DETROIT - American auto sales, once a bright spot in the economic recovery, stalled last month as the nation's largest car company reported falling sales.
Buyers who are nervous about the economy's health stayed away from showrooms, a worrisome sign since August is typically a strong month. Analysts say total industry sales could fall below one million new vehicles, making it the worst August in 27 years. All automakers report sales figures on Wednesday.
General Motors Co.'s August sales fell seven per cent from July, and an even sharper 25 per cent from August of 2009, when sales were boosted by the government's Cash for Clunkers rebates. Subaru, whose strong lineup of smaller cars benefited from clunkers last year, also suffered.
"There hasn't been enough horsepower behind the recovery to motivate consumers to regain their confidence and purchase vehicles at a higher rate," says Jeff Schuster, executive director of global forecasting for J.D. Power and Associates.
Also, potential buyers are having a harder time getting big discounts.
Automakers have been reluctant to increase incentives such as rebates and low-interest financing. Most car companies are making money at lower sales levels because they've cut production. They no longer need to offer cars at below break-even prices just to move them off lots.
"We know it's going to be a modest recovery, it's going to be bumpy," said Don Johnson, GM's vice-president of U.S. sales. "What we don't want to do is get back to putting incentives on the vehicles to keep the plants running."
GM's four remaining brands— Chevrolet, Buick, GMC and Cadillac — dropped 11 per cent versus August of last year. While Buick, GMC and Cadillac reported increases, Chevrolet, the company's largest brand, slipped because of the tough comparison with August of last year. That's when buyers snapped up many of Chevy's small cars under the clunkers program.
The clunkers comparison also hurt small-car specialists like Subaru, where sales fell 22 per cent in August. Subaru was unable to match big sales last year of its smaller Impreza and the Legacy models. Sales fell 7.2 per cent from July.
Small cars sold well last August because of the $2.8 billion clunkers program, which ran from July 27 to Aug. 25. It gave government rebates to people who bought new vehicles with better gas mileage than their old vehicles. Buyers got either $3,500 or $4,500, depending on how much the mileage was increasing. Nearly 700,000 new vehicles were bought under clunkers.
At GM, Buick sales rose 66 per cent over August of last year, while Cadillac sales jumped 83 per cent, led by the new SRX crossover. Chevrolet, though, dropped 22 per cent, mainly because it sold about 20,000 Cobalt and Aveo small cars under the clunkers program. GM said Buick is the fastest-growing brand in the industry. Its increase was driven by the LaCrosse midsize luxury car, which saw sales almost double.
GM's sales are up five per cent so far this year as it prepares for an initial public offering of its stock, which could happen as early as October. Wednesday was also Daniel Akerson's first day as GM's new CEO, taking over from Ed Whitacre.
In Canada, Ford reported its sales rose eight per cent in August to its best performance for the month in 20 years with 24,034 units sold during the month compared with 22,236 in the same month a year before.
As of August, Ford sales for the year to date were up 17 per cent. Ford said its total number of cars sold for the month rose 18.9 per cent to 5,858, while the number of trucks sold rose five per cent to 18,176.
Other automakers are also expected to report their Canadian sales for the month.
— With files from The Canadian Press