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Analysts: October auto sales better than expected
YOUNGSTOWN
U.S. auto sales in October, both industrywide and for General Motors, beat analysts’ expectations.
“Many signs in the economy would suggest that vehicle demand should be moderating – higher interest rates, import tariffs, weak housing market, stock market volatility, elevated gas prices – yet vehicle buying remains strong,” said Charlie Chesbrough, senior economist for Cox Automotive.
“The key ingredients for strong sales exist – low unemployment, high confidence and credit availability. However, most market watchers expect demand to decline as economic conditions change in 2019. But for now, the robust sales pace in 2018 continues,” she said.
Cox said October sales, which were reported Thursday, beat its initial forecast of 1.33 million units.
As has been the trend for many months now, analysts noted sales of trucks, sports utility vehicles and crossovers are driving strong vehicle sales as car sales continue to decline.
“Monthly market share for cars will likely dip below 30 percent for the third straight month in October. Share for cars continues to decrease and has the momentum to fall below 28 percent soon,” said Zo Rahim, research manager for Cox. “The drop is being driven by the Detroit Three [GM, Ford and Fiat Chrysler], whose market share appears to be below 20 percent in October for the second straight month.”
He noted, however, this is not necessarily a “major issue” for automakers, as “car production has come down and we’re at a point where supply is favorable to meet demand.”
“In fact, one could argue that demand for cars is strong and affordability concerns are causing potential shoppers to move to the used- vehicle market, where there is ample supply of good, desirable vehicles, highlighted by car segment pricing gains in the wholesale market,” Rahim added.
General Motors no longer releases monthly sales figures, but analysts provide estimates.
Cox Automotive estimated the Detroit automaker, which manufactures the Chevrolet Cruze compact car in Lords-town, sold 242,000 vehicles, a 4 percent decline from last October, but better than analysts’ initial prediction of 229,000 sales, or a 9.4 percent decline from year-ago levels.
That news comes the day after GM released a strong third-quarter earnings report. GM reported $2.5 billion in profits for the third quarter of this year, and noted its strong results in North America were driven by truck and crossover vehicle sales.
Analysts also reported that average transaction prices for vehicles went up last month.
Kelley Blue Book reported the estimated average transaction price for light vehicles in the U.S. was $37,007, up 3 percent year over year. KBB noted this growth was due to higher-priced vehicles such as trucks and SUVs. GM’s estimated average transaction price for October was $41,458, up 2.9 percent from last October, according to KBB.
Also up in October was the annual percentage rate on new financed vehicles. APR averaged 6.2 percent last month, up 1.3 percent from a year ago and the highest level since January 2009, Edmunds reported.
“It’s getting harder and harder for shoppers to afford a new car, and if the economy starts to slip, we’re at a point now where we really could start to see some significant impacts in the auto market,” said Jeremy Acevedo, Edmunds’ manager of industry analysis.
Fiat Chrysler Automobiles US reported its U.S. auto sales last month were up 16 percent year over year, to 177,391 vehicles.
American Honda sales were down 4.1 percent from last year; its truck sales were up 6.5 percent and its car sales were down 14.5 percent.
Toyota Motor North America reported October sales of 191,102 units, a 1.4 percent increase on a volume basis and a 2.5 percent decrease on a daily selling rate basis over last October.
Ford Motor Co. reported it sold 192,616 vehicles in October, a 3.9 percent drop from year-ago levels.