US auto sale for the month of August has been fantastic, the best since 2007. Industry sales jumped 17% compared to last year August, pushing the seasonal adjusted annual rate to 16.1 million, as per Autodata. Retail sales were pretty encouraging during the month. Other factors boosting the sales of cars were availability of easy credit, wider choice of new models and buyers need to replace their aging cars with the latest ones.
The top automakers including General Motors (GM), Ford (F), Chrysler, Toyota (TM) and Nissan experienced double digit gains from solid demand for pickups as well as small cars. Let’s delve a little deeper into some important figures.
A Look at the Performance
While August was a dream month for almost all automakers, a Japanese auto giant was the biggest gainer witnessing a sales rise of about 23%. Nissan followed just behind with 22% increase over last year comparable period.
While Japanese automakers stole the show with phenomenal rise, domestic automakers reported noteworthy gains as well. The economy’s largest automaker General Motor’s sales went up 15%. The automaker sold over 276,000 vehicles which was primarily triggered by the Sonic compact and pickups. The Detroit giant recorded its best month since September 2008. The other two domestic makers Ford and Chrysler posted 12% sales gain each. Ford sold 221,000 vehicles, but failed to keep its No. 2 spot in the U.S. It was beaten by arch rival Toyota which crossed past the Blue Oval by selling 232,000 vehicles during the month.
Signs of Improvement
In May 2007, the auto industry witnessed sales of over 1.56 million vehicles which was largely driven by small cars. However, this time it’s different. The industry is selling vehicles from the huge Detroit automakers’ pickups to the smaller Honda Fits as the nation is recovering. As per TrueCar.com buyers are paying record high prices to satisfy their pent-up demand for cars. The average price per car sold shot up $1,000 to $31,252 in August compared to last year period.
Growing numbers are clearly proving that big businesses are getting back their confidence and purchasing trucks to replace the old ones. According to Polk research firm, the average age of US pickups is about 11.3 years.
Demand for pickups is growing with every month. Conventionally pickups demand is higher in the second half of the year, particularly during the fourth quarter. More importantly, pickup is an area of strength of domestic automakers General Motors, Ford and Chrysler. General Motors sold almost 44,000 Chevrolet Silverado, up 14% from last year. Ford sold over 70,000 F-Series pickups during the last month. Chrysler’s Ram pickup sales also surged 31% to approximately 33,000.
The U.S. is coming out of the worst downturn of this decade. Car sales are growing at a rapid pace and automakers are finding it difficult to meet the demand. In fact, demand is growing at such an incredible pace that several showrooms are unable to keep sufficient stock of models to cater to the need. Ford, Hyundai and Land Rover are working hard to keep sufficient level of stock to avoid shortages.
However, the moot point in all this is will the sales pace sustain? Several factors including reviving consumer confidence, growing job market and improving employment rates, pent-up demand and recovery in the housing sector are indicating that the improvement in the U.S. auto sector is there to stay. The best part is that vehicles are more reliable and fuel efficient, and the technologically more advanced. So there lies no doubt about the uncertainty of future demand in the next couple of years at least.