Detroit's Big Three Surge but Still Trail Japanese Rivals

Vehicle sales have been solid this year giving investors in Ford (NYSE: F  ) and General Motors (NYSE: GM  ) reason to cheer as their stock prices have risen 81% and 68%, respectively, over the last year. Detroit's Big Three automakers turned in a better than expected August, but how do their numbers hold up against Japanese competitors?

General Motors – 275,847 units sold, up 15% 
GM did well across the board – all of its brands turned in double-digit sales gains in August. Cadillac led the charge with a 38% increase, followed by Buick with a strong performance, up 37%. GMC and Chevrolet both turned in 14% and 10% increases, respectively. When you mash all those numbers together company-wide sales increased by 15% to 275,847 units sold – the most of any automaker in the U.S. market.

Pacing its overall gains was GM's most profitable segment, full-size pickups, with a 15% increase. That was driven largely by the Silverado, which improved sales by nearly 14% over last year. Beyond full-size pickups, GM had significant improvements in two of its passenger cars as retail deliveries for its Impala and Malibu were up 76% and 93%, respectively. That's a huge win for GM because it desperately needed to produce a hit with its passenger vehicles, and the redesigned Impala could be the winner the company was hoping for.

Ford – 221,270 units sold, up 12% 
Ford had another consistent month posting its best retail sales since August 2006. Its retail sales increased 20% and total sales were up 12%. The biggest August highlight for the company was that sales of its F-Series topped 70,000 units for the second time this year – something it hasn't done twice in a year since 2006. The Fusion and Lincoln MKZ also set best-ever sales for the month of August. While an overall increase of 12% is nothing to sneeze at, Ford likely could have seen higher gains if supply wasn't limited on key models.


Graph by author. Information from Automotive News DataCenter.

It's been known for months that inventory of the Fusion was very limited and plants were running over capacity trying to keep up with demand. Because of the tight inventory dealers aren't negotiating on prices, causing the Fusion to sell at a $1,176 premium to the industry average and a $2,378 premium to the market-leading Toyota (NYSE: TM  ) Camry. While that's a good problem to have, it's great news for investors that Ford hired 1,400 workers to its Flat Rock assembly plant to bring additional production of the Fusion into the U.S. 

Chrysler – 165,552 units sold, up 12% 
Not to be outdone, Chrysler had its best August in six years as it turned in a sales increase of 12%. That was largely driven by sales of its full-size Ram and Grand Jeep Cherokee, which were up 30% and 39%, respectively. Similar to GM, all of Chrysler's five brands reported sales increases and the company recorded its 41st consecutive month of year-over-year sales gains. To top it all off, Chrysler had six models that set sales records in August.

Keep in mind 
While all of Detroit's automakers did well, they still trailed behind Japanese rivals in terms of sales gains. Honda (NYSE: HMC  ) led the pack with sales gains of 27%, to 166,432 units sold. Toyota posted an impressive 23% gain when you consider that it was working from a higher base sales number. Toyota's sales improved from 188,520 last year to 231,537 which was just enough to edge out Ford for the No. 2 sales spot in the U.S. market. Another thing to keep in mind is that Labor Day sales were recorded in August this year, which could have inflated the sales gains slightly. Toyota and Honda topped Detroit's Big Three in August sales gains but Ford and GM are much more competitive than they have been in a long time and could start reversing that trend sooner than you might think. 

With the American markets reaching new highs, investors and pundits alike are skeptical about future growth. They shouldn't be. Many global regions are still stuck in neutral, and their resurgence could result in windfall profits for select companies. A recent Motley Fool report, "3 Strong Buys for a Global Economic Recovery," outlines three companies that could take off when the global economy gains steam. Click here to read the full report!


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  • Report this Comment On September 05, 2013, at 1:20 PM, A9930thTA wrote:

    Figures lie and liars figure. Percentage gains do not tell the whole story and all you have to do is look to China for proof.

    Fords sales a few months back gained 40% to 50,000 vehicles. GMs sales were up 18% making it sound like Ford did much better.....

    HOWEVER.....

    GMs increase was a smaller percentage but their sales number increased by more vehicles than Ford did. If Ford sells 50,000 vehicles and their sales are up 100% they increased sales by 25,000. If GM sold 275,000 and their sales were up 10% they increased their sales by 25,000 units as well.

  • Report this Comment On September 05, 2013, at 1:23 PM, BillW65 wrote:

    The main reason American car makers trail foreign manufacturers is not a problem of quality, but a problem of loyalty. Right now, American cars are at a level of quality unseen before in domestic makes. In the '50's demand for cars was so intense the factories couldn't keep up. Maybe a corner was cut here or there, but none pertained to safety. In the '60's VW, Toyota, and Honda appeared in the American market. They didn't do well. During the fake oil shortage of the '70's, people noticed these under-powered, noisy, and junky foreign cars got much better gas mileage than the heavier and powerful cars we made. As a part of the postwar rehab of our enemies, we taught the Japs our way of making cars. They were smart enough to take it and run with it. They applied what we taught them to their little junky cars and started to produce higher quality cars. But I say, "Remember Pearl Harbor!" "Remember The Holocaust!" "Remember some four-hundred-thousand American soldiers, sailors, Marines and flyers dead at the hands of the people taking our money. For me, loyalty over-rides buying a car made by our former and/or future enemies.

  • Report this Comment On September 05, 2013, at 1:41 PM, whatsyourname wrote:

    ooo 81% and 68% in a year... big deal... Tesla's stock increased nearly 400% in the last 9 months... i dont think GM and Ford should be worrying about Toyota, Honda, and the like as much as they should about Tesla; which looks to overtake ALL OF THEM!

  • Report this Comment On September 05, 2013, at 1:42 PM, whatsyourname wrote:

    ...let alone the nearly 970% increase in tesla stock in the last 4 years.

  • Report this Comment On September 05, 2013, at 2:48 PM, TMFTwoCoins wrote:

    @A9930thTA

    I understand what you're saying. But how can I be anymore transparent? I gave full unit sale figures in the bolded headlines? I suppose I could put them in a table next time so its easier to compare units vs % gain, but goodness, shall I hold your hand as well?

    @whatsyourname

    Tesla's Model S is a phenomenal product, and the stock price has seen an incredible year, for sure. We'll see how it plays out, I wouldn't be surprised in the least to see Tesla's stock get cut in half at the first sign of market adversity. That said, that would be a good point to jump into a company poised for a very interesting future at least a decade away.

  • Report this Comment On September 05, 2013, at 4:49 PM, joejoea1 wrote:

    I regret having to say this, and it hurts me to do so, however it must be said, for years it seems like the American auto industry in general looks for ways to get their customers with cars breaking down prematurely, and making repairs quite expensive and difficult, and frequent, whereas the Japanese automakers have less repairs, better reliability when the car gets older, even though the repairs are sometimes twice the cost of American car parts, its for worth it since I won't be losing time replacing the same part again.

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