U.S. sales at FCA US rose 16 percent in October behind another big month at the Jeep and Ram brands, and strong fleet shipments.

Volume rose 9 percent at Jeep, 14 percent at Ram, 38 percent at Dodge and 21 percent at the Chrysler brand. It was the 10th month in a row that Jeep volume advanced year over year.

The rise in Dodge deliveries last month reflected a 357 percent surge in sales of the Caravan, the venerable minivan that is now sold primarily to fleet customers.

Retail sales totaled 141,200, and fleet shipments were 36,191 last month, or 20 percent of overall volume, FCA said.

At Ford Motor Co., volume dropped 4 percent last month behind lower car and F-series sales. Deliveries fell 3.5 percent at the Ford division and 15 percent at Lincoln.

U.S. sales of the F-series pickup dropped 7.3 percent last month and car volume skidded 17 percent, Ford said.

Ford’s U.S. retail volume declined 4.9 percent and fleet shipments dipped 1.2 percent.

Toyota Motor Corp., helped by a 6.8 percent rise in light-truck volume, said October sales rose 1.4 percent, with volume up 1.7 percent at the Toyota brand but down 0.8 percent at Lexus. Combined car deliveries at Toyota and Lexus fell 7.2 percent.

Another weak month for car demand resulted in a 11 percent decline at Nissan Motor Co. in October, with sales off 13 percent at the Nissan brand but up 15 percent at Infiniti. Nissan said combined car sales at Nissan and Infiniti skidded 24 percent last month.

Honda Motor Co. posted a 4.1 percent decline in volume last month, with car sales off 15 percent and truck deliveries advancing 6.5 percent. Sales fell 5.3 percent at the Honda brand but rose 7.3 percent at Acura.

Industry outlook

When other automakers report results later today, analysts expect overall light-vehicle demand for the month to have declined about 2 percent from October 2017.

U.S. auto sales in 2018 have risen 0.5 percent through September but an anticipated second-half slowdown is underway. Volume skidded three straight months beginning in July, with the September decline — 5.5 percent – the largest of the year.

Easy money ends

While consumer confidence remains high and U.S. employment growth is strong, rising interest rates are making it more expensive for consumers to finance or lease new vehicles. That has prompted some buyers to shift to used cars and light trucks as an era of easy money fades away.

Still, while there is growing consensus that the U.S. new light-vehicle market will decline in 2018 from 2017, it is still expected to finish the year above 17 million for the fourth straight year, an unprecedented stretch. That run included a record 17.5 million sales in 2016.

While passenger car sales remain on track to fall for the fifth straight year, light-truck demand remains strong, helped in part by elevated incentives and moderate gasoline prices.

“The marketplace is very competitive, regardless of segment,” AutoNation CEO Mike Jackson told analysts Wednesday on an earnings call. “And affordability is an issue with rising rates for the consumer. You can tell them all day long that these are very attractive rates. All they know is money used to be free and now they have to pay for it. So that’s an adjustment period that they’re going through.”

SAAR outlook

The seasonally adjusted, annualized sales rate for October is expected to come in at a robust 17.3 million. Still, that’s down from 17.9 million in October 2017, when demand spiked following Hurricanes Harvey and Irma, according to analysts surveyed by by Bloomberg. If the SAAR projection holds, October would mark the eighth month in 2018 the annualized pace of sales has topped 17 million.

Major automakers

Among major automakers, October sales were projected by analysts polled by Bloomberg to rise at only three automakers: Fiat Chrysler, with an expected gain of 12 percent; VW/Audi (0.5 percent) and Hyundai-Kia (2.6 percent). Analysts expect volume to fall 6.7 percent at General Motors, 5.5 percent at Ford, 1.4 percent at Toyota, 10 percent at Nissan and 0.4 percent at Honda.

Tracking incentives

J.D. Power says average new-vehicle incentives were tracking at $3,742 in the first few weeks of October, down from $3,885 in October 2017. ALG estimates average incentive spending per new vehicle dropped $103, or 2.8 percent, to $3,609 last month compared with October 2017. And the ratio of average incentive to average transaction price is expected to be 10.6 percent, down from 11.1 percent a year earlier. The Detroit 3, along with Nissan, continue to be the biggest discounters, with October incentives averaging more than $4,000 a vehicle, ALG estimates. (See chart below.)

Odds, ends

• Days to turn, or the average number of days a new vehicle sits on a dealer lot before being sold, was 69 days through Oct. 21, down five days from October 2017, J.D. Power says.

• There were 26 selling days last month, one more than October 2017.

• Fleet volume is expected to drop 2.3 percent yet account for 22 percent of all light-vehicle sales, up from 21 percent in October 2017, J.D. Power says.

• The average new-vehicle retail transaction price in October is on pace to reach $32,947, an all-time monthly record, Power says. The previous high for the month of October — $32,449 — was set last year. Kelley Blue Book estimates the average transaction price for light vehicles in the United States was $37,007 in October, an increase of $1,118, or 3.1 percent, from October 2017, while mostly flat from September.

Quotable

“For the manufacturers, the shift to trucks is extremely profitable and they’ll be fine.”

— AutoNation CEO Mike Jackson.

Hannah Lutz contributed to this report.

October incentive outlays for U.S.
Manufacturer October 2018 forcast October 2017 September 2018 Percentage change vs October 2017 Percentage change vs September 2018
BMW (BMW, Mini) $5,316 $5,289 $5,695 0.5% -6.7%
Daimler (Mercedes-Benz, Smart) $5,633 $4,964 $5,943 13.5% -5.2%
FCA (Chrysler, Dodge, Jeep, Ram, Fiat) $4,434 $4,572 $4,600 -3% -3.6%
Ford (Ford, Lincoln) $4,390 $4,289 $4,757 2.4% -7.7%
GM (Buick, Cadillac, Chevrolet, GMC) $4,440 $4,910 $4,451 -9.6% -0.2%
Honda (Acura, Honda) $2,018 $1,935 $2,036 4.3% -0.9%
Hyundai $2,772 $3,002 $2,869 -7.7% -3.4%
Kia $3,646 $3,639 $3,792 0.2% -3.9%
Nissan (Nissan, Infiniti) $4,074 $4,036 $4,468 0.9% -8.8%
Subaru $1,203 $1,067 $1,252 12.7% -3.9%
Toyota (Lexus, Scion, Toyota) $2,438 $2,522 $2,645 -3.3% -7.8%
Volkswagen (Audi, Porsche, Volkswagen) $3,675 $3,519 $3,861 4.4% -4.8%
Industry $3,609 $3,712 $3,804 -2.8% -5.1%

 

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