Car Sales Heading Toward Post-Recession Peak

By Jeffery Gilbert, CBS Detroit

DETROIT (WWJ) - Pent up demand, low-interest rates and attractive year-end deals pushed August car sales to levels not seen in six years.

“Well, the overall trend in August sales is up, up and away,” said analyst Karl Brauer with Kelly Blue Book. “We’re seeing strong sales from pretty much every manufacturer.”

The strong sales are pushing the annual sales rate above 16 million. That’s something we haven’t seen since before the recession.

“To most people that follow the auto industry that signifies what sales rate were before the recession,” said Jessica Caldwell, Senior Analyst with Edmunds.com. “I think that headline that ‘The Auto Industry is Back’ would produce a real good psychological impact.”

Japanese manufacturers lead the way. Honda reported its sales up 27 percent, with Toyota sales rising 23 percent, and Nissan up 22 percent.

“Some of it has to do with early product,” said LMC Automotive analyst Jeff Schuster. “I think there’s been some aggressive pricing strategies, certainly with the situation dealing with the yen.”

Executives for the “Detroit Three” have complained that the low yen gives Japanese carmakers an unfair advantage.

Still, all three domestic car makers posted double-digit sales increases. GM sales were up fifteen percent.

“We’re continuing to see the industry grow, really, back to pre-recession levels,” said GM Sales Operations Manager Kurt McNeil.

Pickup sales were strong, with roughly thirty percent of General Motors pickup trucks sold being the new 2014 Silverado and Sierra.

August sales were also helped by the calendar. The Saturday of Labor Day weekend was in August this year, not September.

Chrysler and Ford both saw their sales were up 12 percent. It was Chrysler’s 41st consecutive month-over-month sales increase.

“Last month we achieved our strongest retail sales in the past 60 months,” said Reid Bigland, Head of U.S. Sales. “All aspects of our business continue to improve as evidenced by our streak of 41-consecutive months of year-over-year sales gains.”

Retail sales are sales made at dealerships to individual buyers. They are generally more profitable than fleet sales. All of the major car makers saw their retail sales increase significantly in August.

For Karl Brauer of Kelly Blue Book, that’s a very good sign.

“Retail sales are a more genuine indicator of the true market, and where the average consumer is at in terms of car buying.”

Hyundai says its sales were up 8 percent.

Volkswagen, meanwhile, was down slightly…compared to a very strong August of 2012, when they had a lot of new product.

Ford, which has been hampered by tight supplies of the Fusion and Escape says it’s going to increase its production seven percent in the fourth quarter.

They’ve already begun ramping up, with the addition of a second shift at the Flat Rock Plant, to build more Fusions.

“Producing more Fusions at Flat Rock Assembly with its 1,400 new workers is a welcome opportunity, as Fusion showed great strength in August,” said Ken Czubay, Ford vice president, U.S. marketing, sales and service. “Small cars and hybrids continue to outpace the market in the coastal regions of the U.S., with Ford brand retail small car sales growing at more than three times the rate of the U.S. small car industry.”

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