October new-vehicle sales building on September strength
(October 25, 2010) New-vehicle retail sales in October are building upon the strength from September and exhibiting signs of a more pronounced recovery trend, 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 expected to come in at 756,300 units, which represents a seasonally adjusted annualized rate (SAAR) of 10.2 million units—making October the first month to reach a 10-million-unit selling rate this year. Retail transactions are the most accurate measurement of true underlying consumer demand for new vehicles.
“Unlike July, August and September, which experienced some mid-month weakness, October’s robust sales pace has continued through the second week,” said Jeff Schuster, executive director of global forecasting at J.D. Power and Associates. “Coming off a strong close to September, October’s expected performance marks the first back-to-back months of strength since the spring. Despite the drag from high unemployment and lower incentive levels, improvement in the automotive market continues in October, suggesting that consumers are discounting the negative sentiment.”
U.S. Retail SAAR from October 2009 to October 2010
(in millions of units)
Total light-vehicle sales for October are expected to come in at 922,700 units, 14 percent higher than October 2009. Fleet sales in October are expected to be up 3 percent from one year ago, representing an 18 percent share of total sales. October is typically a month with a lower level of fleet sales, but October fleet volume is expected to be the lowest of the year.
J.D. Power and Associates U.S. Sales and SAAR Comparisons
|
October 20101 |
September 2010 |
October 2009 |
New-vehicle retail sales |
756,300 units |
758,425 units |
667,877 units |
Total vehicle sales |
922,700 units |
956,639 units |
836,115 units |
Retail SAAR |
10.2 million units |
9.5 million units |
9.0 million units |
Total SAAR |
11.9 million units |
11.7 million units |
10.4 million units |
1Figures cited for October 2010 are forecasted based on the first 14 selling days of the month.
2The percentage change is adjusted based on the number of selling days (27 days vs. 28 days one year ago).
As the industry continues to improve at a slower-than-anticipated pace, J.D. Power and Associates is revising its 2010 forecast downward slightly to 9.1 million units for retail sales (from 9.2 million units) and 11.5 million units for total sales (from 11.6 million units).
Gross domestic product in 2011 is now expected to grow at the same rate as in 2010, approximately 2.5 percent. Given the weaker economic outlook for next year, the 2011 forecast has also been revised to 10.5 million units for retail sales (from 10.7 million units) and 12.9 million units for total sales (from 13.2 million units).
North American production volume in the first three quarters of 2010 has already exceeded production for all of 2009, with 8.9 million units produced, compared with 8.5 million vehicles last year. Fourth-quarter production in 2010 is expected to be 2.8 million units, compared with 2.7 million units in 2009. The forecast for 2010 has edged up to 11.7 million units, an improvement of 37 percent compared with 2009.
Vehicle inventory rose slightly from September to 58 days supply with 2.2 million units in stock. However, the overall level continues to be well-balanced with demand and inventory remains below historical levels.
“Production for several high-profile models—such as the Chevrolet Cruze and Volt, Ford Explorer and Focus, and the Dodge Durango and Charger—will start this quarter or will continue to ramp up, driving a strong production recovery at the close of 2010,” said Schuster. “North American production levels are expected to grow by an additional 1 million units in 2011 to 12.7 million.”