October has one more selling day than October 2017. Through September, U.S. light-vehicle sales rose 0.5 percent, driven by strong light-truck demand that has offset ongoing weak car volume. Photo credit: DAVID PHILLIPS
U.S. light-vehicle sales are expected to dip to the lowest October volume since 2014, forecasters say, as automakers hold back on incentives and the cost to buy a new car or truck keeps rising. It could be the first month ever in which light trucks account for more than 70 percent of retail sales, according to J.D. Power and LMC Automotive.
Edmunds and Cox Automotive are projecting a roughly 2 percent decline from October 2017 and a seasonally adjusted, annualized selling rate of 17.1 million, which is in line with year-to-date results. The J.D. Power/LMC forecast calls for sales to be down just 0.2 percent and for a SAAR of 17.4 million, down from 17.97 million a year ago.
“The fourth quarter is off to a slow, but not alarming, start for the auto market,” Jeremy Acevedo, Edmunds’ manager of industry analysis, said in a statement. “Last October, auto sales were somewhat spurred by replacement demand following Hurricane Harvey, which makes for a more complex year-over-year comparison. Rising interest rates and higher vehicle prices are also thinning the crowds of shoppers at dealerships, and that’s a trend we see stretching into the new year.”
Incentives are on pace to decline for a fourth consecutive month, the longest such stretch since the recession ended in 2009, J.D. Power said. That’s a good sign for automakers’ bottom lines, even as the financial discipline generates less showroom traffic.
“For manufacturers, the financial benefits of continued growth in truck mix along with reduced incentives is helping to offset the effect of reduced sales volumes,” Thomas King, senior vice president of J.D. Power’s data and analytics division, said in a statement. “Manufacturers have succeeded in better aligning production with consumer demand, which is the primary driver of reduced incentive levels. Given those reduced incentive levels, the overall outlook for the financial health of the industry is positive despite the lower sales volumes.”
Automakers are scheduled to report October sales on Thursday, Nov. 1. The month has one more selling day than it did in 2017. Through September, industry sales in 2018 were up 0.5 percent.
J.D. Power said the average incentive per vehicle through Oct. 21 was down $143 from the same time last year. Much of the drop in spending was on cars, with incentives down $494 on an annual basis, while spending on trucks and SUVs was up $17.
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