Soaring August U.S. Sales Lower Inventory Healthy 4%

Helped by the Labor Day weekend, August’s light-vehicle sales volume of 1.579 million was the best for the month since 2003, and second to May’s 1.601 million for any month since July 2005.

Supported by an improving economy, the pump undoubtedly was primed with marketing aimed at lopping off excess older model-year inventory in advance of the newer ‘15 models, most of which will be in full availability in October.

That there was some targeted discounting bears out in August’s 103-month high 17.45 million seasonally adjusted annual rate, a sharp upward movement from the 16.6 million the industry tracked at over the previous three months. Also, the year-to-date SAAR increased 300,000 units from July to August to 16.6 million, a big month-to-month rise eight months into the year.

Significant is that the paring of inventory industrywide points to a slowdown in sales in September and October, probably to something more in line with the 16.3 million-unit SAAR the market tracked at prior to August.

However, continued success of some year long hot-selling products and new ’15 models hitting the market early also contributed to August’s surge.

The huge sales volumes served to bring inventory levels more in line with long-term demand as LV stocks declined 4.0% from July to 3.20 million units, good for a 56 days’ supply following a seasonally high 61 days in July. August’s days’ supply is in line with historical seasonal trends for the month and nearly even with year-ago’s 55. August’s inventory total is 9.5% above year-ago’s 2.92 million units, and highest for the month since 2004.

Inventory of domestically made vehicles declined 5.8% from July, totaling 2.63 million units, 13.8% above year-ago. Domestic days’ supply ended the month at 59, down from prior-month’s 64, but above year-ago’s 56.

Inventory of domestic vehicles could have been cut more but August sales at the two biggest automakers, General Motors and Ford, increased only marginally from year-ago compared with the rest of the industry.

GM’s inventory declined just 1.4% from July, an indication it will have stronger results in September compared to the industry. Even with sluggish sales, Ford’s inventory dropped 4.8% from July, largely in line with the industry trend. Part of Ford’s lukewarm sales results are because it’s intentionally maintaining higher inventory of its biggest-selling vehicle, the F-150 pickup, while the two plants building it undergo extensive retooling for a re-engineered model over the rest of the year.

Overall sales of large pickups increased a strong 11.4% in August from year-ago with share rising to 12.0% from 11.7% in like-2013, and likely would have been stronger if Ford was marketing the vehicles more competitively instead of conducting inventory control. The Ford F-Series was the only one of the six models offered in that segment to record a decline. Less Ford, large-pickup sales increased 19.7%.

Inventory of large pickups ended August 32.4% above like-2013, led by F-Series with volume up 44.4%, although dealer stocks for all models rose by double digits.

Fiat-Chrysler, which posted a whopping 24% sales increase in August, cut its inventory 6.1% from July, including double-digit drops for three of its best-sellers, the Chrysler Town & Country, Jeep Cherokee – which outsold Grand Cherokee for the first time in August – and the Ram pickup.

The Cherokee sparked a 54.2% increase in total Jeep sales, and, likely because the brand now has a higher mix of CUVs vs. the more truck-like SUVs, its share increased in August from July, opposite its typical pattern that normally parallels seasonal trends in the SUV segment. Less Cherokee, Jeep sales still climbed 12.3% from year-ago in August.

Nissan, with an 8.6% market share through August, and heading for its best-ever U.S. penetration in a calendar year, is girded to achieve that new high. Nissan sales increased 15.7% in August, and its inventory still ended the month 10.1% above year-ago, including a 34.1% increase in its domestic stock.

Sales surged for Nissan-brand cars and the Rogue and Murano CUVs. The Murano could be undergoing a sell-off ahead of a redesigned version hitting dealer lots in the fall. Conversely, Nissan’s Infiniti brand posted a 20.0% decline in August sales from year-ago though not enough to dampen the overall results for the automaker.

After falling for the first time in 15 months in July, sales of import vehicles increased only 1.6% from same-month 2013 in August. Despite the tepid results, import inventory dropped 3.8% from July and ended August 6.6% below year-ago with 568,603 units. August import days’ supply fell to 46 from 49 the prior month and 50 a year ago.

One area where automakers likely concentrated price discounting efforts was in the Lower Middle Car segment.

Sales in the highly competitive segment experienced a 12.9% year-over-year increase in August after posting generally flat results since the beginning of 2013 while the industry has been recording mostly solid gains. Lower Middle Cars represent one of the highest-volume segments, but flagging demand in the segment as buyer preferences shifted to CUVs has created an inventory overflow.

The Chevrolet Malibu, Ford Fusion, Honda Accord, Kia Optima and Nissan Altima all posted results in August far better than their year-to-date comparisons. But making the segment even more contested are redesigned versions of the Chrysler 200, Hyundai Sonata and Subaru Legacy that recently hit the market, and each posted hefty sales gains over year-ago in August.

Despite the sales burst, inventory in the segment remains 15.0% above year-ago, indicating there will be some volume-lifting marketing moves during the remainder of the year.

Toyota, the No.3 automaker in the U.S. market based on year-to-date sales – it outsold No.2 Ford in August – skimmed its inventory levels 7.1% from July to August. Toyota’s sales increased 10.2% over year-ago in August with major gains from the Toyota 4Runner, Avalon, RAV4 and several Lexus models.

Lack of supply limited RAV4 sales earlier in the year though it was posting strong gains. But with inventory 62% above same-period 2013 heading into August, RAV4 sales spiked upward 57%. Portending another huge month is that inventory for the CUV ended August a robust 54% above year-ago.

However, a small amount of the RAV4’s success could have come from lean dealer stocks of the robust-selling Highlander CUV, which recorded its first downturn in 12 months in August. Highlander inventory entered August 65% below year-ago and ended the month down 61%.

Toyota’s overall Aug. 31 inventory was 5.9% below year-ago.

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