Analysis

With U.S. light-vehicle inventory rising moderately over the past three months, the stage is set for auto makers to significantly raise the seasonally adjusted annual selling rate for the second month in a row.

A WardsAuto forecast calls for 1,051,531 light-vehicle deliveries in October over 26 selling days – a 15.4% gain in daily sales over year-ago (27 days) and a 3.7% decline from the September rate (25 days).

However, the forecast month-to-month decline in DSR is distinctly better than past September-to-October drops, which regularly ranged 8.0%-11%. This year’s result could boost the monthly SAAR to 13.6 million units, the highest non-Clunker rate since June 2008.

Related document: Ward’s U.S. Lt. Vehicle Sales and Inventory Forecast

The largest factor shaping the relatively optimistic outlook is the return to near-normal production rates for both Honda and Toyota.

Both auto makers suffered precipitous declines in market share over the summer months as a result of inventory problems brought about by the March tsunami and earthquake in Japan. However, both made sizable gains in September as production came back online.

With overtime production beginning in October, both auto makers should avoid traditional September-to-October daily sales declines and instead see month-to-month gains as high as 10%.

As forecast, Toyota would sell some 140,000 units for a 13.2% share, the company’s highest take since April. Honda’s 9.6% share also would be a 6-month best.

Toyota and Honda’s steps toward normalcy likely will impact auto makers that have grown used to operating in a less-competitive field over the last six months. But there are reasons to believe other car companies will experience higher-than-average September to October sales results.

Early indications point toward a stronger fleet market in October. In addition, the annual late-summer/early fall sell-off of last year’s models will push into the month, as many ’12 models have not yet appeared on dealer lots in significant numbers.

Additionally, industry incentives seem to be holding at or slightly above September levels, and dealers of brands facing renewed competition from Honda and Toyota in the small- and midsize-car segments may be more willing to make deals.

The WardsAuto forecast calls for General Motors to increase its DSR 11.7% over year-ago on sales of 197,500 LVs, good for an 18.8% share.

Ford’s DSR should rise 12.6%, for a 16% share, and Chrysler is expected to see improvement over poor year-ago results, with sales of nearly 120,000 units lifting the auto maker’s DSR as much as 36% over prior-year.

Collectively, the Detroit Three should account for 46% of October deliveries, compared with 49.2% in September.

Nissan is expected to grab at least 8.5% of LV sales, besting Hyundai/Kia’s 8.1%, as the Korean auto makers continue to bump up against capacity constraints and inventory issues.

At forecast levels, 2011 U.S. sales would total 10,968,000 cars and light trucks through October, a 14.9% gain compared with year-ago.

jsousanis@wardsauto.com