Ford, Hyundai, Kia rack up double-digit gains as market rebounds; Toyota, Honda skid again

U.S. auto sales slid again at Toyota Motor Corp. and American Honda, while Ford Motor Co., Hyundai and Kia deliveries rose by double digits last month compared with August 2021, as the market begins to slowly bounce back and the industry's chronic inventory shortages slowly ease.

U.S. light-vehicle deliveries rose 4.8 percent last month, Ford said Friday, above the range of forecasts for a 3.6 to 4.6 percent gain. The market was helped by an extra selling day and higher fleet shipments, marking the first monthly gain, year over year, since July 2021.

August was the third consecutive month light-vehicle sales totaled 1.13million units, LMC Automotive said. And retail sales remained under 1 million units for the fourth consecutive month in August, according to preliminary data from LMC Automotive.

The seasonally adjusted annualized sales rate tallied 13.2 million in August, LMC Automotive said, within the 13.1 million to 13.3 million range of forecasts from Cox Automotive, J.D. Power, LMC Automotive and S&P Global Mobility. The SAAR, which tallied 13.19 million in August 2021 and 13.5 million in July, has failed to consistently climb above 15 million since July 2021, reflecting weak inventory levels.

“The industry is still struggling with the combination of lean inventories, very expensive vehicles, and higher interest
rates," said Augusto Amorim, senior manager of sales forecasting for the Americas at LMC Automotive. "Stable sales for three months are not a bad sign considering all these negatives factors and suggest that demand remains higher than supply."

August 2021 was the first month when chronic inventory shortages had a significant impact on new-vehicle sales following the start of the pandemic.

Still, while consumer demand is strong, rising interest rates and sticker prices remain market hurdles, prompting analysts to cut their outlook for 2022 industry sales. LMC Automotive on Friday slashed its outlook for 2022 sales to 13.8 million from 14.3 million. S&P Global Mobility last week reduced its forecast for U.S. auto sales in 2022 to 14.1 million, from 14.6 million as recently as July.

Ford reported a 27 percent increase in August volume, with the Ford division up 28 percent and Lincoln advancing 24 percent. The gains were broad across Ford Motor's product lineup, with utility vehicle volume jumping 48 percent, trucks rising 13 percent and cars up 49 percent.

Ford said demand remains strong, with retail orders for 2023 model vehicles totaling more than 76,000 last month, a 41 percent increase compared to 2022 model year vehicle orders from a year earlier. And for the fifth straight month, more than 50 percent of Ford's retail sales came from previously placed orders.

The comapny said it ended August with 259,000 vehicles in dealer stock or in transit, up from 254,000 at the end of July and 215,000 as August 2021 closed.

Toyota Motor, with some of the leanest stockpiles, said volume dropped 9.8 percent last month, with sales down 8.1 percent at the Toyota division and 20 percent at Lexus. It was the 13th-straight monthly decline at Toyota and seventh consecutive drop in Lexus' monthly volume. 

The Toyota brand's top sellers posted mixed results last month: Camry, down 5.7 percent; Corolla, off 20 percent; Highlander, down 24 percent; RAV4, up 9.1 percent; and Tacoma, up 11 percent.

Toyota Motor said it ended August with 132,932 vehicles in U.S. inventory — 16,556 at dealerships and 116,376 at ports or in transit — for a 21-day supply, with truck supplies higher than car stockpiles.

The Toyota division has a 20-day supply of vehicles, while Lexus is sitting on a 26-day supply of cars and light trucks, the company reported Thursday.        

Honda Motor Co. said August sales skidded 38 percent, with deliveries down 36 percent at the Honda division and 47 percent at Acura. Honda brand sales have now dropped 13 straight months, while Acura volumes have dropped 12 consecutive months.

Honda said its days' supply of vehicles remains stuck in the single digits, while a West Coast rail embargo contributed to supply woes during the month.

Hyundai and Kia each ended a stretch of five-straight monthly declines with strong August results.

August volume rose 14 percent at Hyundai and 22 percent at Kia behind strong retail demand for crossovers, EVs and some cars.

