(October 24, 2011) WESTLAKE VILLAGE, Calif. — After a strong September, new-vehicle retail sales in October remain stable above a 10-million unit level, according to J.D. Power and Associates, which gathers real-time transaction data from more than 8,900 retail franchisees throughout the United States.

October new-vehicle retail sales are projected to come in at 828,300 units, which represents a seasonally adjusted annualized rate (SAAR) of 10.5 million units.

The year-over-year increase in the selling rate is expected to reach 11 percent — the second double-digit growth rate in a row, after four months of single-digit growth. Retail transactions are the most accurate measurement of true underlying consumer demand for new vehicles.

“After a solid September selling rate, there were questions as to whether the strength would continue into October, given continued concerns with the economy,” said John Humphrey, senior vice president of global automotive operations at J.D. Power and Associates. “However, consumers are again returning to dealerships, keeping the sales pace more consistent with the strength seen at the beginning of the year.”

U.S. Retail SAAR—October 2010 to October 2011
(in millions of units)

Total light-vehicle sales in October are expected to come in at 1,012,200 units, which is 11 percent higher than in October 2010. Fleet sales are also expected to increase 11 percent compared with October 2010 and will account for 19 percent of total sales.

Given the continued strength in October, J.D. Power is maintaining its forecast for 2011 at 12.6 million units for total light-vehicle sales and 10.2 million units for retail light-vehicle sales.

J.D. Power and Associates U.S. Sales and SAAR Comparisons

¹Figures cited for October 2011 are forecasted based on the first 13 selling days of the month.

²The percentage change is adjusted based on the number of selling days (26 days vs. 27 days one year ago).

However, as the level of economic uncertainty remains high, J.D. Power is decreasing its forecast for 2012 to 13.8 million units for total light-vehicle sales (from 14.1 million units) and to 11.2 million units for retail light-vehicle sales (from 11.5 million units).

“The risk of a double-dip recession has increased to nearly 40 percent, driving the reduction in the forecast for 2012,” said Jeff Schuster, executive director of global forecasting at J.D. Power and Associates. “While there have been recent positive signs in the economy and we expect another recession will not materialize, the recovery pace for 2012 is taking another hit, although a complete halt in growth is unlikely.”

North American light-vehicle production through the first three quarters of 2011 is up nearly 9 percent (9.7 million units) from the same period in 2010. The Japanese OEMs are continuing to recover from the earthquake/tsunami disaster earlier this year; however, production is down 10 percent in the year-to-date production comparison. The Detroit 3 OEMs have increased production by 14 percent year-to-date, while the European manufacturers are seeing a 41 percent increase, helped by BMW’s expansion in South Carolina.

Vehicle inventory edged up slightly to a 50-day supply at the beginning of October from 49 days at the beginning of September. Car inventory has increased to a 44-day supply, up from 40 days in September. With some cuts in truck production, truck inventory started October at 55 days, down from 57 days in September. Several manufacturers remain well below the industry norm of a 60-day supply. Hyundai/Kia began October with 25 days’ supply (was 21 days in September), Honda with 33 days’ supply (previously 32 days), and BMW at 29 days’ supply (previously 33 days).

The 2011 North American production outlook remains on track for 12.9 million units, an increase of nearly 9 percent from 2010. As inventory replenishment continues, fourth-quarter 2011 production output is expected to reach 3.2 million vehicles, which is a 10 percent improvement from the same quarter in 2010.