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October New-Vehicle Sales Nearing 2008 Feat

October 25, 2012

WESTLAKE VILLAGE, Calif. — October new-vehicle sales have so far continued the robust pace realized in September, with J.D. Power and Association’s and LMC Automotive projecting another month of double-digit, year-over-year growth.

October new-vehicle retail sales are projected to come in at 943,200 units, a 13 percent increase in volume from October 2011. If the prediction sticks, October’s seasonally adjusted annualized rate (SAAR) should come in at 12.0 million units, marking the second consecutive month the rate has topped 12 million units. It would also be the first time since 2008 (April and May) that the sales have reached that mark.

“The October retail sales pace is solidifying an accelerating recovery in the automotive market,” said Deirdre Borrego, vice president and general manager of U.S. Automotive Operations at J.D. Power and Associates. “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.”

Total light-vehicle sales in October are projected to increase 11 percent from October 2011, with volume at 1.135 million units. Fleet sales in October are expected to represent 17 percent of total sales, which is slightly below the five-year average of 19 percent for October.

 

October 20121

September 2012

October 2011

New-Vehicle Retail Sales

943,200 units

(13% higher than October 2011)

997,285 units

832,551 units

Total Vehicle Sales

1,134,800 units

(11% higher than October 2011)

1,186,648 units

1,018,694 units

Retail SAAR

12.0 million units

12.4 million units

10.5 million units

Total SAAR

14.8 million units

14.9 million units

13.2 million units

1Figures cited for October 2012 are forecasted based on the first 17 selling days of the month.

LMC Automotive also is increasing its 2012 outlook for total light-vehicle sales in the United States from 14.3 million to 14.4 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.

“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,” said Jeff Schuster, senior vice president of forecasting at LMC Automotive. “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. There is further upside potential for 2013 if the level of demand continues to outpace the risk factors post-election.”

Compared to last year, North American light-vehicle production volume is up 20 percent through the first three quarters of 2012, and continues to be one of the 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.

Although vehicle inventory in early October climbed slightly to a 58-day supply, compared with 57 days in September, it remains below the 60-day threshold. Both car and truck inventories are up slightly as well. Car inventory has risen to a 51-day supply from 50 days in September, while truck inventory has increased to a 65-day supply from 64 days.

Based on the recent strong level of demand (North American sales are up 13 percent through September this year), the 2012 North American production forecast has been increased to 15.3 million units (from 15 million in the previous forecast), a 17 percent increase from 2011. The increase reflects the need for higher production volume in the fourth quarter to maintain current inventory levels. The North American production forecast for 2013 is expected to approach 16.0 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,” said Schuster. “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.”

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