Poor August sales bring bigger profits to carmakers, report says

Article by Christian Andrei, on September 7, 2010

US auto sales fell by 21% in August, its lowest level for the month in almost 30 years. The drop is more dismal because of the comparison with August 2009, when sales had risen steeply due to the cash for clunkers program.

Since inventories are low, automakers didn’t have to offer high incentives to clear dealer lots for the upcoming 2011 models. The Automotive News Data Center said that the August's seasonally adjusted annualized sales rate fell below 11 million units for the first time since February, to 10.8 million. However, most analysts anticipate sales to go back to the low- to mid-11 million range.

IHS Automotive’s fourth-quarter production forecast remained the same at 2.8 million, a 3% increase from the previous year. But the big surprise is related to manufacturer profits, which improved largely even as sales fell to near the industry's lowest levels in three decades.

The domestic carmakers, which lost billions of dollars when US sales came to 16 million or more a year, are now profiting at an annual industry sales rate of about 11 million.

Automakers are able to do this as consumers pay higher transaction prices and may buy more vehicles than they preferred to do a year ago.

Sales of high-margin SUVs, crossovers and pickups are growing quicker than car sales (especially small cars). Furthermore, automakers’ new habits of cutting overhead and curbing overproduction have resulted to tighter inventories, smaller incentives and higher profit margins.

Jeff Schuster, executive director of global forecasting at J.D. Power and Associates, describes it as “almost like a symphony coming together,” which enables the industry to be profitable even with lower volumes. [via autonews - sub. required]

Topics: sales, united states

If you liked the article, share on:

Comments

Login or Create new account to add a comment!

Recommended

The Shooting Brake is probably the least rendered body shape in the automotive world. But it’s also the most sought after design among car nuts for its unique, old-fashioned charm....
by - January 23, 2017
Perhaps to make the upcoming Valentine’s day more special, Tinder dating app and Ford UK have cooked up a special blind date for all the single blokes and chicks in...
by - January 23, 2017
2017 is undeniably a very busy year for BMW. After introducing the new 4-Series, the German automaker has just released several new updates. In relation to this, BMW is also...
by - January 23, 2017
The renowned Shelby Super Snake is now 50 years old! As we greet the Super Snake a “happy birthday” or a “happy anniversary,” Shelby itself is celebrating half a century...
by - January 23, 2017
Nearly a year after the Subaru XV Concept was unveiled at the 2016 Geneva Motor Show in Switzerland, this SUV study is making its North American debut at the 2017...
by - January 23, 2017
Facebook

Youtube Channel

Tip Us
Do you have a tip for us?
Did you film an important event?
Contact us
Newsletter
Subscribe to our newsletter!
Subscribe
Galleries