U.S. Auto Sales Dive in August

DETROIT -- Auto sales, once a bright spot in the economic recovery, grew fainter last month.
General Motors Co.'s August sales fell 7 percent from July, and an even sharper 25 percent from August of 2009, when sales were boosted by the government's Cash for Clunkers rebates. Ford saw sales slip 5 percent from July. Subaru, whose strong lineup of smaller cars benefited from clunkers last year, also suffered.

Buyers who are nervous about the economy's health stayed away from showrooms, a worrisome sign since August is typically a strong month. Total industry sales could fall below 1 million new vehicles once automaker finish reporting sales on Wednesday, making it the worst August in 27 years.

"There hasn't been enough horsepower behind the recovery to motivate consumers to regain their confidence and purchase vehicles at a higher rate," says Jeff Schuster, executive director of global forecasting for J.D. Power and Associates.

Car buyers are also struggling to find bargains.

Most car companies are making money at lower sales levels because they've cut production. They no longer need to offer cars at below break-even prices just to move them off lots.

Ford is paying close attention to shifting demand. It will slow production slightly in the fourth quarter because of weaker buying. The Dearborn, Mich.-based company will make 570,000 cars and trucks, down from 574,000 in 2009.

"The Ford plan is to match capacity with the real demand, and we continue to monitor the key economic indicators as we make adjustments," said Ken Czubay, Ford vice president for sales and marketing.

GM's four remaining brands-- Chevrolet, Buick, GMC and Cadillac -- dropped 11 percent versus August of last year, hurt by falling sales at Chevy. Sales at the company's largest brand slipped because of the tough comparison with August of last year. That's when buyers snapped up many of Chevy's small cars, like the Cobalt and Aveo, under the clunkers program.

The clunkers comparison also hurt small-car specialists like Subaru, where sales fell 22 percent in August. Subaru was unable to match big sales last year of its smaller Impreza and the Legacy models. Sales fell 7.2 percent from July.

Small cars sold well last August because of the $2.8 billion clunkers program, which ran from July 27 to Aug. 25. It gave government rebates to people who bought new vehicles with better gas mileage than their old vehicles. Buyers got either $3,500 or $4,500, depending on how much the mileage was increasing. All trade-ins had to get 18 mpg or less. Nearly 700,000 new vehicles were bought under clunkers.

At GM, Buick sales rose 66 percent over August of last year, while Cadillac sales jumped 83 percent, led by the new SRX crossover. GM said Buick is the fastest-growing brand in the industry. Its increase was driven by the LaCrosse midsize luxury car, which saw sales almost double.

GM's sales are up 5 percent so far this year as it prepares for an initial public offering of its stock, which could happen as early as October. Wednesday was also Daniel Akerson's first day as GM's new CEO, taking over from Ed Whitacre.

"We know it's going to be a modest recovery, it's going to be bumpy," said Don Johnson, GM's vice president of U.S. sales. "What we don't want to do is get back to putting incentives on the vehicles to keep the plants running."