Automakers say US sales turn frail in August

DETROIT — Auto sales, once a bright spot in the economic recovery, stalled last month as the nation's largest car companies reported falling sales.

General Motors Co.'s August sales fell 7 from July, and an even sharper 25 percent from August of 2009, when sales were boosted by the government's Cash for Clunkers rebates. Ford saw sales slip 5 percent from July. Subaru, whose strong lineup of smaller cars benefited from clunkers last year, also suffered.

Buyers who are nervous about the economy's health stayed away from showrooms, a worrisome sign since August is typically a strong month. Analysts say total industry sales could fall below 1 million new vehicles, making it the worst August in 27 years. All automakers report sales figures on Wednesday.

"There hasn't been enough horsepower behind the recovery to motivate consumers to regain their confidence and purchase vehicles at a higher rate," says Jeff Schuster, executive director of global forecasting for J.D. Power and Associates.

Also, potential buyers are having a harder time getting big discounts.

Automakers have been reluctant to increase incentives such as rebates and low-interest financing. Most car companies are making money at lower sales levels because they've cut production. They no longer need to offer cars at below break-even prices just to move them off lots.

"We know it's going to be a modest recovery, it's going to be bumpy," said Don Johnson, GM's vice president of U.S. sales. "What we don't want to do is get back to putting incentives on the vehicles to keep the plants running."

GM's four remaining brands— Chevrolet, Buick, GMC and Cadillac — dropped 11 percent versus August of last year. While Buick, GMC and Cadillac reported increases, Chevrolet, the company's largest brand, slipped because of the tough comparison with August of last year. That's when buyers snapped up many of Chevy's small cars under the clunkers program.

The clunkers comparison also hurt small-car specialists like Subaru, where sales fell 22 percent in August. Subaru was unable to match big sales last year of its smaller Impreza and the Legacy models. Sales fell 7.2 percent from July.