Sept. 7, 2012 – The pace of vehicle sales in August was the strongest since April 2008, offering further evidence that the vehicle market recovery is gaining momentum.
Research firm AutoData Corp. reported Wednesday that vehicle sales in August jumped from 14.1 million units to 14.5 million units, annualized. NAFCU Staff Economist Curt Long said the increase reflects the release of pent-up demand that has been building throughout the economic downturn. “The average age of vehicles on the road is currently 10.8 years, and many drivers are opting to purchase a new vehicle even as incentives are less plentiful.”
In August, car sales increased from 7.1 million units to 7.4 million units, while sales of light trucks increased from 7 million units to 7.1 million units. “Rising gas prices compelled many households to purchase more fuel-efficient vehicles in August, and that pushed up car sales,” Long observed. “The gain in light-truck sales was likely due to increased construction activity.”
All six of the largest automakers reported year-over-year sales increases. Honda led the way with a 59.5 percent gain, followed by Toyota (45.6 percent), Chrysler (14.1 percent), Ford (12.6 percent), General Motors (10.1 percent) and Nissan (7.6 percent). However, Long pointed out that the baseline for the year-over-year comparisons “is skewed” due to the Japanese tsunami in April 2011, which impacted production overseas and boosted sales for American manufacturers.
The U.S. brand share of the total vehicle market grew from 43.1 percent to 45.3 percent on a monthly basis in August. The share of domestically assembled vehicles increased from 77.5 percent to 79 percent.
Even as the broader economy faces continued headwinds, prospects for further strengthening in the vehicle sales market appear solid, Long said. “Even as consumer confidence has waned, the Conference Board’s measure of households planning to purchase vehicles in the next six months has remained high. Combine that with the fact that there are a lot of older vehicles on the road, and interest rates remain low, and you have a recipe for a solid recovery.”
The economist was quick to add that downside risks still remain and those could “potentially thwart the progress we expect to see over the near term.”
For more, see NAFCU’s Macro Data Flash.