Market Overview

Auto Sales Slow In October Despite Hurricane Boost

Share:
Auto Sales Slow In October Despite Hurricane Boost
Related GM
NAFTA Talks Race Against Mexico's Deadline
This Day In Market History: Electric Car Wins First U.S. Auto Race
IBD Stock Of The Day: Hot Auto Brand Makes Key Moves, Hits Buy Signal (Investor's Business Daily)
Related F
NAFTA Talks Race Against Mexico's Deadline
Robinhood Responds To Allegations Of Shortchanging Customers
Ferrari: Expensive Or Not? (Seeking Alpha)

After two fairly strong months, auto sales softened in October, courtesy trimming of incentives and one fewer selling day in the month.

However, industry watchers believe sales will rebound in the final months of the year, as automakers strive to clear inventories.

Incentive spending remained aggressive in October, J.D. Power said. The firm estimated average incentive spending per unit in the month through Oct. 26 to be $3,901, up from $3,835 in October 2016. However, incentives moderated from September 2017.

Industry Forecasts

Auto sales for October could have dipped 3.5 percent year over year and 13.3 percent month over month to a seasonally adjusted annual rate of 17.6 million units in October, according to car shopping and information platform Edmunds.com.

The firm saw a small lift coming from replacement demand in Houston following the recent hurricanes.

However, October's SAAR represented the second highest monthly sales rate in 2017, and therefore the month should qualify as a fairly strong one, Jessica Caldwell, executive director of industry analysis at Edmunds said.

J.D. Power concurred with Edmunds in naming October as the month recording the second highest level of retail sales thus far this year, with the retail sales pace forecast at a SAAR of 14.2 million units, though down 0.3 percent year over year.

"Recovery from Hurricanes Harvey and Irma continue to aid new-vehicle retail sales in October," said Thomas King, senior vice president of the data and analytics division at J.D. Power.

"Despite one fewer weekend than last year, sales in the Hurricane-affected regions continue to post gains in October."

See also: Bill Ford Says Detroit And Silicon Valley Are Frenemies, Thinks There's 'Lack Of Clarity' In Automaker Valuations

GM Sales Slip

General Motors Company (NYSE: GM) said total sales fell 2 percent to 252,813 units, with the firm blaming the drop on lower passenger car deliveries and one fewer selling day compared to last year.

However, selling-day adjusted sales were up 2 percent. The company claimed that its retail market share topped 17 percent for the third consecutive month, the first time since 2011.

Month-end inventory fell from the level at the end of September, and incentive spending as a percent of average transaction price eased to 13.5 percent from the third quarter estimate of 13.7 percent.

Ford Sales Rise But Slow From September

Ford Motor Company (NYSE: F) said its October sales climbed 6.2 percent to 200,436 vehicles. Retail sales were up 3.5 percent to 148,105 or 74 percent of the total vehicles sold. Fleet sales soared 14.6 percent.

In line with the recent trend, truck sales climbed 11.4 percent and SUV sales rose 5.3 percent, while car sales skidded 2.4 percent.

"F-Series produced another big sales gain for us in October. Strong customer demand for high series Super Duty continues, and now we're seeing the same for the new 2018 F-150. With sales up 15.9 percent, F-Series drove our overall truck sales to an 11.4 percent gain for the month," said Mark LaNeve, Ford vice president, U.S. marketing, sales and service.

Fiat Chrysler's Retail Sales Reverse After September's Rebound

Fiat Chrysler Automobiles NV (NYSE: FCAU) reported a 13 percent year-over-year drop in total sales to 153,373 vehicles in October. Retail sales, accounting for 85 percent of the sales, fell 4 percent and fleet sales plunged 43 percent.

Foreigners Not Immune To Slowdown

  • Toyota Motor Corp (ADR) (NYSE: TM) reported a 1.1 percent increase in October sales to 188,434 units. On a daily selling rate basis, sales were up a steeper 5.2 percent. A 2.5 percent increase in sales volume at the company's Toyota division helped to counter the 7.7 percent drop in Lexus sales.
  • Nissan Motor Co Ltd (ADR) (OTC: NSANY)'s October sales growth slackened to 8.4 percent from 9.5 percent in September, although the 123,012-unit sales represented a record performance for October.
  • Honda Motor Co Ltd (ADR) (NYSE: HMC) reported a 0.9 percent year-over-year increase in October sales to 127,353 vehicles. Buoyed by strong sales of passenger cars, Honda division sales rose 1.2 percent, while Acura division's sales fell 1.3 percent.

Outlook

Edmunds believe the year could still finish strong despite the so-so performance thus far, provided incentives flow out copiously in a bid to clear high inventory levels of 2017.

The need to reduce inventory could send incentive spending to a new all-time high level in the final months of the year, according to J.D. Power.

Stock Reaction

  • Fiat Chrysler stock was rallying 1.38 percent at $17.59.
  • Ford was up 0.73 percent at $12.36.
  • GM shares were slipping 0.65 percent at $42.70.
  • Honda Motor was climbing 1.77 percent at $31.65.
  • Nissan was seen trading up 0.46 percent at $19.53.
  • Toyota Motors shares were up 0.26 percent at $124.32.

Related Link: Q3 Earnings Season: What We Know So Far

Posted-In: News Retail Sales Travel Top Stories Economics Media Trading Ideas General Best of Benzinga

 

Related Articles (F + FCAU)

View Comments and Join the Discussion!

Predicting Where The QQQ Will Be By The End Of The Week

The VantagePoint Weekly Forex Outlook