We managed to hear and read a lot of predictions for August auto sales. Now we realize that automakers' decision to scale back U.S. discounts in August is a sign they're willing to maintain some price discipline, even if it raises the odds that industrywide annual sales will fall for the first time in seven years.
August reports may show a seasonally adjusted annual sales pace of about 17.2 million cars and light trucks, down from a 17.9 million rate in July that was the highest of the year. Incentives were lower than in July, when General Motors Co. offered 20 percent cash back on several Chevrolet models. Automakers aren't chasing sales at any cost, the practice that helped force GM and Chrysler to restructure through bankruptcy in 2009. While discounts have, at least on paper, crept back up to pre-recession levels, there's more cushion than ever: Transaction prices are at a record high as buyers opt for bigger vehicles with nicer interiors, electronics and driver-assist features. With that profit protection, automakers don't mind if the industry snaps a record streak of sales increases. The discipline is helping the industry stay profitable while it's still backed by strong, if weakening, underlying trends: low unemployment, available credit, high equity valuations, cheap gasoline.
With the discounts eased, industrywide sales may have fallen about 3.5 percent in August. Among the projected declines are 8.2 percent for Ford, 4.9 percent for GM and 6.6 percent for Volkswagen's VW and Audi brands. GM said on Tuesday that its sales would probably be down 5 percent to 6 percent. Buyers continue to favor pickups and sport utility vehicles. Light trucks, which also include minivans, probably rose to 59 percent of all sales in August from 56 percent a year earlier. The truck demand is helping Fiat Chrysler. Its deliveries are predicted to rise 5 percent, compared with year-earlier results that were revised last month after dealers and federal regulators called its reporting practices into question. One company bucking the truck trend is Honda, whose car sales rose 6.8 percent through July — more than double its 3.3 percent gain for light trucks. Deliveries of the redesigned Civic gained 18 percent through July, overtaking Toyota's Corolla, while sales of the refreshed Accord rose 5.8 percent, cutting the Toyota Camry's lead almost in half. For August, analysts estimated Honda's sales climbed 1 percent.