October U.S. Sales Edge Industry Closer to Possible Record Year

October U.S. light-vehicle sales upset expectations of a mild slowdown from the 17.8 million-unit seasonally adjusted annual rate averaged over the previous three months by improving on it with an 18.1 million mark.

Although edging September by only a few thousand units, October’s SAAR was the fourth straight month-to-month increase, a rarity even during periods of strong growth.

A generally healthy economy, low fuel prices, low interest rates and pent-up demand still make up the basis for the market’s sterling results. But adding to October’s total was an unexpected increase in incentive levels from September. That the industry raised incentives in the first month when most ’16 models are in widespread availability, and fewer’15 models remain stock, could be a harbinger of things to come.

Based on data from TrueCar, several automakers continued the incentive creep they started in Q3 by aggressively raising discounts in October, usually a good time to cut back on spiffs.  With Ford announcing a generous consumer-discount program for the final two months of the year, sales could end 2015 as high as 17.5 million units if other automakers react in kind by goosing their already rising incentives.

Sales in the final two months of the year would have to increase by just 4% over last year’s combined November-December total to top the record 17.35 million deliveries set in 2000. The only hindrance might be whether the right inventory is there to do it. The fourth quarter is a seasonally strong time of year for pickups, large SUVs and luxury vehicles.

October’s LV volume totaled 1.45 million units for a daily selling rate of 51,663 over the month’s 28 selling days. The DSR was 9.6% above year-ago’s 47,142 (27 selling days).

Year-to-date volume through October totals 14.44 million, 5.9% above year-ago’s 13.64 million and the highest 10-month total since 2000’s 14.88 million.

Continuing 2015’s established pattern, light trucks surged to record October penetration of 58.4%, with sales up 17.2% from year-ago. Cars increased 0.4% from like-2014.

CUV sales increased 27.1% from same-month 2014, with huge gains in small, midsize models and luxury versions. Luxury SUVs also increased dramatically as luxury-segment trucks in total rose 25.2%. A 1.0% decline in Luxury Cars diluted the overall gain in luxury vehicles to 9.4%.

Small Pickups also helped the light-truck boom with deliveries up 26.1%. However, Large Pickups increased less than 1% from year-ago, and market share dropped to 12.4% from 13.5% in October 2014.

Also priming October’s volume were fleet deliveries, with early estimates indicating a double-digit increase over year-ago, likely helping account for a second straight year-over-year gain in Middle Cars. Sales in the small-volume Large Car segment also were up, but Small Cars declined as did the aforementioned Luxury Car segment.

Nearly all automakers posted increases over year-ago, with many up by double digits – BMW recorded the lone shortfall. Volkswagen/Audi eked out a second gain following the revelation of its emissions rigging.

The biggest gainers in large part were the same as those with significant incentive increases and some that tend to have a heavy mix of fleet volume. Finishing ahead of the industry’s average increase were FCA US, GM, Hyundai, Jaguar Land Rover, Mazda, Mitsubishi, Subaru, Tesla and Volvo.

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