Automakers turned in their best August since before the 2007-09 recession, with U.S. monthly auto sales rising 20 percent from a year ago as consumers with aging vehicles showed more confidence in buying big-ticket items on easier credit terms.
Big sales gains were achieved by Japan's Toyota Motor Corp and Honda Motor Co, which continued to recover after last year's earthquake and tsunami.
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All three Detroit automakers increased August sales more than analysts had expected.
Total sales for the month were 1,285,202 vehicles, according to Autodata Corp, the highest monthly sales figure for any August since 2007, when 1.47 million autos were sold in the United States.
"The reason for the improvement is that consumers are feeling better about making big-ticket item purchases," said Jesse Toprak, autos analyst with TrueCar.com.
He also said that new models from Detroit and foreign automakers gave consumers "the best selection ever."
The auto sales pace last month was the latest sign suggesting consumer spending fared better early in the third quarter after weak consumption held back economic growth to a 1.7 percent annual pace from April through June.
"The weaker consumer spending that we saw in the second quarter was solely related to slower car sales. So the pickup in car sales removes this weakness and it's a good sign and bodes well for consumer spending in the summer," said Harm Bandholz, chief U.S. economist at UniCredit Research.
"The fact that Americans continue to buy cars is in line with our view that the fundamentals for faster consumer spending remain in place."
Consumer spending, which accounts for about 70 percent of U.S. economic activity, also rose at a 1.7 percent pace in the second quarter.
TOYOTA, HONDA SOAR
Toyota showed a sales increase of 46 percent, and Honda's sales rose 59.5 percent.
General Motors Co <GM.N> posted a 10 percent jump, as higher gasoline prices spurred sales of compact cars including GM's Cruze. Average U.S. gasoline prices rose 21 cents a gallon in the past month.
"Higher gas prices in August will lead to unseasonably strong small car performance across the industry," said Edmunds.com analyst Jessica Caldwell.
On the seasonally adjusted annualized rate followed by the auto industry, August U.S. sales were 14.52 million vehicles, slightly more than the 14.5 million annualized rate for February of this year.
Analysts polled by Reuters forecast an annualized sales rate of 14.2 million light vehicles.
So far this year, the U.S. auto sales rate has been 14.3 million on an annualized basis, GM and Ford said. Those figures do not include medium and heavy trucks. That compares with 12.8
GM's sales gain of 10 percent last month surpassed expectations from five analysts of a gain between 2 and 6.4 percent.
GM is No. 1 in the U.S. auto market by sales, followed by Ford, Toyota and Chrysler.
Toyota's August sales of 188,520 represented a 46 percent gain over last August, when sales were greatly pressured by a lack of inventory caused by the March 2011 earthquake and tsunami in Japan.
Honda's sales rose 59.5 percent to 131,321 vehicles, led by an 89 percent rise in sales of its top model, the Accord.
Beau Boeckmann, vice president of Galpin Ford in Southern California, said sales at his dealership are up in part because consumers are finding it easier to obtain credit. Galpin is the largest Ford dealership in the world as measured in sales volume.
"There's been an overall opening up of credit to consumers," Boeckmann told Reuters on Tuesday. "A couple of years ago when you were talking with the banks, they tried to find a way to not buy the deal. There's been a big attitude shift."
GM said sales rose to 240,520 vehicles. Ford's U.S. August sales rose 13 percent to 197,249 vehicles, and Chrysler Group LLC posted a 14 percent rise in August.
Chrysler sales were 148,472 vehicles, which the company said showed its best performance for August since 2007. Chrysler is managed and majority-owned by Italy's Fiat SpA <FIA.MI>.
GM shares ended 0.2 percent lower at $21.31 on Tuesday, and Ford shares were up 0.7 percent at $9.41. The broad S&P 500 Index <.INX> dipped 0.1 percent on the day.
VOLKSWAGEN, HYUNDAI, NISSAN
Volkswagen AG <VOWG_p.DE> turned in its best August U.S. sales performance since 1973, said Carsten Krebs, head of communications for Volkswagen Group of America. The carmaker's sales rose 62.5 percent to 41,011 vehicles last month.
Overall, Volkswagen's U.S. sales rose 48 percent, including sales of luxury brands Audi and Porsche. Audi's sales rose 13 percent to 11,527 vehicles.
Hyundai Motor Co's <005380.KS> U.S. sales rose only 4 percent in August, to 61,099 vehicles, as the South Korean automaker was limited by constraints on its supply. Its corporate sibling, Kia Motors Corp <000270.KS>, reported its 24th straight month of record sales, up 21.5 percent at 50,028 vehicles.
Caldwell of Edmunds.com pointed out that 17 percent of Kia's new-car customers are financed at an interest rate of 10 percent, indicating that the brand is appealing to consumers with subprime credit.
John Krafcik, chief executive of Hyundai Motor America, said via Twitter that the company will add a third shift to its Alabama plant in September which "will help us better meet demand."
Limited supply of Nissan Motor Co's <7201.T> top-selling Altima midsize sedan helped cut in to that automaker's monthly sales, which rose by a less-than-expected 7.6 percent.
Nissan began selling the redesigned Altima in July, and August sales of that model were up 12.5 percent from a year ago. Still, "several thousand" Altima sales were lost due to lack of inventory by some U.S. dealers, said head of the Nissan brand in North America, Al Castignetti.
LEXUS TOPS LUXURY
Toyota's Lexus was the August sales leader among luxury brands, at 24,237 vehicles, beating Daimler AG's <DAIGn.DE> Mercedes-Benz at 22,686 and BMW AG's <BMWG.DE> BMW brand at 16,835.
Lexus was No. 1 in the U.S. luxury market for 11 straight years until last year, when its sales dropped in large part due to the Japanese earthquake. BMW was No. 1 last year and Mercedes-Benz second.
For the year so far, Mercedes-Benz is the leading luxury brand at 182,098 in sales followed by BMW at 164,636 and Lexus at 150,604.
Rising gasoline prices were a factor in consumers' choice of vehicles in August, said Ken Czubay, Ford vice president of U.S. marketing.
"As fuel prices rose again during August, we saw growing numbers of people gravitate toward our fuel-efficient vehicles," said Czubay.
Still, sales of its Fiesta small car fell 28 percent in August. Meanwhile, Focus compact car sales rose 31.5 percent.
Ford reported record sales for the Escape crossover and Fusion sedan, and said the F-Series pickup had its best sales month all year. Ford brand sales were up 13.1 percent, while Lincoln brand sales rose 1.7 percent.
Chrysler said sales of its Dodge Dart compact sedan were 3,045 in August, as it rolled out the car to more U.S. dealerships.