Honda Motor Company (NYSE:HMC) said that its U.S. sales fell 14.1% in September, as a calendar quirk -- and a letdown after a huge sales gain in August -- made for a difficult year-over-year comparison.

Despite the letdown, Honda's strong August result was enough to give it a 2.4% sales gain for the quarter -- a good result compared to its five largest-selling peers:

Automaker Q3 2019 U.S. Sales Change vs. Q3 2018
General Motors 738,638 6.3%
Toyota Motor 627,194 (9.9%)
Ford Motor 580,251 (4.9%)
Fiat Chrysler Automobiles 565,034 0.1%
Honda Motor 429,214 2.4%
Nissan Motor 327,354 (4.8%)

Data sources: Company press releases.

Year to date through September, Honda's U.S. sales are roughly flat, down just 0.1% from the same period in 2018.

After Honda's best sales month ever, a letdown

Honda had an absolute blowout month in the U.S. in August, selling almost 174,000 vehicles (up 17.6% from the year-ago month) for its best-ever monthly result in the United States. That would be a hard act to follow under any circumstance, as it's likely that the company "pulled forward" sales from later in the year with aggressive marketing and incentives. Given that September had two fewer "selling days" than September of 2018, it was easy to predict that Honda would see a letdown. ("Selling days" exclude Sundays and holidays, when auto dealerships are traditionally closed.)

A red 2019 Honda Civic, a compact sedan

Honda Civic sales jumped almost 26% in August, but the model -- and most of Honda's other mainstays -- slumped in September. Image source: Honda.

While there were a few bright spots, most of Honda's mainstays were down year over year:

  • Sales of the Accord and Civic sedans, historically two of Honda's biggest sellers in the United States, were down 19.8% and 10%, respectively. Using Honda's "daily selling rate" (DSR) figures, adjusted for the change in sales days, the two were still down 12.9% and 2.1%, respectively.
  • Honda's compact CR-V crossover, its top seller in the United States in recent times, still led the company's portfolio with 25,904 sold in September. But that was down 15.3% from September 2018, or 7.9% on a DSR basis. The one-size-down HR-V bucked the trend, with sales rising 26%, or 37% on a DSR basis.
  • The midsize Honda Pilot SUV and the Odyssey minivan both posted year-over-year declines.
  • Sales of the upscale Acura brand, an important driver of profit margin for Honda, were down 17.9% in September, with both of its high-volume crossover SUVs (the MDX and RDX) posting double-digit percentage declines, even on a DSR basis. One bright spot: Sales of the compact Acura ILX sedan, an upscale relative of the Civic, rose to 1,078 from 930 a year ago.
  • Another bright spot, albeit a small one: Honda sold 16 examples of the $158,000 Acura NSX sports car in the U.S. in September, up from 11 in September of 2018.

What it means for investors

For auto investors looking ahead to Honda's quarterly earnings report next month, its U.S. results are kind of a mixed bag. On the one hand, sales were up for the quarter -- but on the other, that gain was driven by a blowout August in which Honda's incentives were up 16% from a year ago, according to figures from ALG (a division of TrueCar).

All of that will probably add up to a sales gain in North America for the quarter, but those incentives likely squeezed Honda's margin in the region, meaning that operating profit might well decline from a year ago despite the strong sales. We'll find out when Honda reports earnings next month.

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