Oc­to­ber auto sales fall, but mar­ket in U.S. still truck­ing

Baltimore Sun - - BUSINESS - By Jamie But­ters, David Welch and Keith Naughton

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.

JOE RAEDLE/GETTY IM­AGES 2015

Toy­ota’s Oc­to­ber sales took a much larger 8.7-per­cent hit than the 4.7 per­cent that an­a­lysts pre­dicted.

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