As U.S. sales climb toward never-before-seen levels, automakers are asking two questions: How much longer can American consumers maintain this pace, and how many more vehicles can the factories turn out?
August brought sales of 1,485,266 cars and light trucks, a rise of 20.4 percent over last year. Retailers moved 803,212 cars and 682,054 trucks.
Most brands chalked up year-to-year increases. DaimlerChrysler showed a 9.6 percent gain as Jeep Grand Cherokee sales more than doubled.
Volkswagen sales rose 33.8 percent on strong demand for the Passat and Jetta. And significant increases for most Mitsubishi vehicles pushed up sales for that brand 42.8 percent.
General Motors sales jumped 63.7 percent. But those numbers are anomalous - last year's sales were squeezed in the aftermath of the June-July strike by the UAW that halted production. That shutdown partially skews comparisons for the industry as a whole.
Still, August sales indicate that the auto industry is on track to sell nearly 17 million light vehicles this year. The record is 16,026,426 in 1986.
SELL 'EM IF YOU GOT 'EM
That's what American Honda Motor Co. told its dealers as the company posted its best sales month in history. Honda Division racked up a 9.2 percent gain, and Acura was up 22.1 percent.
The company noted that it is closing in on annual sales of 1 million vehicles for the first time.
But Honda's North American factories are bumping into production ceilings. The Marysville, Ohio, plant, which builds both the Honda Accord and the Acura TL, is straining to meet rising demand for both.
In order to build more TLs, the plant had to cut back on Accord production. To compensate, Honda is importing thousands of Accords from Japan. August's 10 percent rise in Accord sales was all import - 7,945 of them vs. only two in 1998.
Meanwhile, Honda's Odyssey minivan is down to a five-day inventory as the company hurries to put in a second shift at its plant in Alliston, Ontario.
'We've got a three-month wait on Odysseys,' says Jerry Hodge, a Honda-Nissan-Mazda-Buick-Sat-urn retailer in Knoxville, Tenn. 'Right now, we really need more of everything.'
Hodge said he was surprised that several customers traded sport-utilities in recent weeks to buy new cars. The trend has been in the other direction. Yet August sales showed that car sales rose for several makes.
Ford Motor Co., which has led the industry shift into light trucks, sold 17,000 more cars than it did a year ago. Surprisingly, Ford's truck sales were nearly flat.
NO MORE TRUCKS?
However, the problem was not so much a lack of consumer interest: Ford's truck plants are simply running out of room.
For example, Ford's Louisville, Ky., assembly plant reduced Ex-plorer production by 12 trucks per hour this summer to gear up for assembly of the Sport Trac.
Despite the boom in light trucks, the only new truck capacity Ford has added in recent years is a current construction project to build the big Excursion sport-utility.
'We're running out of space,' said George Pipas, Ford sales analysis manager. 'Does that mean this is as good as it's going to get? We don't think so. We think the next 12 months will be even better.'
David Garrity, auto analyst with New York's Dresdner Kleinwort Benson, believes that limited supplies of light trucks may be pushing more buyers toward cars. 'Availability is getting a little thin,' Garrity said. 'Customers may be finding better availability in cars.'
He and others believe the U.S. market will continue at its current level as long as manufacturers and importers exercise price restraint.
Big price increases don't seem likely at the moment. Incentives may be one small indicator. GM is offering rebates on some of its new full-sized pickups. Ford's aging Escort saw a 7 percent sales boost in August, partly because of low-interest deals and $1,500 rebates.
On the other hand, industry inventories were actually lower on Aug. 1 than they were in August 1998 as GM recovered from its strike.
So far, Fed rate hikes seem to be having no effect. Paul Taylor, chief economist for the National Automobile Dealers Association, said last week that the rate increases probably will have only a slight effect on 1999 sales. And even then, he predicted, it will probably not show up until the fourth quarter.
The dealers association forecasts a sales increase of 4 percent this year. That modest growth would put year-end sales at about 16.8 million cars and light trucks, easily topping the current record of 16 million in 1986.
'Consumer confidence is still real high now,' said John Campbell, owner of Saab of Santa Ana, Calif. 'Personal income is up. Product values are great. There's talk of inflation and interest rate hikes. But it doesn't seem to be affecting people. We're selling a lot of custom wheels on our cars.'