August Car Sales: An Anomaly And A Short One (F)(TM)HMC)

August light vehicle sales in the US have to be good. The “clunkers” program produced almost 700,000 purchases. The industry might as well enjoy it while its lasts. September and the rest of the year will be awful.

Edmunds predicts that the 1.17 million cars will be sold this month, which is up 18% from last month and down “only” 6% from last year. Drops of 30% have been the norm in 2009.

The annualized sales rate hit 19 million in late July, but is only half of that now, the car research company says.

Ford (F) sales are expected to be up a breathtaking 26% from August of last year. Ford continues a comeback which is both remarkable and improbable. There was one time last year when the company was considered much worse off than GM. Ford mortgaged itself to get enough cash to weather the recession and the extreme gamble appears to have worked. Ford’s stock is up almost 250% this year and trades near $8.

The government bailouts of GM and Chrysler are still off to a bad start. Edmunds say that Chrysler sales will be down 19% this month compared with  a year ago. The figure will be worse for GM–25%

The “big three” Japanese companies will do relatively well. Sales for Toyota (TM) and Honda (HMC) will be off about 3% and down 15% at Nissan.

The unusual rise of Hyundai will continue as its sales are projected to move up 69%. The firm’s high-value, low-cost cars and its programs to pay for the vehicles of some customers who lose jobs have kept the Korean company on a sales trend that remains the envy of the industry.

This Labor Day will be a depressing one for the car companies this year. The effect of the “clunkers” program will be over and the industry will face four very hard months of what are likely to be extremely poor sales, even with new 2010 models coming out. Edmunds points out “Current purchase intent is down 50 percent from the Cash for Clunkers peak, and down 11 percent from the June average,” noted Senior Analyst David Tompkins, PhD. “Day by day, intent is slipping: Sunday activity was down 21% from Saturday, then Tuesday activity was down 16 percent from Monday.”

Put another way, without the government’s incentive, the domestic auto industry has not recovered at all.

Douglas A. McIntyre