GM gain puts Big 3 back on top

NEW YORK (CNNMoney.com) -- General Motors posted a surprise sales gain in August, bucking an industry trend of weak auto sales in the period, and helping domestic brands to recapture a majority of U.S. sales.

GM said its sales of cars and light trucks, such as SUVs and pickups, rose 6 percent in the month to 385,529 vehicles. Car models saw a nearly 8 percent drop in sales, but that was outweighed by the the 16.5 percent jump in light truck models.

GM said it had the strong sales despite a more than 10 percent drop in less-profitable sales to rental car companies. Sales of its pickup trucks, and its so-called crossover vehicles - more car-like SUVs - helped GM with strong sales to consumers.

"The myth of import superiority is being destroyed," said a statement from Mark LaNeve, GM vice president in charge of North America sales, service and marketing.

Still, GM was not immune to recent woes in the mortgage markets, which has raised consumer concerns about making big ticket purchases. The company also announced it was trimming September and fourth quarter production targets in North America, as it said it still faced "an overall market that remains challenging and competitive."

But shares of Dow component GM (Charts, Fortune 500) were up more than 3 percent in late-day trading, shooting up after the early-afternoon sales report that impressed industry experts.

"It wasn't increased incentives. I think it was true success of some of their vehicles in the marketplace," said Jesse Toprak, executive director of industry analysis for sales tracker Edmunds.com. "They have a number of vehicles timed perfectly, such as their crossovers which are hot right now."

The GM sales results came as rival Ford (Charts, Fortune 500) reported Tuesday that its total U.S. sales fell about 14 percent to 218,332 in the month. That was a bit better than one forecast, but it dropped Ford out of its traditional place as the No. 2 U.S. automaker.

Toyota Motor (Charts) posted a rare 2.8 percent drop in U.S. sales to 233,471, which was weaker than forecasts. But its sales were still enough to put it ahead of Ford Motor for the month. It also saw its year-to-date sales top Ford's light vehicle total, which excludes the U.S. automaker's sales of heavy-duty trucks.

Ford spokesman George Pipas repeated the company's earlier position that it was not concerned as much with its position as No. 2 automaker as it was with stemming ongoing losses on its North American operations.

"In past times you might have tried to offset the weakness by steering units to daily rental channels or raising incentives," said Pipas in a call with analysts and journalists. "Point No. 1 in our plan to restructure the company is taking into account lower demand than we had in the past and a much changed product mix than we've had in the past."

Rather than increase sales to rental car companies to keep production high, Ford has deliberately cut back on those less-profitable sales. The company said its sales to rental car companies dropped 44 percent from year-ago levels.

But sales to retail customers by Ford still dropped 13 percent, an indication that the weakness in demand for its products is not limited to a deliberate strategy of cutting back sales to the rental car market. The F-series pickup, still the nation's best selling vehicle, saw its sales drop off nearly 10 percent, as the favorite of builders and contractors was hit by the slump in housing and new home construction during the period.

Pipas said some of the weakness in retail sales is due to comparison to a year earlier when Ford was offering zero-interest financing ahead of the Labor Day holiday.

"On balance it was a pretty good retail month unless you stack it up, as we do, against last year's incentive-induced sales," he said.

U.S. rival Chrysler Group also saw its sales decline, falling about 6 percent, during the month that saw former German parent DaimlerChrysler (Charts) sell its North American unit to private equity group Cerberus Capital Management.

Even with the declines at Ford and Chrysler - and with sales gains at other Asian automakers such as Honda Motor (Charts), Nissan (Charts) and Hyundai - the domestic brands of the traditional Big Three were able to recapture the majority of U.S. sales in August. Still, that's likely to be down from the 53.2 percent combined market share they had in the year-earlier period, according to another sales tracker, Autodata.

In July the domestic brands captured only 48.1 percent of sales, marking the first time that import brands captured more than half of U.S. sales in a month.

In an increasingly global auto industry, the distinction between domestic and import brands is somewhat less useful than it once was.

Auto parts and components can be sourced around the globe and among those automakers counted as import brands are those currently owned by Ford, such as Volvo, Land Rover and Jaguar, as well as Saab, a unit of GM.

The major Asian automakers also make a significant percentage of their vehicles for the U.S. market at North American plants.

But with Ford exploring a sale of its luxury European brands, and with DaimlerChrysler's undoing of the 1998 merger that brought it Chrysler, in some ways the distinction between the traditional Big Three and their import rivals is now more relevant than it was only a few months ago, when those U.S. automakers had closer ties to import brands.