U.S. sales fall 3.5% as big players slip

Ford Motor Co. and Nissan Motor Co. posted their biggest U.S. sales declines in years last month in an industry that is showing further signs of running out of steam.

Ford was dragged down by a 9.4 percent drop at its namesake division, while Nissan recorded its sharpest monthly decline in more than three years. Sales at General Motors and Toyota Motor Corp. dropped for the sixth time in 2016.  Fiat Chrysler chalked up another gain aided mainly by the strength of Jeep.

Overall sales fell 3.5 percent, and the seasonally adjusted annual sales rate came in at 16.97 million, the third-lowest total of the year.

The results point to the difficulties the industry will have stretching its streak of consecutive sales gains to a century high of seven years.

"It wasn't exactly a blockbuster month in August, so that puts extra pressure on the industry to step up its game in September, especially this coming Labor Day weekend," said Jessica Caldwell, an analysts at Edmunds.com. "We're at a critical time where dealers need to clear out 2016 inventory to make room for 2017s."

Third time

August marks the third month this year that volume has declined, the most monthly drops in any year since recession-wracked 2009, when volume slumped in eight individual months.

August had the same number of selling days as in 2015 -- 26 -- but featured one fewer weekend this year, contributing to the decline in volume most analysts expected.

The month's 16.97 million SAAR compares with 17.79 million in August 2015 and 17.86 million in July.

“Coming off the strongest SAAR of the year at 17.9 million units in July, the industry took a bit of a step back in August,” said Bill Fay, general manager of the Toyota division.

Ford's sales fell 8.8 percent to 213,411 with retail volume off 8 percent and fleet shipments dropping 10 percent. A 7 percent rise at Lincoln offset some of the decline at the bigger Ford division. The results marked Ford's biggest monthly setback since August of 2010.

GM said August sales dropped 5.2 percent to 256,429 cars and light trucks. Deliveries slipped 3.9 percent at Chevrolet, 14 percent at GMC and 2.7 percent at Buick. Sales rose 3.9 percent at Cadillac.

At Toyota Motor Corp., volume dropped 5 percent to 213,125 cars and light trucks last month. Honda Motor Co. deliveries dipped 3.8 percent.

Sales fell 7.9 percent at Kia, 2.7 percent Mini, 13 percent at Mazda, 12 percent at Mitsubishi and 9.1 percent at the VW brand, where U.S. volume has slid every month beginning with November as the company struggles to move past violations of U.S. diesel emissions rules.  

The Hyundai brand's volume rose by just three units over August 2015.

Subaru posted record U.S. sales of 60,418 in August, the first time the brand has topped the 60,000 mark in a month, for a gain of 15 percent over August 2015. Thomas J. Doll, president and COO of Subaru of America, described the August results -- which shattered the brand's previous monthly sales record in December 2015 (56,274) -- as "epic."

Nissan dip

Nissan posted a 6.5 percent decline in August U.S. sales, with demand falling 6.9 percent at the Nissan division and 1.8 percent at Infiniti.

It was only the second time this year that deliveries at the Nissan group, one of the hottest automakers in the U.S. this year, with sales up 7.3 percent through July, have dropped.

Nissan last recorded a tumble as steep as August’s in February 2013.

Among other luxury brands, August sales rose 189 percent at Jaguar, 15 percent at Land Rover, 3 percent at Mercedes-Benz, 2.5 percent at Audi and 31 percent at Volvo, but volume slid 8 percent at BMW and 7.6 percent at Lexus.

Lexus was the top-selling luxury brand in August but Mercedes-Benz leads Lexus and BMW in year to date volume.

FCA US, helped by more generous incentives, posted a 3.1 percent August gain. Sales rose 12 percent at Jeep, 5.1 percent at Dodge and 1.6 percent at the Ram brand, but deliveries dropped 22 percent at the Chrysler brand, 21 percent at Fiat and 62 percent at low-volume Alfa Romeo.

Tough comparison

U.S. sales have now risen just 0.5 percent for the year. Even before today, analysts were divided over whether demand can top 2015’s record tally. For the remainder of the year, automakers face a tough comparison to the second half of 2015, when the SAAR topped 18 million in September, October and November.

"Looking forward [to the next few years], we continue to see industry sales as strong but at a lower level than this year," said Mark LaNeve, head of U.S marketing, sales and service for Ford.

While profitable trucks, crossovers and SUVs continue to top consumer shopping lists, there are signs that the pent-up demand that has fueled industry volumes in recent years has been exhausted, analysts say.

“Shopping on dealer websites was down 2 percent in August compared to a year ago, and only up 3.5 percent from July 2016, another indication that new-car sales may be plateauing," said James Grace, director of analytics product management for Dealer.com.

Other analysts -- citing low gasoline prices, widely available credit and low financing costs and employment gains -- believe sales still have room to grow.

“Despite sales beginning to cool off, the industry is still on pace for a record year,” said Eric Lyman, TrueCar’s chief industry sales analyst. “2015 delivered a 10-year high in August sales, so automakers faced a high hurdle to show year over year gains in August 2016.”

Industry sales continue to be driven by light trucks, notably compact crossovers and large utility vehicles.

“All the economic factors continue to point toward a strong second half of the year and another potential record year for the industry,” said Mustafa Mohatarem, GM’s chief economist. “We think the industry is well positioned for a sustainable high level of customer demand.”

TrueCar says incentive spending averaged an estimated $3,331 per vehicle in August, an increase of 7.7 percent from a year earlier. That figure was down 2.2 percent from July 2016, as automakers launched sales to clear out 2016 models.

As the market shows signs of reaching a sales plateau, automakers aren’t chasing U.S. sales at any cost, a practice that helped force GM and Chrysler to restructure in bankruptcy in 2009.

While discounts have, at least on paper, crept back up to pre-recession levels, there’s more cushion than ever: Average transaction prices are at a record high as buyers opt for bigger vehicles with plusher interiors, more electronics and driver-assist features. With profits largely protected, automakers don’t mind if the industry snaps a streak of six straight annual sales increases.

“It may or may not be a record but, look, any time you’re above 15 million is good,” said John Mendel, Honda’s head of U.S. sales. “I’m bullish on the rest of the year.”

Nick Bunkley and Bloomberg contributed to this report.