginally.
Most major automakers reported good results. Chrysler topped in terms of year-on-year increase, while General Motors Company (GM - Analyst Report) was leading in terms of absolute figures, despite posting a slight year-on-year decline. Toyota Motor Corp. (TM - Analyst Report) , Nissan Motor Co. Ltd. (NSANY - Snapshot Report) , Ford Motor Co. (F - Analyst Report) and Honda Motor Co., Ltd. (HMC - Analyst Report) also recorded sales growth.
Now, let us look at the U.S. sales figures reported by the individual automakers.
General Motors recorded 272,423 vehicle sales in August, down 1% year over year. Retail sales declined 4%, while commercial sales went up 30% and fleet sales improved 9%. General Motors is set to launch Chevrolet Colorado and GMC Canyon this Fall, which should boost results. The automaker is already getting many dealer orders for both vehicles.
Ford reported a 0.4% increase in total sales from the year-ago period to 222,174 vehicles in Aug 2014. This was the company’s best August sales in 8 years. Retail sales improved 2% year over year to 178,800 units. However, fleet sales declined 6% to 43,374 units.
Chrysler Group – controlled by Italy’s Fiat S.p.A – recorded a 20% year-over-year rise in sales to 198,379 vehicles. With this, Chrysler’s monthly sales have increased year over year for 53 consecutive months, which is impressive. Moreover, this is the best August sales for the group since 2002.
Toyota’s sales increased 10.2% year over year on daily selling rate (DSR) basis and 6.3% on volume basis to 246,100 units in Aug 2014. Sales in the Toyota division improved 5.7% based on volume and 9.6% on DSR basis to 213,291 units. Lexus sales rose 14.2% on DSR basis and 10.1% on volume basis to 32,809 units.
Honda recorded a 0.4% year-over-year increase in sales on volume basis to 167,038 vehicles in Aug 2014. Sales on DSR basis improved 4.1% year over year. Sales in the Honda Division increased 1.5% on volume basis and 5.2% on DSR basis to 151,551 units, the third highest monthly sales in its history. However, sales of the Acura Division fell 9.2% on volume basis and 5.8% on DSR basis to 15,487 vehicles.
Nissan Motor posted an 11.5% year-over-year increase in sales to 134,388 vehicles in August. Sales in the Nissan division also climbed 15.3% to 125,224 units. However, sales of the Infiniti Division went down 22.9% to 9,164 units in the month.
The pent-up demand for vehicles has been more or less tapped in the last few years. As the pent-up demand is reaching a plateau, automakers are offering large incentives to attract consumers. Moreover, with improvement in the general economic situation, banks are offering more car loans with lower interest rates and longer repayment periods.
Other factors contributing to the increasing auto sales include rising employment rate, growing consumer confidence and recovery of the housing market. Further, the high average age of cars on the U.S. roads is resulting in high replacement demand for cars as well as car parts.
General Motors expects industry light vehicle sales of nearly 16.5 million units this year. Meanwhile, Ford expects it to range between 16.3 million and 16.8 million units.
In the long run, sales are expected to rise on the back of residual pent-up demand and improving macroeconomic conditions. As the automobile industry is a major contributor to U.S. economic growth, improving auto sales will also help in recovery of the overall U.S. economy.