Hurricane Charley, high gas prices and a soft economy battered the auto industry last month, hurting sales and leading the nation's two biggest car makers to say they will cut back production for the end of the year.
General Motors Corp. said its August sales dropped nearly 14 percent compared with the same month last year, and Ford Motor Co. sales were down 13 percent -- both despite increasing incentives and discounts to consumers.
Toyota and Honda, two of Detroit's most powerful overseas rivals, also saw sales weaken in August. Toyota sales fell 10 percent compared with the same month last year, and Honda's fell 14 percent.
The decline is part of a broader economic slowdown, said George Pipas, head of sales analysis at Ford. "I think the economy has taken a brief pause -- or what we believe to be a brief pause -- and that seems to be borne out with the data on household income and spending, and is also seen in the weak jobs report," Pipas said.
The Labor Day buying period spilled over into August last year to help create a record-setting month for many manufacturers. This year's August statistics do not include the holiday.
Nonetheless, not all automakers suffered last month. Nissan, BMW and Volvo logged healthy increases, and the Chrysler Group of DaimlerChrysler posted a relatively mild decline of 6 percent.
"There's clearly less demand for the cars of the traditional domestic manufacturers, and August just reinforces that," said George Hoffer, an economics professor at Virginia Commonwealth University. "If you think things were bad for the Big Three in August with the incentives, what would they have been without the incentives?"
Several automakers pointed out that this August had two fewer sales days than August 2003; adjusting for that difference would cut General Motors' decline to 7 percent, and boost the Chrysler Group to a sales increase of 2 percent. But Ford's Pipas said the adjusted numbers do not track with what many car dealers experienced in August. "I don't think it feels like a 5 or 6 percent decline to anybody," he said.
GM, the world's biggest automaker, saw unadjusted truck sales drop nearly 17 percent compared with the same month last year while sales of passenger cars fell 9 percent. "Comparisons to our record sales of last year are tough. Still, our sales last month fell somewhat short of our expectations," John Smith, GM's vice president for North American vehicle sales, said in a news release.
Ford suffered more on the car side, with sales plummeting 26 percent as the company prepares to introduce new models later this year. Truck sales fell only 6.5 percent, buoyed by the continued strong performance of the redesigned F-series pickup, which saw sales rise 15 percent over last August's figures.
The Chrysler Group saw a 16 percent increase in car sales for the month, thanks to strong performance from new models such as the Chrysler 300C sedan and the Dodge Magnum wagon, while truck sales dropped 11 percent from a year ago.
The industry is uncertain about whether the slump will continue later into the year, Pipas said, leading Ford and GM to announce production cutbacks.
Ford said it will build 830,000 cars and trucks in the final three months of the year, down from 900,000 in the same period last year. GM projected that it will build 1.29 million vehicles in North America during that period, a 6.8 percent decline from 1.385 million during the last three months of last year.
"Whether this is a pause [in the economy] or something we've got to be concerned about creates uncertainty about how the rest of the year is going to unfold," Pipas said.