WESTLAKE VILLAGE, Calif. — New-vehicle sales should remain stable in October, pacing at the more than 10 million-unit level, according to J.D. Power and Associates. The market research firm projects sales to come in at 828,300 units, which represents a seasonally adjusted annualized rate (SAAR) of 10.5 million units.
"After a solid September selling rate, there were questions as to whether the strength would continue into October, given continued concerns with the economy," said John Humphrey, senior vice president of global automotive operations at J.D. Power and Associates. "However, consumers are again returning to dealerships, keeping the sales pace more consistent with the strength seen at the beginning of the year."
The year-over-year increase in the selling rate is expected to reach 11 percent, marking the second consecutive double-digit growth rate after four months of single-digit growth, according to J.D. Power. Total light-vehicle sales in October are expected to come in at 1.012 million units, an 11 percent increase vs. October 2010.
Fleet sales also are expected to increase 11 percent vs. October 2010 and will account for 19 percent of total sales, according to J.D. Power. Considering the continued strength in October, the company is maintaining its forecast for 2011 at 12.6 million units for total light-vehicle sales and 10.2 million units for retail light-vehicle sales.
As the level of economic uncertainty remains high, however, J.D. Power is decreasing its forecast for 2012 to 13.8 million units for total light-vehicle sales from 14.1 million units. For light-vehicle sales, the firm has dropped its forecast to 11.2 million units from 11.5 million units.
"The risk of a double-dip recession has increased to nearly 40 percent, driving the reduction in the forecast for 2012," said Jeff Schuster, executive director of global forecasting at J.D. Power and Associates. "While there have been recent positive signs in the economy and we expect another recession will not materialize, the recovery pace for 2012 is taking another hit, although a complete halt in growth is unlikely."
North American light-vehicle production through the first three quarters of 2011 is up nearly 9 percent to 9.7 million units from the year-ago period. Japanese OEMs continue to recover from the earthquake and tsunami disaster earlier this year, with production down 10 percent in the year-to-date comparison.
The Detroit Three have increased production by 14 percent year to date, while the European manufacturers are seeing a 41 percent increase, helped by BMW's expansion in South Carolina, according to J.D. Power.
Vehicle inventory edged up slightly to a 50-day supply at the beginning of October from 49 days at the beginning of September. Car inventory has increased to a 44-day supply, up from 40 days in September. With some cuts in truck production, truck inventory started October at 55 days, down from 57 days in September.
Several manufacturers remain well below the industry norm of a 60-day supply, as Hyundai/Kia began October with 25 days' supply (was 21 days in September), Honda with 33 days' supply (previously 32 days) and BMW at 29 days' supply (previously 33 days). The 2011 North American production outlook remains on track for 12.9 million units, an increase of nearly 9 percent vs. last year.
As inventory replenishment continues, fourth-quarter 2011 production output is expected to reach 3.2 million vehicles, a 10 percent improvement vs. the year-ago quarter.