Blistering August Sales Swell Luxury Vehicle Numbers

Frenzied month may mean slower September

by on Sep.03, 2014

Lexus captured the August luxury car sales crown. It's the second month in a row the Japanese brand has done so.

Luxury car sales remained brisk during August as Mercedes-Benz, BMW and Lexus as well as Audi all posted healthy sales increases last month in what has become an increasingly contest sales.

As it did in July, Lexus bested its German rivals for luxury sales leadership by selling 32,809 cars and utility vehicles. Lexus sales increased 10.1%.

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“It was a great market from top to bottom in August,” said Jeff Bracken, Lexus group vice president and general manager. “Lexus had its second straight record-setting month as both passenger cars and luxury utility vehicles posted solid gains.”

Mercedes-Benz reported record-breaking August sales volumes with 27,078 units sold across its passenger car and light truck lineups, a 9.4% gain from the 24,761 vehicles sold the same month last year.

Mercedes enjoyed a strong August, like most other automakers in the U.S. It was outsold by only Lexus among luxury makers.

Stephen Cannon, president and CEO of MBUSA, said, “With the new C-Class rolling onto dealer lots and our first entry into the compact utility segment just weeks away, we’re in the early stages of a product offensive that will take the brand to its highest year on record.”

Sales of BMW increased 11% in August for a total of 27,214 compared to 24,523 vehicles sold in August 2013, which gave it the narrowest of leads over Mercedes-Benz.

Year-to-date, the BMW brand is up 11.6% on sales of 211,005 compared to 188,997 sold in the first eight months of 2013. Year-to-date, Mercedes-Benz sales now total 205,894, up 8.2%. Lexus has sold a total of 198,831 vehicles so far this year.

“August – and Labor Day in particular – not only mean the end of summer, but they’re also the transition to the very important selling season in the final four months of the year and the strong results posted by both new and pre-owned BMW are the best indicator of what we can expect,” said Ludwig Willisch, president and CEO, BMW of North America.

“Topping 200,000 sales in the U.S. in the first eight months of this year is our new benchmark and I’m especially pleased to see the results for our born-electric BMW i3 and we look forward to the sales launch of the new M4 Convertible next month.”

But General Motors’ luxury brand, Cadillac, which is increasingly looking like the principal casualty of GM’s record breaking recalls this year, saw its sales slide by more than 15% last month and barely stayed ahead of struggling Acura in the race for affluent buyers, according to the most recent sales reports.

American Honda Motor Co. reported August 2014 Honda and Acura vehicle sales of 167,038 units, an increase of 0.4% versus August of last year.

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Subaru of America, Inc. reported selling a record 50,246 vehicles, which a 22% increase over August 2013 sales of 41,061. August also marks the best-ever sales month in company history, breaking the previous record set in July. August also was the 33rd consecutive month that Subaru has seen year-over-year growth.

“We have a healthy outlook for industry new vehicle sales volume, although sedans may see pricing pressure,” aid Efraim Levy, Standard & Poors analyst.

Overall, it was a combination of easy credit, rising consumer confidence and strong demand for utility vehicles and trucks that pushed new vehicle sales towards a seasonally adjusted average rate of 17 million unit in August, helping the auto industry maintain the momentum it had built up throughout the summer. While credit may have been available, lenders weren’t handing it out as freely as they have in the past for potential buyers with less-than-stellar credit.

Experian Automotive noted today that the number of loans to subprime and deep subprime buyers dropped in the second quarter and the amount of the loans to those buyers dropped by as much as 2.6%. The move is part of an ongoing trend over the last several quarters. Subprime buyers have credit scores between 619 and 550 and deep subprimes are less than 550.

The August results took most analysts by surprise, as they expected only a slight increase on monthly sales. The aforementioned combination needed a catalyst in order to create the reaction from buyers and they got in the form of aggressive Labor Day promotions.

Eric Lyman, vice president, Editorial & Consulting at TrueCar/ALG, noted that the automakers began their Labor Day sales programs two weeks earlier than normal. When that was combined with five selling weekends, it created a sales inferno.

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“The Labor Day experience was just way beyond everyone’s expectation,” he said. “The consumer has figured out that August is the best month to buy a car and this year it was better than normal.”

However, there may be a price to pay for this kind of irrational exuberance by consumers: a sluggish September. Lyman believes the fifth weekend may have pulled forward some September sales, but he believes industry sales will finish above the 16.4-million unit mark forecast by TrueCar/ALG this summer if nothing dramatic happens to the economy.

Chrysler, Ford, Nissan, Hyundai, Toyota all posted sales gains during August while General Motors and Volkswagen reported their sales dropped last month despite the strong consumer demand for new cars and trucks.

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Chrysler Group sales soared 20% on continued demand for Jeeps and Ram trucks, while Ford rode sales of its Explorer, Fusion and Escape to a small uptick of .4%. Nissan and Toyota enjoyed significant gains during the month as well.

Not only did the makers sell more vehicles in August, they got more money for those vehicles.

“Similar to last month, trucks and full-size SUV/crossovers are driving average transaction price increases, as full-size truck transaction prices alone are up 5.5%,” said Alec Gutierrez, senior analyst for Kelley Blue Book.

“Following several redesigns, full-size SUV/crossover segment sales could have double-digit growth and transaction prices have climbed more than 7% in August. With a host of new models and gas prices trending downward, these will continue to be the hot vehicle segments,” he said.

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