U.S. light-vehicles sales slipped 1.8 percent last month and the seasonally adjusted, annualized pace of sales fell to the lowest level -- 16.13 million -- since February 2014 behind a late-month wallop from Hurricane Harvey.
It was the eighth straight monthly decline for an industry that a week ago was forecast to record its first sales advance of the year. That was before Harvey slammed into coastal Texas and left much of Houston, the nation’s fourth-largest metro area and a major truck market, paralyzed by floodwaters.
Ahead of Friday's final tally, analysts polled by Bloomberg expected the August SAAR to drop to 16.4 million from 17.21 million a year earlier. There was one extra selling day last month compared with August 2016.
After exceeding 17 million in January and February, the SAAR slipped below that level in March and hasn’t topped it since April.
Even with the storm, General Motors and Toyota managed to record strong U.S. sales gains in August while their biggest rivals slipped.
GM’s 7.5 percent increase, helped by higher fleet and retail orders, marked a sharp rebound from four straight monthly declines. Toyota recorded its third straight monthly advance, up 6.8 percent, after a soft start to the year. August sales dropped at Ford Motor Co., Fiat Chrysler, Nissan Motor Co., Honda Motor Co. and Hyundai-Kia.
“Hurricane Harvey did have an adverse effect on deliveries during the last week of August for every automaker but the key U.S. economic fundamentals remain supportive of strong vehicle sales,” Mustafa Mohatarem, GM’s chief economist, said in a statement. “With the U.S. economy strengthening, we anticipate retail sales will be strong for the foreseeable future.”
Company by company
Sales at GM’s Chevrolet division rose 11 percent and 12 percent at GMC, behind strong crossover demand, while volume dropped 23 percent at Buick and 8.1 percent at Cadillac. The automaker’s retail sales rose 4 percent while fleet deliveries advanced 24 percent, GM said.
At Ford, which has managed just one monthly gain this year, sales fell 2.1 percent on lower daily rental, car, crossover and SUV demand. Sales slipped 1.9 percent at the Ford division and 5.8 percent at Lincoln. Ford said its August fleet deliveries edged down 0.2 percent to 45,830 vehicles.
While storm assessments are still underway, Ford expects new-vehicle losses in Texas to be fewer than 5,000 units and isolated to a few dealers. Mark LaNeve, head of sales and marketing for Ford, said Friday that 13 of the company's 114 Houston-area dealerships remain closed and 10 incurred extensive damage.
"It's going to take a long time to really know the damage," LaNeve said. "Water damage may crop up months down the road."
Behind strong light-truck deliveries, sales rose 8.0 percent at the Toyota division, but slipped 0.4 percent at Lexus.
"Though demand softened in the last part of the month, August was still a good month for the industry. We continue to set records in light trucks," said Jack Hollis, group vice president and general manager of the Toyota division.
Fiat Chrysler said August deliveries dropped 11 percent as fleet and retail shipments fell. Except for low-volume Alfa Romeo, all of FCA’s brands fell last month, including double-digit declines at Jeep, Fiat and Chrysler.
Nissan Motor deliveries dropped 13 percent on a 19 percent decline in car deliveries and 8 percent drop in truck sales. Volume decreased 15 percent at the Nissan division while rising 5.2 percent at Infiniti.
Honda Motor Co. sales dropped 2.4 percent on a drop of 1.8 percent at the Honda brand and 7.8 percent at Acura.
Hyundai-Kia's sales slump continued, with volume off 26 percent at the Hyundai brand and 1.7 percent at Kia.
Subaru of America set an all-time monthly sales record of 63,215 last month, a 4.6 percent increase over August 2016. The August results eclipsed Subaru's previous monthly sales record -- 63,177 units in December 2016.
At Volkswagen Group, sales rose 9 percent at the VW brand and 2.8 percent at Audi.
Mazda's U.S. sales dropped for the fifth straight month, falling 1 percent in August. Deliveries rose 11 percent at Mitsubishi.
U.S. new-vehicle sales had been expected to rise in August for their first monthly gain of the year until Harvey devastated metro Houston. Before the storm, which hit the shore as a Category 4 hurricane before weakening, sales were forecast to rise about 1 percent.
Some automakers and brands fared worse than others as a result of the storm. Texas is the top sales market for Ford, Ram, GMC, Cadillac and Mitsubishi, Edmunds says.
LMC said Harvey will directly reduce U.S. light-vehicle sales in August by about 1.3 percent, or 20,000 units, and another 1.2 percent, or 16,000 vehicles, in September, before a recovery begins.
“Harvey will depress one of the most critical selling periods of the year, spanning the August sales month close and Labor Day weekend,” LMC said in a report Thursday. “In 2016, these 11 days alone accounted for 4.1 percent of retail sales, or 580,000 units, nationally.”
LMC expects 15,000 sales to result this year from scrapped vehicles being replaced. “However, as replacement spills into 2018, a more significant positive impact could be felt -- 250,000 units or more,” LMC said.
Damage to licensed and operating vehicles at the time of the storm is expected to total $2.7 billion to $4.9 billion, Cox Automotive Chief Economist Jonathan Smoke said Friday.
“We have estimated that 300,000 to 500,000 vehicles were likely damaged or lost in the Houston area alone... Households there averaged 1.8 vehicles," said Smoke. "There is a more than 94 percent vehicle ownership rate [in Houston] -- one of the highest in the country. If we’re correct, it would be the worst in terms of vehicle damage in history."
Retail and fleet demand has softened, mostly on weaker car sales, in 2017 after a record 2016 fueled by a strong, incentive-fed December.
Ahead of today’s reports, analysts polled by Bloomberg expected August sales to rise 3.7 percent at GM, 5.5 percent at Volkswagen-Audi, 4.2 percent at Honda Motor and 7.8 percent at Toyota Motor. Volume was projected to drop 3.5 percent at Ford Motor, 5.9 percent at FCA, 0.6 percent at Nissan Motor, and 6.2 percent at Hyundai-Kia.
FCA and Hyundai-Kia are still looking for their first monthly sales gain of the year.
More inventory, bigger deals
After seven straight years of growth and a record 2016, U.S. light-vehicle sales have now fallen 2.7 percent this year through August, even as new-vehicle stockpiles grow and automakers fatten deals. Much of the decline in industry volume reflects weaker car demand and reduced fleet shipments.
In August, car sales slipped 9.5 percent while truck demand rose 2.9 percent.
The industry's average days to turn continues to hit levels not seen since July 2009. Edmunds says new vehicles sat on dealership lots an average of 77 days last month -- two days higher than July.
Edmunds said inventory of 2017 model-year vehicles was "particularly plentiful" on dealer lots last month, even as 2018 models began to arrive. Edmunds estimates that only 8 percent of new vehicles sold in August were 2018 models, while in August 2016, 17 percent of vehicles sold were from the coming new model year.
Major automakers dangled end-of-summer and clearance deals throughout August. Honda, Toyota, Lexus and Chevrolet were among brands that spent heavily to advertise specials last month.
The average new-vehicle incentive rose to $3,856 through the third week of August, a level that would surpass the previous high for the month, $3,645, in 2016, J.D. Power said.
ALG estimates the biggest spenders among major automakers on incentives last month were Nissan ($4,743 average deal per new vehicle), FCA ($4,650) Ford ($4,577), GM ($4,546) and Kia ($4,112). (See chart below.)
Michael Martinez and Vince Bond Jr. contributed to this report.