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Luxury Cars, Japanese Brands Gain Big During August’s Sales Surge

Transaction prices top all-time record.

by on Sep.04, 2013

The traditionally strong selling season has proved hotter than expected this summer.

Japanese carmakers succeeded in picking up market share during August’s automotive sales boom, while surging demand for luxury cars, trucks and crossovers helped push up the vehicle prices to record levels across the board.

A sharp upturn in recent months has hit consumers squarely in the pocketbook. According to a report by TrueCar.com, the Average Transaction Price – what consumers pay factoring in both incentives and options – surged 3.2% year-over-year to $31,252.

That hasn’t kept buyers out of showrooms, however, with the industry expected to have garnered sales that, on an annualized basis would have come in at or slightly above 16 million, according to industry analysts.  Most have been raising their forecasts sharply in recent months as showroom traffic continues to defy concerns about the unsteady economy.

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“The market is continuing to pick up steam, our sales momentum is on record pace and we have two major new products hitting the market in the next few weeks,” said Steve Cannon, president and CEO of MBUSA, which saw the Mercedes-Benz brand post a 21% increase for August to stay ahead of BMW.

The luxury segment experienced some of the biggest jumps in August, sales of BMW brand vehicles gaining 35, while highline brands such as Audi, Maserati, Porsche, Jaguar, Land Rover and Lexus all posted sales increases of 20% or better during August as U.S. new car sales appear to have reached a six-year high.

There were a few weak spots, Hyundai managed a meager gain of 8%, well below the industry average – but that reflected the fact that a growing number of makers are now facing shortages of some of their most popular products, in this case including the Hyundai Elantra.

(Labor problems worsen product shortages for Hyundai, Kia. Click Here for the full story.)

Volkswagen actually slipped into negative territory, sales sliding 1.6% even though the maker’s deliveries topped 40,000 units for only the third time in the last 40 years.

Japanese makers had a particularly solid month.  With Subaru and Honda leading the way, major Japanese brands posted double-digit sales increases during August that effectively raised their market share even as General Motors, Ford and Chrysler continued to post healthy sales gains thanks to strong sales of pickup trucks and sport utility vehicles. Subaru sales were up 45%, Honda’s by 29%, Nissan sales increased by 24% and Toyota’s rose by 22.8%.

“August was our best-ever with demand strong across all models. Significant to our success this year is more than half our sales are to people new to Subaru,” said Bill Cyphers, senior vice president of sales, Subaru of America, Inc.

(Even as economy rebounds, Americans curb driving. For more, Click Here.)

Nissan has seen a strong surge in demand in recent months, buoyed by recent price cuts for a number of key products such as the new Rogue, Sentra, Pathfinder and Altima, the latter moving up on but failing to topple the midsize king-of-the-hill Toyota Camry. Nissan recorded its sixth consecutive record month for the division and its best retail month ever, noted sales chief Fred Diaz.

Toyota officials were equally upbeat. “August capped a great summer for new vehicle sales,” says Bill Fay, Toyota division group vice president and general manager, who suggested that, “The auto industry continues to be a bright spot in the economic recovery.”

J.D. Power and Associates and other analysts project total sales for the month will have come in at a 16.1 million Seasonally Adjusted Annual Rate, or SAAR.  The figure would have come in even higher had it not been for shortages of some key products, such as the Hyundai Elantra and Ford’s Fusion sedan and F-Series pickup – the latter model rolling out of showrooms “every 42 seconds, 24/7,” noted Ford sales chief Ken Czubay,

The F-Series saw its 25th consecutive monthly sales gain, with sales now running at a pace not seen since 2006. Pickups, in general, have been the industry’s hot ticket this year, analysts suggesting that indicates a strong upturn in the housing and construction industries. Ford recently added a third shift at a key truck plant to keep up with the surge in demand.

Ford economist Ellen Hughe-Cromwick said new vehicle sales in August benefited from improving economic conditions.  “We have a demand for vehicles because people are getting back to work,” she said.

Nonetheless, Hughe-Cromwick cautioned that, “We just don’t want to get irrationally exuberant at this point.” The industry used the recent recession to slash excess production capacity and, like other makers, Ford is being cautious about adding too much new capacity too quickly lest the current sales surge prove unsustainable.

(Chrysler celebrates 30th year of minivan leadership, though market toughens. Click Here for more.)

Little more than four years out of bankruptcy, Detroit’s other two makers also scored solid gains for August, Chrysler reporting its 41st consecutive monthly increase, while GM was up 15% — its Cadillac brand scoring its best August since 1989 when George H.W. Bush was president and the Berlin Wall was still standing. Overall, GM’s sales were the best since September 2008, when the global financial crisis went into meltdown and the company started preparing for an increasingly likely bankruptcy.

“The second half of 2013 is off to a very solid start for GM and our model-year changeover and new product launches are going smoothly,” said Kurt McNeil, vice president, U.S. sales operations, adding that the maker expects even bigger gains as it rolls out an array of new models such as the new Cadillac CTS and Chevrolet Corvette Stingray.

Several studies noted the high cost of vehicles sold in August – though tracking services TrueCar.com and KBB.com debated whether the figures came to an all-time record. Both, however, agreed that Average Transaction Costs are up from year-ago level, in part due to a steady cutback in incentives by manufacturers who need less of a lure to bring buyers into their showrooms.

Paul A. Eisenstein contributed to this report.

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