The U.S. auto industry saw sales of new cars and light trucks shoot up 17 percent in August as the industry posted its best month since zero-percent financing supercharged sales last fall.
The Big Three automakers combined had a 20 percent increase in sales from a year earlier.
Sales at General Motors were up 22 percent, to 489,471 vehicles. Ford, including its European luxury brands, was up 12 percent, to an August record of 364,776, and Chrysler gained 28 percent from a weak August 2001, to 210,855.
Late summer traditionally is a slow period for the auto industry, but rampant discounting pushed it to a record for the month at 1.7 million units sold. August is this year’s best month and came close to October 2001, the best month ever at 1.73 million units sold.
So far this year, industry sales have risen to 11.66 million units, 1 percent more than last year’s pace through August. In 2001, 17.2 million vehicles were sold, the industry’s second-best year in history.
Paul Ballew, GM’s market analyst, said generous incentives such as zero percent were “just the price of admission” to compete in the auto market, and he signaled that GM does not plan to ease up.
“We’re going to put our foot on the accelerator and continue to be aggressive in the marketplace,” he said. “We’re playing to win, not to draw.”
GM, which has been winning market share with aggressive incentives and hot-selling trucks, said Wednesday that it expects third-quarter earnings of slightly more than $1 per share, up from its previous estimate of 90 cents per share.
GM raised its earnings target for the year to $6.50 per share, from $6. Both estimates exclude losses from Hughes Electronics and special charges.
GM plans to produce 1.39 million vehicles in the fourth quarter, 7 percent more than last year, to replenish dealer inventories depleted by robust sales the last two months. GM dealers ended August with 800,000 vehicles in stock, 200,000 less than a year earlier.
GM, which started zero percent last fall, Wednesday announced interest-free loans for three years on most 2003 models. Interest rates are 2.9 percent to 3.9 percent on longer loans, and rebates of $1,000 to $2,000 are available in lieu of discount financing. The program excludes the Saturn, Saab and Hummer brands.
GM had offered zero percent for up to five years on some 2002 models in a program that ended Tuesday.
Chrysler, which last month announced interest rates of 2.9 percent to 5.9 percent on several 2003 models, said it would match GM. Ford, however, said it would not.
“We still have a generous selection of ’02 models. Our emphasis in the next few weeks is on clearing out the ’02s,” said George Pipas, Ford’s sales analyst.
Ford is offering zero percent for up to five years on some 2002 models through Sept. 30.
Pipas estimated that Ford, Lincoln and Mercury dealers had 490,000 unsold 2002 models in inventory. GM, by contrast, said its inventory of 2002s was 300,000 vehicles at the end of August.
Ballew doubts the industry can maintain this pace, but he predicted the year will end up at around 16.6 million units sold, the fourth best in history.
“We expect an easing, not a collapse,” Ballew said of the next four months. He warned that depleted inventories could hamper GM’s sales the rest of this year if shoppers cannot find the vehicles they want.
GM’s sales for the year are up 4 percent and its market share has grown nearly a point, to 28.7 percent. Ford’s share has dropped nearly 2 points, to 21.3 percent.
Booming truck sales account for all of GM’s increase, and GM sold a record 132,826 SUVs last month. Ford sold 51,021 Explorers, which it touted as the best month for an SUV model. Jeep sold 51,603 sport-utilities, a monthly record for the brand.
Sales were up 24 percent at Nissan and 17 percent each at Toyota, Honda and Hyundai.
