Ford, GM report big drop in sales in August

updated 8:32 p.m. ET Sept. 3, 2008

DETROIT - Nearly every major automaker saw its U.S. sales drop in August, but many are seeing signs that the worst slump in recent history may have bottomed out.

Most upbeat were executives from General Motors Corp., which posted a 20.3 percent sales decline from a year ago but a 31 percent improvement over July’s totals.

Much of the gain came from offering all buyers employee discounts on many models, but Mark LaNeve, GM’s vice president of North American sales, said there’s hope that June and July were the trough for U.S. sales.

“We are very encouraged by what we saw in August. It gives us reason to think that we are starting to pull our way out of this,” he said Wednesday in a conference call with reporters and industry analysts.

Overall, U.S. sales fell 15.5 percent compared with August of last year but rose 10 percent from July’s dismal figures, according to Autodata Corp. The seasonally adjusted annual sales rate for August was 13.7 million, up from 12.5 million in July, the worst month in 16 years.

Chrysler LLC said its U.S. sales fell more than 34 percent last month, while Ford Motor Co. reported a 26.5 percent decline. Toyota Motor Corp.’s sales dipped 9.4 percent, and Honda Motor Co. saw a 7.3 percent slide.

Nissan Motor Co. was the only major automaker to report an increase over August 2007: Its sales climbed 13.6 percent.

But the increase over July buoyed most automakers, with sales executives saying that lower fuel prices were starting to ease consumers’ minds. They also reported the market shifting a little bit back toward trucks and sport utility vehicles, driven by incentives and lower gas prices.

Automakers said consumer sentiment was improving, housing price declines and manufacturing production are stabilizing, and exports continue to be strong.

“Some bright spots are emerging,” said Irv Miller, group vice president for communications with Toyota, whose sales improved 7.1 percent from July to August.

Officials at GM and other automakers tempered their remarks by saying that they’ll face challenging conditions for the rest of this year and even into 2009, with the housing slump projected to continue and tight credit and leasing combining to knock buyers out of the market.

George Pipas, Ford’s top sales analyst, cautioned that higher incentives industrywide helped push August sales.

“I think there are some positives,” Pipas said. “But the underlying economic conditions and the credit situation, which has given rise to this summer’s low level of sales, still persist. So I think we still have to be careful about popping the champagne cork after a month whose sales were inflated by incentives.”

Fueled by the employee discounts for everyone, which GM extended Wednesday until Sept. 30, the Detroit automaker posted its best sales month of the year in August.

LaNeve said he didn’t think there would be a huge payback for the discounts, which amount to around 10 percent off invoice prices but vary by model. He said the discounts may cost GM 4,000 to 5,000 sales during the next four months or so, but that could be erased by a market uptick.

“The market’s been operating at such a depressed level that I think with any improvement in the market, we don’t have any payback at all,” LaNeve said.

GM’s incentive spending per vehicle, he said, was flat with July but up $700 over August 2007.

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