Is It Really That Bad?

A scan of headlines recapping August vehicle sales would have many believing that the auto industry is headed off a cliff.

Here’s a sampling:

• Auto Sales: Worst August Since 1983 (CNNMoney.com)
• Auto Sales Crash in August (The Tennessean)
• 21% Drop in August Auto Sales Spurs Talk of Stimulus (Detroit Free Press)
• Auto Sales Fall as Economy Struggles (The Associated Press)
• August Auto Sales Cool Without ‘Cash for Clunkers’ Incentives (The Detroit News)

Sure, many automakers posted softer volumes than anticipated, and overall volume topped out at 997,468 — not the 1.03 million that analysts had been predicting. Toyota’s August sales figures were off 34% from 2009 and Honda’s were down 33%. For Nissan and GM, volume dropped 27% and 25%, respectively.

But comparisons with August 2009 seem unfair. You see, last August, consumers were buying vehicles like they were going out of style, thanks to the federal government’s “Cash for Clunkers” incentive program. In fact, August 2009 vehicle sales hit nearly 1.3 million units — higher than they had been since May 2008.

Light-vehicle sales volume for 2010 is still expected to reach about 11.5 million vehicles, 10% more than last year. And though last month’s figures fell below the one-million mark, August bested months like January and February, when volume hovered around 700,000 units.

Are we making a mountain out of a molehill?