DETROIT (Reuters) - Detroit automakers’ sales declined by 20 percent to 34 percent in August, but aggressive discounts and lower gas prices helped the battered industry do better than many Wall Street analysts had feared.
General Motors Corp and Ford Motor Co on Wednesday cut second-half production targets, likely putting a drag on their results, but held out hope that the near-freefall in sales seen in the summer had slowed somewhat in August as consumer confidence steadied.
“We’re very encouraged by what we saw in August, and it gives us reason to think we’re pulling our way out of this thing,” said GM’s sales and marketing chief, Mark Laneve. “Hopefully, we will start scratching our way back to numbers that are improving on a month-on-month basis.”
August sales marked the 10th straight month of declining sales in the U.S. auto market, making it the longest such downturn since the 2001 recession.
While GM’s August sales fell 20.4 percent, that was better than analysts had feared as the automaker received a boost from its employee-pricing discount program.
Among other major players, Chrysler LLC’s sales plunged 34 percent, Ford’s tumbled 26.6 percent, Toyota Motor Corp’s fell 9.4 percent and Honda Motor Co’s slid 7.3 percent.
All was not gloomy, though. Nissan Motor Co Ltd surprised investors with a 13.6 percent increase in August sales.
GM and Ford shares rose on the results. GM ended up 5.8 percent, or 62 cents, at $11.27 on the New York Stock Exchange after touching an intraday high of $11.57. Ford closed up 1.3 percent, or 6 cents, at $4.57.
U.S. auto sales fell 15.5 percent to 1.25 million units or to a seasonally adjusted, annualized rate of 13.72 million units in August. That was sharply down from a 16.3 million rate of a year earlier, but up from the 16-year low of 12.55 million in July, according to AutoData Corp.
Jesse Toprak, analyst at auto industry tracking firm Edmunds, said the market may have hit a bottom in July.
“Bad news is we’re still down from a year ago, but the good news is that we saw some improvements over the last couple of months thanks to a combination of lower gas prices and incentive spending,” he said.
While automakers said the month-to-month improvement was encouraging, they cautioned that the second half of the year will not be an instant return to times of plenty.
Toyota said it was “guardedly optimistic” that August sales showed that the worst of the downturn had passed.
“We see it as an improvement over July, a marginal improvement,” Toyota spokesman Irv Miller said. “There’s not really a lot of reason to go running down the street with balloons and flags, because there are a lot of issues out there.”
Ford — which sees industry sales coming in at the bottom end of its forecast range of 14 million to 14.5 million units this year — said consumer confidence showed signs of bottoming out in August, a positive indicator for an industry that has struggled mightily through a deeper-than-expected slump.
Auto sales are a closely watched and early key indicator of consumer demand in the United States for big-ticket items.
The August trends reflect a continued shift toward smaller, more economical passenger cars and away from large pickup trucks and sport utility vehicles.
To boost sagging sales and clear out inventory, GM extended its employee-level pricing discount program by a month through the end of September and increased the number of 2009 model year vehicles carrying the offer.
Overall, automakers increased their sales incentives by about 7 percent in August from a year earlier, to an average of $2,642 per vehicle, according to Edmunds, which tracks auto trends. That figure is heavily weighted toward large trucks.
Year-over-year, Chrysler led major automakers in incentives with an average of $4,366 per vehicle, followed by Ford with $3,443 on average per vehicle. Incentives at the other automakers also rose in August, according to Edmunds.
Additional reporting by Kevin Krolicki, Soyoung Kim and David Bailey; Editing by Maureen Bavdek/Pat Fitzgibbons/Braden Reddall