August was another very good month for car dealers. About 1.285 million cars and light trucks were sold, as Reuters reports. At an annualized rate of 14.52 million, those sales were better than expected. Through the first eight months of 2012, sales are running at a pace nearly 12 percent higher than 2011’s selling rate.
The rising sales are a sign of rising confidence—of both consumers and lenders. Cars are big-ticket purchases—$20,000, $25,000, $30,000. Most must be financed, either with car loans or leases. Without the twin engines of available credit and consumers’ willingness to assume financial obligations, two components that disappeared four years ago this month and stayed missing for more than two years, there could be no recovery in auto sales.
Chrysler continues its impressive comeback. As we’ve written, the infusion of Italian management and marketing flair brought by the merger with Fiat seems to be working. Sales of 148,472 units were up a solid 14 percent from August 2011. But for a company on the verge of liquidation, this is good news. The core pickups and sedans did well. But the (still small) sales of Fiat models grew sharply, up 34 percent from August 2011. And the new Dodge Dart, the clunky classic reimagined as a high-mileage coupe, sold 3,045 units.
The bailout of General Motors has been less successful than the Chrysler rescue. GM still owes a lot of money to taxpayers, and its stock has been suffering. The only way for GM to return the entire "investment" is sustained, profitable sales growth, at home and abroad. In August, the U.S. division upheld its end of the bargain. GM’s overall sales rose 10 percent in August from last year, to 240,520. Sales of smaller passenger cars were particularly strong, up 25 percent. The Chevrolet Volt, the much-maligned electric-gasoline car, set a monthly record with 2,831 units. Meanwhile, Ford, whose unassisted turnaround was one of the most impressive feats of modern-day corporate engineering, turned in another solid month. Sales came in at about 197,000, up 13 percent from August 2011.
Ford’s growth enabled it to hang on to its second-place position in the U.S. market. In 2011, Honda and Toyota were laid low by the tsunami, which made it impossible for them to produce new vehicles or to export completed cars. But swift reconstruction of the supply chain and greater investment in U.S. production capacity have allowed the Japanese car companies to catch up. Toyota’s sales rose rose 40 percent. It sold 188,520 cars. Across the board it was a big month from the high end (Lexus) to the low (sales of Scion more than doubled from August 2011). Toyota sold 28,960 hybrids more than double the number of hybrids it sold in August 2011. Hybrids came to more than 15 percent of the company’s sales. Not bad for a niche technology. Honda’s sales, at more than 131,000, were up nearly 60 percent from August 2011.
The other foreign car companies had big gains as well: Volkswagen, up 62.5 percent; Kia, up 21 percent. And so on. Increasingly it is meaningless to talk of a division between the Big Three domestic automakers and foreign automakers—and not just because Chrysler is owned by Fiat. Every major foreign automaker has established significant production capacity in the U.S.—mostly in Southern states. And so the rising sales of foreign nameplates increasingly leads to more production and jobs in the U.S.
All in all, August was a very solid month for car sales.
It’s natural for people to wonder how car sales can keep growing at this pace when the employment market remains weak and consumer confidence remains low. The answer is that the consumer is playing catch-up, too. In 2008 and 2009, car purchases didn’t just decline; they fell off a cliff. Buyers essentially went on strike for two years. And that meant a lot of the normal replacement of cars didn’t take place. Americans aren’t very good at delayed gratification. And now, as Jim Henry notes at Forbes, the average age of a car on American roads is 11 years. With each passing week, more people return to work and gain the confidence to buy, more people are able to access credit or amass a down payment, and more people have to buy a car because the aged jalopy they’ve been driving finally conks out.