October auto sales fall, but market in U.S. still trucking
Automakers reported lower U.S. sales for October, reinforcing the idea the market may have plateaued at a healthy level that still supports the U.S. economy.
The companies faced a difficult comparison to the year-earlier month, which was the best of 2015 and had two more sales days. General Motors exceeded estimates with a decline of 1.7 percent instead of the 6.9 percent predicted in a Bloomberg survey of analysts. Toyota missed big with an 8.7 percent drop, while Fiat Chrysler Automobiles and Nissan also fell. Ford’s report is delayed until later this week.
October’s results help explain why investors have lost enthusiasm for automakers’ shares, even with the possibility still in play that 2016 could mark a record seventh straight year of sales gains. While pickup and sport utility vehicle demand remains strong enough to keep the companies making money, it will be hard for most to wring out better earnings.
“It’s getting tougher to sell cars, but it’s still a pretty good market,” Michelle Krebs, an analyst with Cox Automotive’s Autotrader, said in an interview. “It’s just taking more money to push the sales.”
GM predicted the annualized pace of sales, adjusted for seasonal trends, will be 18 million vehicles, more than the 17.7 million average estimate in the survey. Either rate, while down from 18.2 million a year earlier, would still be one of 2016’s best and keep alive the possibility of topping last year’s annual record.
Automakers are dialing up the deals as the market slows. Sales gains by GM’s large SUVs were aided by higher incentives, Krebs said. GM also added “hefty rebates” on its Silverado pickup to win back sales it lost in September to Fiat Chrysler’s Ram, said Brad Korner, general manager of AIS Rebates.
Tuesday’s results won’t be the final word on October. Ford won’t report until later in the week because a Monday fire at its headquarters disrupted the flow of information from dealers, the No. 2 U.S. automaker said in a statement. At Fiat Chrysler, Jeep SUV sales took a rare drop, falling 6.6 percent. Sales by Volkswagen’s namesake brand fell 18 percent to 24,779. Honda reported a 4.2 percent sales drop, just beating the forecast.
Toyota’s October sales took a much larger 8.7-percent hit than the 4.7 percent that analysts predicted.