U.S. auto sales may hit 28-uear low as discounts flop

U.S. auto sales in August probably were the slowest for the month in 28 years as model-year closeout deals failed to entice consumers concerned the economy is worsening and they may lose their jobs.

Industrywide deliveries, to be released tomorrow, may have reached an annualized rate of 11.6 million vehicles this month, the average of eight analysts’ estimates compiled by Bloomberg. That would be the slowest August since 1982, according to researcher Ward’s AutoInfoBank. The rate would be 18 percent below last year’s 14.2 million pace, when the U.S. government’s “cash for clunkers” incentive program boosted sales.

“Home sales are way down, the stock market is way down, the unemployment report is very disappointing and consumer confidence is sputtering,” Jesse Toprak, vice president of industry trends at TrueCar.com, said in an interview. “People just don’t want to make big-ticket purchases because they’re uncertain about their jobs and the value of their homes.”

While automakers increased discounts by 1 percent from July to an average of $2,864 per vehicle, sales to individuals probably fell 7 percent from last month, according to Santa Monica, California-based TrueCar.

Consumers are avoiding showrooms as fear of a double-dip recession grows following the 27 percent plunge in existing home sales in July, said Mike Wall, an analyst for IHS Automotive. The U.S. unemployment rate in July held at 9.5 percent, near a 26-year high of 10.1 percent. The Conference Board reported today that consumer sentiment rose to 53.5 this month from a five-month low of 51 in July. Fewer Americans said jobs were plentiful in August.

‘Tough Sell’

“When you’ve got that sentiment, that fear hanging over the market, it makes it a tough sell for consumers” to spend $25,000 or more on a vehicle, said Wall, who is based in Grand Rapids, Michigan.

Ford Motor Co. is set to announce its fourth-quarter production schedule tomorrow, said George Pipas, the automaker’s sales analyst. Ford will build 575,000 cars and trucks in the final three months of the year, up slightly from 574,000 a year earlier, Joseph Amaturo, an auto analyst for Buckingham Research Group, wrote today in a research note. Ford may also boost third-quarter production, now scheduled for 570,000 vehicles, Amaturo said.

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