October 2018 auto sales in the U.S. came in higher than anticipated, beating the Cox Automotive forecast of 1.33 million vehicles sold. Trucks, SUVs and CUVs carried the month, again, with one manufacturer noting “historic” truck sales.
While General Motors did not release October sales, the Cox Automotive team is estimating the company delivered sales better than our initial forecast of 229,000, a 9.4 percent drop vs. year-ago levels. Considering market performance in October, our revised estimate for GM puts October sales at 242,000, down roughly 4 percent from last year.
Please find below commentary and notable highlights from the team at Cox Automotive. If you would like to speak with one of the expert analysts from Autotrader, Kelley Blue Book or any member of the Cox Automotive Industry Insights team, please contact us.
From Michelle Krebs, Executive Analyst for Autotrader:
FiatChrysler was likely the winner in October, with every brand but Fiat delivering significantly higher sales. Hefty incentives on specific models that resonated with consumers helped FCA to a 16-percent increase. Among them: up to $7,000 on some versions of the Ram; up to $11,000 on some versions of the 2018 Jeep Grand Cherokee, which finally had an up month; up to $7,000 on Chrysler 300, which saw sales up 37 percent. However, up to $13,750 in customer cash on the 2018 Dodge Charger SRT 392 didn’t move the needle for the entire line, which was down 22 percent.
Ford sales, while down versus 2017, were better than anticipated and were safely ahead of FiatChrysler, which beat Ford in September. Ford had a 70,000 plus month for F-Series but it was sport utilities, notably Explorer and Expedition along with the hot-selling and pricey Lincoln Navigator that helped the company beat our forecast.
From Rebecca Lindland, Executive Analyst for Kelley Blue Book:
The domestic-brand truck wars are alive and well, as consumers take advantage of new models, terrific incentives, and a hot job market. Increasing gas prices have little effect on consumer choices as functionality and utility continue to rule the day. Pickup trucks are some of the most luxurious and well-equipped vehicles in showrooms today. The new Chevy Silverado and GMC Sierra are prime examples of full-size trucks that drive a lot smaller than they look, making it a pleasure to use these vehicles on a day-to-day basis, and the new Ram 1500 shows substance and style are an unbeatable combination. And yet, despite all the new competition, the F-150 remains up year-to-date and outsold all Ford SUVs combined in October, further proof there’s nothing quite like a pickup truck
From Brian Moody, Executive Editor of Autotrader:
Ford is entering the perfect storm for automotive revenue—and it’s a good storm, as customers want what Ford wants customer to want, namely large, pricey trucks and SUVs. At the same time, Lincoln is quietly building some of the best luxury vehicle is the business right now, backed with a powerful combination of hardware and software/services. Navigator’s big gains show their revisions are really connecting. Once the Nautilus gets up and running, I bet it’s a similar story.
Like Lincoln, Acura is going through a kind of revival. People want lux SUVs and Acura makes some good ones. Both the MDX and RDX are compelling and finally feel like their own thing – not a luxurious Honda. Lincoln is a little ahead of them and has successfully done the same, created a line of good product that doesn’t feel and look like expensive Fords.
From Zo Rahim, Research Manager for Cox Automotive:
Monthly market share for cars will likely dip below 30 percent for the third straight month in October. Share for cars continues to decrease and has the momentum to fall below 28 percent soon. The drop is being driven by the Detroit Three, whose market share appears to be below 20 percent in October for the second straight month. Even Asian brands continue to struggle with cars; if they pull back as the domestics have, it would only exacerbate the declines.
Decreasing car sales, however, is not a major issue for the OEMs. Inventory and Days Supply for cars remains healthy – far lower than light trucks. As the industry focuses on the latest and greatest pickups and CUVs, car production has come down and we’re at a point where supply is favorable to demand. In fact, one could argue that demand for cars is strong and affordability concerns are causing potential shoppers to move to the used-vehicle market, where there is ample supply of good, desirable vehicles, highlighted by car segments pricing gains in the wholesale market.
From Charlie Chesbrough, Senior Economist for Cox Automotive:
The strength in today’s new-vehicle sales results for October were surprising, a little higher than our 17.1 million expectation. Many signs in the economy would suggest that vehicle demand should be moderating – higher interest rates, import tariffs, weak housing market, stock market volatility, elevated gas prices – yet vehicle buying remains strong.
Monthly payments are rising as the Federal Reserve’s monetary tightening policy takes hold, but sales have not declined. It may be that higher income Americans, the key new-vehicle buying demographic, are doing particularly well in today’s economy. The key ingredients for strong sales exists – low unemployment, high confidence, and credit availability. However, most market watchers expect demand to decline as economic conditions change in 2019. But for now, the robust sales pace in 2018 continues.
From Brad Korner, General Manager for Cox Automotive Rates and Incentives:
Incentive levels have been tapering since late summer, with auto makers balancing incentives with an industry wide “low days in stock” inventory level. There are still excellent deals to be found, with OEMs and their captive lenders supporting lease pull-aheads and targeted conquest and loyalty programs. We are also beginning to see more auto makers experimenting with extra customer-cash support for consumers with low FICO Scores, as credit and interest rates become more of a challenge for consumers. These finance incentives will help dealers negotiate sales more competitively with monthly payments.