October Auto Sales Frighteningly Good

Trucks, SUVs continue to lead the pack.

by on Oct.27, 2015

October auto sales are expected to be the best October results since 2001.

The auto industry is looking at another big month in October as sales are moving at very brisk pace and carmakers, with the exception of scandal-tarred Volkswagen, continue to post sales gains.

New-vehicle retail and total sales in October 2015 are expected to be the strongest for the month since 2001, when automakers’ “Keep America Rolling,” 0% financing incentives propelled new-vehicle retail sales to 1.6 million units.

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“September was a strong month — bolstered by the Labor Day weekend — so the expectation is that we would see some weakness is subsequent months, but that hasn’t been the case,” said John Humphrey, senior vice president of the global automotive practice at J.D. Power. “Through the first 18 days in October, retail sales are up 7% compared with the same period a year ago.”

Total light-vehicle sales are expected to approach 1.4 million in October 2015, a 4.4% increase on a selling-day adjusted basis compared with October 2014. The SAAR for total sales in October is expected to be 17.4 million units, an 840,000-unit increase from the selling rate in October 2014.

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Fleet volume is projected at 238,100 units, a 1% increase on a selling-day adjusted basis from October 2014. Fleet sales are expected to account for 17.2% of total sales in October 2015, down slightly from 17.7% in October 2014. After a stronger start to the year, since June fleet volume has settled in at a level below that of a year ago.

Carmakers also benefitted from having five weekends — rather than the four weekends typical of most October, analysts noted.

Car shopping website Edmunds.com also predicted that 1,424,568 new cars and trucks will be sold in the U.S. in October for an estimated Seasonally Adjusted Annual Rate or SAAR of 17.8 million. The projected sales will be a 1% decrease from September 2015, but an 11.5% increase from October 2014. Edmunds projects that the sales volume and SAAR will be the biggest for an October since 2001.

One month after the news broke of Volkswagen’s diesel “cheat device” crisis, October sales data suggest that the company is fighting to grow its overall sales. Edmunds projects VW and Audi will combine to grow sales 5.1% from October 2014.

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However, a closer look at the individual brands suggests that Audi is responsible for all of that growth: Edmunds forecasts that Audi’s October sales will increase 15.3% year over year, while Volkswagen’s brand sales will remain flat from October 2014.

“In this year of booming auto sales, no automaker should be relieved to see flat year-over-year performance, but this may be the best that Volkswagen can hope for this month,” said Edmunds senior Analyst Jessica Caldwell.

“Until VW starts down a road to recovery by informing owners of a specific fix to their diesel vehicles, the company is likely to make far fewer sales than this surging market would otherwise deliver to them.”

While sales are strong, they have not been evenly distributed, as truck sales in October are up 15% year over year, while car sales have slipped 2.6%. Pickups and SUVs combined account for 58% of retail sales thus far this month.

“Given the continued pressure on car segments, manufacturers are responding with greater incentive spending on cars,” said Humphrey. “While incentive spending on cars has risen 16% year over year, truck incentive spending is up just 2 percent compared with October 2014.”

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Car incentive spending is currently $650 per unit higher than truck incentive spending.

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