Inventory Control, Replacement Demand Cause Second Straight U.S. Sales Surge

Excess inventory, strong incentives and hurricane replacement volume all contributed to a second consecutive upward surge in U.S. light-vehicle sales in October.

October’s 18.0 million-unit seasonally adjusted annual rate was the second straight month sales topped the 18 million mark, and was well above the 16.8 million SAAR the industry was tracking at during the first eight months of this year.

Perhaps somewhat caused by replacement demand, fleet volume also helped, with an initial estimate for the month 2% above like-2016. Coming into October, year-to-date fleet volume was running 7% below same-period 2016.

Retail volume, which accounts for roughly 80% of the total market, declined an estimated 5% year-over-year in October after running flat with year-ago through September.

Replacement demand created from vehicle losses in August and September due to Hurricanes Harvey and Irma is expected to increase new-vehicle volume for this year by 100,000 units.

Going into October, the industry also was burdened with excess inventory of ’17 models, with dealers stocks an estimated 10% to 15% higher than necessary.

Sales totaled 1.349 million units for a daily selling rate over the month’s 25 selling days of 53,945, 2.6% above like-2016’s 52,584 – 26 selling days. (Note: The total includes estimates for BMW. Due to technical issues, BMW will report October sales Nov. 2.)

October’s sales burst, combined with production cuts, likely took out a big chunk of the excess inventory. However, there still will be an inventory overhang in November and December, and sales could remain above the 17 million-unit SAAR level for the final two months of 2017.

Based on DSRs, Ford posted its second straight year-over-year gain, on the strength of fleet volume and a whopping 20% increase in Ford F-Series pickup sales.

Ford’s surge allowed it to claim the No.2 slot in October ahead of Toyota, which had topped it during the third quarter as it underwent an inventory purge to alleviate its excess dealer stocks. Even though Ford zoomed past it in October, Toyota still managed a 5.2% gain, as well as a sixth straight year-over-year increase in market share.

Nissan recorded by far its best gain in 2017, with October sales up 12.7% from like-2016. Besides gains in its trucks, part of its surge was huge increases for the Nissan Maxima (79%) and Sentra (35%) cars.

Inventory control, fleet volume and some new products – the Buick Enclave, Chevrolet Traverse and GMC Acadia – lifted General Motors to its third consecutive gain in October. GM’s market share also topped 18% for the third straight month, which also were the three best penetration totals it’s had in 2017.

Other automakers with year-over-year increases included BMW, Daimler, Honda, Mitsubishi, Subaru, Volvo and Volkswagen Group.

Losses were notched by FCA US, Hyundai, Jaguar Land Rover, Kia, Mazda and Tesla.

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