Hurricane Replacements Bolster October U.S. Auto Sales
October U.S. new-vehicle sales are tracking stronger than a year ago, even with one fewer selling day, due to a lift from owners replacing hurricane-damaged and destroyed vehicles. New-vehicle deliveries are projected to rise a fraction of a point on a selling-day adjusted basis, according to a monthly update from J.D. Power and auto forecasting partner LMC Automotive. Trucks will account for 66% of the overall mix.
“Sales in hurricane-affected regions continue to post gains,” said Thomas King, senior vice president of Data and Analytics at J.D. Power. “On a national basis, October month-to-date sales are down 2.8% from last year. However, sales in the Southeast, including Florida, are up 5% as shoppers complete purchases postponed during Hurricane Irma and replace vehicles, while sales in the South Central region, including Houston, are up only 3% as recovery from Hurricane Harvey is further along.
Data collected during the first 17 selling days of October indicate that total light-vehicle deliveries (retail and fleet) will edge up 0.1% to 1.32 million units vs. last October’s 1.37 million units, when there was one extra selling day. Retail sales are set to dip (-0.16%) from last October to 1.07 million units, while fleets will rise 3.3% and account for 19% of the sales mix. It’s notable that during October, new vehicles have remained on dealer lots an average of 75 days before selling—the highest average since July 2009.
Incentives and rebates continue to climb as dealers clear out prior model-year stocks. The average spend per vehicle in October was $3,901, or about 10.5% of a vehicle’s MSRP, the update reveals. In addition, the average new-vehicle transaction price is $32,185, a record for October.
Commenting on trends, Jeff Schuster, senior vice president of forecasting at LMC Automotive, said that the sales pace is partly driven by hurricane recovery, but also appears to be less of a volume boost for a shorter time than anticipated. He said next year will be pivotal for auto sales, with variables ranging from a likely fiscal stimulus package, insurance-delayed hurricane recovery purchases, to used-car interplay and some credit tightening.