New U.S. light-vehicle sales are expected to rise about 6 percent this month from last October, according to three forecasts, as gasoline prices fall to the lowest level in nearly four years.
LMC Automotive, TrueCar and Kelley Blue Book project sales of around 1.27 million vehicles, the highest October volume since 2004. They estimate the industry’s seasonally adjusted annualized selling rate to be 16.3 million, which would mark the eighth consecutive month with a SAAR of more than 16 million.
“The current environment of the auto industry is one of strength and stability,” Jeff Schuster, senior vice president of forecasting at LMC, said in a statement today. “The market is clearly seeing a second wave of SUV popularity … that will likely dominate market share for the foreseeable future.”
Sales of SUVs and pickups, which have been strong throughout the year, have been aided this fall by lower gasoline prices. The national average for a gallon of regular gasoline fell 18 cents in the past two weeks to $3.08 this week -- the cheapest since December 2010, according to Lundberg Survey Inc.
Incentive spending is at “healthy levels,” up 2 percent from a year ago but down 12 percent from September, TrueCar said. KBB said it is concerned, though, that the ratio of incentives to average transaction prices has climbed to the highest level since 2010.
“Since inventory levels have remained consistent, this isn’t a red flag yet, but it does underline that the national industry growth we’ve had in recent years is slowing,” Alec Gutierrez, senior analyst for KBB, said in a statement.
Industry sales are on pace to reach forecasts of 16.4 million this year, the highest since 2006. They rose 6 percent in the first three quarters vs. the same period in 2013.
KBB projects that sales will rise 14 percent this month for compact SUVs and crossovers and 6 percent for full-size pickups. Midsize cars and compact cars are each expected to generate slight sales gains but lose market share.
KBB and TrueCar project double-digit gains in October for Fiat Chrysler Automobiles and Nissan North America. TrueCar said it expects Subaru to post a 28 percent gain, the biggest among the 10 largest automakers.
Ford stalls
Ford Motor Co. is the only automaker whose sales are expected to fall. Ford is switching production of its F-150 pickup to the aluminum-clad 2015 version, which has cut into sales as the company tries to avoid depleting inventory too quickly.
The forecasts call for General Motors to lose market share, with sales increasing less than 5 percent.
TrueCar said FCA, which outsold Toyota Motor Sales U.S.A. in September for the first time in three years, has a chance to repeat that feat this month, possibly even challenging a suddenly vulnerable Ford. TrueCar estimated vehicle sales of 170,600 for FCA, up 22 percent; 178,500 for Toyota, up 6 percent; and 180,000 for Ford, down 6 percent.
“Fiat Chrysler’s growth, fueled by Jeep and Ram, has set up a dogfight this month, with FCA, Ford and Toyota battling for second place behind GM in total volume,” TrueCar President John Krafcik said in a statement.
LMC said it expects retail sales to rise 6 percent and fleet deliveries to increase 5 percent. Fleet volume likely will account for 16 percent of total light-vehicle sales, it said.
J.D. Power, which helps LMC develop its forecast, said it expects consumer spending on new vehicles to reach $32.5 billion this month, 6 percent more than October 2013. It said 32.6 percent of vehicles sold this month will be financed with a term of at least 72 months, tying a record set in July. Long loan terms are helping push transaction prices higher by making more expensive vehicles feel more affordable to consumers on the basis of their monthly payment.
LMC said North American production rose 7 percent in the third quarter from a year ago, to 4.1 million units. Automakers built 90,000 more compact SUVs in the third quarter than in the same period of 2013, more than any other segment.
Nick Bunkley - Automotive News, October 27, 201
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