Auto Analysts Predict Slower Aug. Sales

Auto industry analysts predict a slowdown in vehicle sales in August, a trend due less to high gas prices than to a summer of heavily publicized discounts that thinned dealer lots and satiated consumers.

Analysts are predicting a seasonally adjusted sales rate of around 16.9 million vehicles in August, down from a near-record 20.8 million vehicles in July. The rate indicates what sales would be for the full year if they remained at the same pace for all 12 months. Full-year sales for 2004 were about 17 million.

General Motors Corp. (GM)is likely to report the sharpest decline when automakers release sales figures Thursday. GM was the first to let all customers pay employee prices in June and recently extended the deal through Sept. 30.

GM's sales climbed 41 percent in June and 19 percent in July, a phenomenal pace that cleared out 2005 models. By the end of July, GM dealers' truck inventories were the lowest they'd been in a non-strike month for 10 years, Burnham Securities analyst David Healy said. Healy said the company was bound for see some effect in August.

"The employee discounts enabled GM to clean out huge carry-over inventories of 2005 models effectively, but at the cost of pulling August-October sales forward into June and July," Healy said in a recent note to investors.

Chris Ceraso, an analyst with Credit Suisse First Boston, expects GM's sales to fall 7 percent to 9 percent this month compared to August 2004. In a research note, Ceraso said GM will likely grab a 25 percent share of the U.S. market in August, compared to 28 percent last year.

Other automakers will fare better. Merrill Lynch analyst John Casesa said Ford Motor Co. (F) continues to draw customers with its employee-discount program, which began in July. In a note to investors, Casesa predicted Ford's sales will be up 5 percent in August, thanks to a fatter inventory than GM. But Ford also is seeing some repercussions after July, when its sales rose 32 percent.

Ford spokeswoman Sara Tatchio said Monday that the company hasn't yet decided whether it will extend the discount beyond Sept. 6, when it is scheduled to end.

Analysts predicted DaimlerChrysler AG's Chrysler Group (DCX) will see a small increase in August after matching GM's discount in July. Chrysler has said it will continue to offer employee pricing on some 2005 vehicles indefinitely.

After losing market share to the Big Three throughout the summer, several foreign automakers that didn't offer employee discounts — including Nissan Motor Co. (search) , Toyota Motor Corp. (search) and Honda Motor Co. (search) — should regain some share in August as their sales continue to rise. Toyota is seeing especially strong demand for its Avalon sedan, its youth-oriented Scion brand and its hybrid Prius, Casesa said. Prius sales were up 92 percent in July.

But buyers weren't necessarily attracted to fuel-efficient vehicles this summer, despite rising gas prices. Ford's F-series trucks saw record sales in July, and Healy predicted sales of gas-guzzling sport utility vehicles and pickups will be up 7 percent in August while sales of cars will fall 9 percent from a year ago.

"Oversimplifying only slightly, if it got wretched gas mileage, it sold out the walls, and it if was fuel-efficient, it's still sitting on the showroom floor," Healy said.

GM shares rose 4 cents to $34.18 on the New York Stock Exchange. Ford shares rose 3 cents to $9.80, and DaimlerChrysler's U.S. shares gained 19 cents to $51.66.