US August Auto Sales Seen Down For 10th Consecutive Month

DETROIT, Sept 2, 2008; David Bailey writing for Reuters reported that automakers are expected to post a 10th consecutive month of U.S. sales declines on Wednesday as incentives on slow-selling trucks and SUVs and General Motors Corp's employee pricing promotion failed to ignite demand from struggling consumers in August.

Analysts see automakers posting double-digit declines in U.S. auto sales for August -- adding to the longest monthly losing streak for the industry since the domestic recession of 2001.

U.S. auto sales may have been down anywhere from 14 to 19 percent industrywide in August from a year earlier, according to analysts, but should have been up slightly from the 16-year low reported in July.

August sales are expected to reflect the continued shift toward smaller, more economical passenger cars and away from large pickup trucks and SUVs, as well as some difficulty supplying fuel efficient vehicles customers want.

U.S.-based GM, Ford Motor Co and Chrysler LLC -- which have a much higher percentage of sales linked to the larger vehicles than transplant carmakers -- are expected to have felt the most impact from the continued shift.

Toyota Motor Corp, the No. 2 auto seller in the United States, is also expected to report sales declines. Analysts see Honda Motor Co Ltd's sales ranging from a slight gain to a big decline and Nissan Motor Co Ltd posting sales growth of about 2 percent.

"Light vehicle sales in the U.S. appear to have continued at depressed levels through August, despite the very generous incentive programs that several major manufacturers have launched in recent weeks," Lehman Brothers analyst Brian Johnson said in a note to clients.

Auto sales are a closely watched and early key indicator of consumer demand in the United States for big ticket items, with investors focused on whether the second-quarter economic growth will be sustained through the rest of 2008.

Automakers have pared sales expectations throughout 2008 as the U.S. economy has continued on a sluggish path and high gasoline prices have pressured sales of larger vehicles.

GM President and Chief Operating Officer Fritz Henderson told reporters in India on Tuesday the automaker is not looking toward the rest of 2008 with huge optimism given continuing pressure on the consumer.

August was "another fairly tough month," Henderson told reporters.

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Aiming to boost sagging sales, GM launched employee-level discounts for nearly all of its 2008 model year cars and trucks and some 2009 models in the second half of August.

The U.S. seasonally adjusted annual rate of auto sales is expected to have dropped to about 13 million units in August, up slightly from a 12.6 million rate in July but down sharply from the 16.3 million rate a year earlier.

"We saw a slight improvement in July, but don't expect to see a major recovery for the remainder of the year," said Jesse Toprak, an industry analyst at Edmunds.com.

Toprak said GM's employee discount promotion likely staved off an even greater decline in August but has not been nearly as effective as a similar promotion in 2005.

On a percentage basis, analysts have forecast Chrysler sales declines of about 25 to 35 percent; GM sales declines ranging from about 19.3 to 37 percent; and Ford declines from about 14.4 to 30 percent.

Analysts expect automakers to report some supply constraints on fuel-efficient vehicles including the Toyota Corolla compact and Prius hybrid sedan as well as Honda's Civic and Fit passenger cars.

Additional reporting for Reuters by Soyoung Kim, editing by Gerald E. McCormick