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Harvey, A Toyota Record, and GM’s Rebound: The Story of August’s Auto Sales

August saw a similar trend in sales to July. Per the course, there were a few winners, while others are still playing catch up as we enter the last half of 2017. However, the most significant story of August is not the sales numbers or the brands that are atop the industry chain, it is Hurricane Harvey. Harvey’s impact on the auto industry is much like that of Katrina in the mid-2000’s, and its upending of August’s sales is impossible to ignore. August sales were approximately 1,522,950, a 2.9 percent drop from the same time last year. Harvey’s devastation across Houston has kept the doors of many dealers closed, car lots of inventory unsold, and manufacturers deciding on next steps to replace their fleets. Harvey has far reaching effects on supply and demand for the rest of 2017. Here are some additional trends to be aware of for August’s sales.

SUVs and Trucks Are Again Carrying The Pack

Without sports-utility vehicles and light trucks, the auto industry would be seeing even more abysmal numbers. The Ford F-Series sold over 77,000 units, The Chevrolet Equinox had over 28,000 units sold, and the Toyota Rav4 experienced over 42,000 units in sales. Larger vehicles are ruling sales, and this does not seem to be a trend that is slowing down. Light duty trucks are outselling smaller cards two to one. So it is still apparent that people prefer their space, and are willing to pay top dollar for roomier vehicles.

The Impact of Hurricane Harvey

The supply and demand over the next few months will rest on the residual effects of Hurricane Harvey. Houston is the ninth largest market for vehicles within the United States, and LMC Automotive, a forecasting firm estimates that ultimately the sale of 20,000 new vehicles will be cut. Also, while precise estimates of this are still being solidified, figures of scrapped cars could range from 200,000 to 1 million once the waters recede. Another fact that manufacturers will have to examine is the amount of money needed to repair the storefronts of dealerships that suffered damages. However, all of the impacts will not reside in the negative. In 2012, following Hurricane Sandy, vehicle sales in New York rose 49 percent, and a Ford U.S. Sales Chief remarked that the company experienced an increase in sales following 2005’s Katrina. Analysts are expecting similar results within the next few months. Citizens will have to replace their vehicles, and therefore dealers can expect a sales uptick in the next few months. According to ABC News, this also means that manufacturers can empty any lagging inventory by sending it to Houston, but this will also bring a decrease in discounted vehicles across the country for consumers.

The Top of the Industry Chain

The light is at the end of the tunnel for one of Detroit’s big three. General Motors saw a 7.5 percent increase in sales from 2016 to 2017. As Houston residents replace their vehicles and trends toward larger vehicles see an increase, General Motors and other Detroit-based dealers may continue to see gains. GMC, Subaru, Toyota, and Volkswagen had increases of 12.4, 4.6, 8.0, and 9.0 respectively. Two highlights from this group are that the Toyota RAV4 set an all-time monthly record with over 42,000 sales, and Subaru has now had 69 consecutive months of growth. It is no surprise that all of these brands have shifted their marketing focus to sport-utility vehicles and crossovers, and will likely continue to do so.

Those Playing Catch-Up

Some of the worst performers this month were Buick, Chrysler, Hyundai, and Smart at -22.5, -32.6, -25.5, and -35.1 respectively. Buick has been plagued with inventory issues since the 2016 LaCrosse, a large sedan, was overproduced in an industry trending toward sport-utility vehicles and crossovers. In 2016, a Buick spokesman cited the large car trend and aggressive discounts of competitors as reasons for the recent decline. This may explain the results we still see from Buick in 2017. Chrysler and Hyundai are also experiencing the same issue. They are both brands that have put their marketing and inventory toward larger sedans in the last two years and are now seeing negative growth as a result. It will be interesting to see if any increasing fuel costs of Harvey will sway Houston and surrounding buyers to shift to smaller vehicles. August could be a preview of what the rest of 2017 holds for the car industry.

 

Table Source: Motor Intelligence, September 1, 2017

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Chanell Turner
Chanell Turner
Chanell Turner is a contributing writer and investigative journalist for CBT News.

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