"We’re seeing inventory begin to rebound, which resulted in strong sales,” said Randy Parker, CEO of Hyundai Motor America. The company said it ended August with 19,209 cars and lights trucks in U.S. inventory, up from 14,784 at the close of July but off from 39,357 at the end of August 2021. Parker, in an interview Thursday, said Hyundai expects factory output to increase 30 to 35 percent in the second half, helping to further rebuild dealer stockpiles. 

Kia, with the lowest days' supply of vehicles, according to Cox Automotive data, said it set an August record with 66,089 deliveries, signaling that the company's lineup continues to churn at a high rate.

“We are optimistic that production through the end of the year will improve," said Eric Watson, vice president of sales operations for Kia America.

Subaru said volume rose 1.5 percent to 50,126 last month, while Mazda volume declined for the fifth-straight month, falling 6.7 percent to 25,426 cars and light trucks.

Among other luxury brands, Volvo sales tumbled 24 percent, its 12th straight decline, and Genesis deliveries rose 2.6 percent to an August record of 5,102 on continued strong demand for crossovers.

The rest of the auto industry reports quarterly sales.

August marked the 10th consecutive month that retail inventory closed below 900,000 vehicles, J.D. Power and LMC Automotive said. Kia, Toyota, Lexus, Honda, BMW, Mini, Land Rover and Subaru had the lowest available inventory last month, according to Cox Automotive data, while Volvo, Ram, Dodge, Buick, Chrysler and Jeep enjoyed the industry's biggest stockpiles.

A significant portion of new light trucks and cars is still being sold before the vehicles arrive at dealerships, as automakers and dealers promote orders to retain customers. Some 55 percent of vehicles were sold within 10 days of arriving at a dealership in August, J.D. Power and LMC Automotive said, while the average number of days a new vehicle remains in a dealer's possession before being sold was on pace to be 20 days last month — down from 25 days a year earlier.

With inventories tight and demand still strong, the average new-vehicle retail transaction price in August was expected to reach a record high of $46,259, up from $46,173 in July and a 12 percent increase from August 2021, LMC Automotive and J.D. Power said.

S&P Global Mobility warned late last month that increasing economic uncertainty will crimp household demand and that "double-digit increases in new-vehicle prices are likely weighing on consumers' willingness to enter the market."

The average incentive per vehicle was tracking toward $969, a 47 percent decrease from a year earlier, J.D. Power and LMC Automotive said. August was the fourth consecutive month with incentives below $1,000.

Incentive spending per vehicle, expressed as a percentage of the average vehicle sticker price, was trending at 2 percent, down 2.3 percentage points from August 2021. TrueCar estimates August incentives averaged $1,197, down from $2,515 a year earlier but up from $1,100 in July. It is also the second-straight period incentives have increased month to month, TrueCar said.

• There were 26 selling days last month vs. 25 in August 2021.
• Rising sticker prices combined with higher interest rates are driving monthly loan payments to new highs. After breaking the $700 mark for the first time ever in July, the average monthly finance payment in August was on track to reach a record $716, up $78 from August 2021, J.D. Power and LMC Automotive say. That translates to a 12.2 percent increase in monthly payments from a year earlier, well above the 11.5 percent increase in transaction prices.
• The average interest rate for new-vehicle loans is expected to increase 137 basis points from a year ago to 5.51 percent.
• Leasing will account for just 17 percent of retail sales last month, J.D. Power and LMC Automotive estimate. In August 2019, leases accounted for 29 percent of all new-vehicle retail deliveries.
• Fleet shipments are expected to total 156,300 in August, up 26 percent from August 2021 on a selling day adjusted basis, LMC Automotive and J.D. Power project. Fleet volume is expected to account for 14 percent of total light-vehicle sales, up from 11 percent a year earlier.

"August is shaping up to confirm our early predictions that the industry may be turning the corner. We're seeing consecutive month-over-month increases for incentives, while average transaction prices are softening. Inventory is also slowly growing, and sales are improving slightly."

- Zack Krelle, TrueCar analyst