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Date Posted: 03:15:41 09/04/08 Thu
Author: -S.
Subject: August Auto Sales Plunge- except Nissan. (Xterra sales surged 76.9 percent. How 'bout that?)

August, 2008 was a terrible month for car sales. For some reason, only Nissan reported an increase. Xterra and Frontier did quite well. Go figure.

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http://www.forbes.com/feeds/ap/2008/09/03/ap5384822.html

August Auto Sales: Nissan sales rise
Associated Press 09.03.08, 2:01 PM ETFRANKLIN, Tenn. -

Nissan Motor Co. said Wednesday its U.S. auto sales rose in August, lifted by higher volumes of its Frontier truck and Xterra sport utility vehicle.

Nissan (nasdaq: NSANY - news - people ) North America Inc. said U.S. August sales rose 13.6 percent to 108,493 units from 95,527 units in August last year.

The Japanese automaker benefited from higher sales of its trucks and SUVs, a notable development given the recent surge in fuel prices and industrywide slump among large vehicles.

Frontier sales rose 55.5 percent to 9,140, while Xterra sales surged 76.9 percent to 8,208. Sales of its new Rogue crossover totaled 6,639.

Sales of Nissan's Infiniti luxury line rose 8 percent to 11,076 from 10,252 a year ago.

For the first eight months of the year, Nissan sales advanced 1 percent to 726,133 compared with 718,784 during the same period last year.

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August Auto Sales Flop
Heavy discounting and promotions have failed to attract buyers. Only Nissan reports positive August sales


General Motors (GM) did its usual cheerleading when August auto sales were reported on Sept. 3, but it was impossible to ignore the fact that its "Employee Discount for Everyone" sale on leftover 2008 models was a dud, especially compared with a similar offer three years ago that electrified the industry.

GM's relentlessly upbeat vice-president for North America vehicle sales, service, and marketing, Mark LaNeve, hoped aloud that maybe industry sales have struck bottom, even as other forecasters have cut their predictions for 2008 sales to as low as 14 million units, the worst in at least 15 years.

"At some point you like to think that it [the bottom] was June or July hey, gang, it's going to happen sooner or later, it might as well happen now," LaNeve said in a conference call with reporters and industry analysts.

"This [result] gives us reason to think we're pulling our way out of this," he said.

Despite the discounts, GM sales were down 20.3% from the year-ago month, to 307,285 cars and light trucks in August. GM's Employee Discount sale began Aug. 20. It was to expire on Sept. 2, but on Sept. 3, GM extended the deals through Sept. 30.

Year-to-date, GM sales were down 18.1%, to about 2.1 million, according to AutoData of Woodcliff Lake, N.J.
A Different Measure of Success

In announcing its monthly sales, GM chose to emphasize the fact that its August sales increased 31.3% vs. July, even though year-ago comparisons are the usual measure of success or failure. Seasonally, August sales are typically higher than July, thanks to end-of-model-year sales.

U.S. auto sales overall were down 15.5% in August from the year-ago month, to about 1.2 million. After eight months, 2008 sales were down 11.2%, to about 9.8 million. Within the August total, car sales were down 7.7%, and light trucks were off 22.1%, as consumers switched to cars to pursue better gas mileage.

Of the six biggest manufacturers in the U.S., only the smallest, Nissan North America (NSANY), once again reported positive growth, posting higher August sales than the year-ago month. Nissan posted an increase of 13.6%, helped in part by discounts on trucks like the Xterra SUV.

But that's about it for the good news. Ford Motor (F) fell 26.5% in August. Chrysler dropped an eye-popping 34.5%. Even Honda (HMC), which has seemed relatively immune so far primarily on the strength of models such as the Accord and Fit, slipped 7.3% in August, from the year-ago month. Year-to-date, Honda has consistently gained share in the U.S. market, with a year-over-year improvement of 1.7%. Toyota (TM) had another bad month too, falling 9.4%.

The lack of response to GM's August incentives is in sharp contrast to the summer of 2005.
Employee Pricing Drama

In 2005, GM's "Employee Pricing for Everyone" promotion set the industry on its ear. GM sales gained 46.9% in June 2005, according to the Automotive News Data Center. That forced Ford and Chrysler to follow suit. In the resulting price war, Detroit Three sales combined jumped 21.8% in July 2005.

This year, Ford and Chrysler have ignored GM's program, although all three rivals are offering big incentives, especially on trucks. For instance, Ford is offering deals such as up to $3,000 cash back on the once hot-selling Ford Explorer. Chrysler is offering up to 40% off suggested retail on some models, including up to $9,000 off the Dodge Ram pickup.

The biggest problem with the 2005 price war was that it "pulled ahead" so many buyers into the market. Sales fell drastically for the rest of the year and into the first part of 2006. This year, baseline demand was so low to begin with, LaNeve said he's not worried about so-called payback.

He also said that this time around, GM dealers didn't complain about the Employee Prices program. In the past, dealers felt the deals were less profitable. LaNeve said that this year's program resulted in dealer margins that were about the same as before the promotion.

"I didn't get one complaint, and I bet I'm on the speed dial of 2,000 dealers. They were delighted to see some customers and write some deals," he said.

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http://www.businessweek.com/lifestyle/content/sep2008/bw2008093_678119.htm?chan=top+news_top+news+index+-+temp_news+%2B+analysis

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