There seemed to be no sign of a slowdown in light vehicle sales in the waning days of October, according to data compiled by J.D. Power and Associates and LMC Automotive.
The firms said total light-vehicle sales in October are projected to increase 11% compared to the same month in 2011, with volume at just over 1.13 million units. Fleet sales in October are expected to represent 17% of total sales, which is slightly below the five-year average of 19% for past Octobers; indicating that automakers continue to manage production levels.
October new-vehicle retail sales are projected to come in at 943,200 units—a 13% increase in volume, compared with the same month last year—which represents a seasonally adjusted annualized rate (SAAR) of 12 million units. The forecasted selling rate in October is the second consecutive month above 12 million units, the first time that has occurred since April and May of 2008.
“The October retail sales pace is solidifying an accelerating recovery in the automotive market,” said Deirdre Borrego, vice president & general manager of U.S. Automotive Operations at J.D. Power. “Each month, we’re seeing stronger signs of a healthy market, not only in terms of sales volumes, but also in dealer inventories, transaction prices and incentive levels.”
As a result, LMC Automotive is boosting its outlook for total light-vehicle sales in the U.S. to 14.4 million units in 2012 from its previous forecast of 14.3 million units. The retail sales forecast is also revised upward to 11.7 million units from 11.6 million units. The forecast for 2013 remains 15 million units for total light-vehicles and 12.3 million for retail sales, noted Jeff Schuster, LMC’s senior VP of forecasting.
“It is becoming clear that the U.S. automotive market is finally approaching a stage of a more natural level of demand, which has been accelerated by increasing consumer confidence and a need to replace aging vehicles,” he said.
“This stability at a higher level is taking the edge off the risk factors for the remainder of 2012 and into 2013, as the U.S. economy wrestles with the European crisis,” Schuster added. “There is further upside potential for 2013 if the level of demand continues to outpace the risk factors post-election.”
In terms of manufacturing, North American light-vehicle production volume is up 20% throughout the first three quarters of 2012 compared to the same period in 2011 and continues to be one of the U.S. economy's bright spots. More than 1.9 million additional vehicles have been manufactured in 2012 through September, highlighting the progress achieved from last year's challenging production environment, Schuster noted.
Car inventory has risen to a 51-day supply from 50 days in September, while light truck inventory has increased to a 65-day supply from 64 days, he added.
Schuster pointed out that LMC’s North American production forecast for 2013 is expected to approach 16 million units – the first time since 2002 that North American production has reached that level.
“Production levels in North America have crossed over the psychological barrier of 15 million units, and now there’s no looking back,” he stressed. “Strong demand fundamentals in the short term, combined with resourcing of imported vehicles and growth in exports, will serve as the growth engine for increased volume, providing that the automotive supply base moves forward with needed investment in both capital and the workforce.”