J.D. Power Sees Strong October

Auto experts have been saying for months that this year could be the strongest in a decade, and that total sales could top 17 million. Last month was huge -- and predictions are that October is going to be another winner. J.D. Power & Associates sees this month winding up as the best October since 2001, in the post-9/11 days where automakers kicked off such 0% financing campaigns as GM's “Keep America Rolling.” 

Based on data from its LMC Automotive unit, J.D. Power sees 1.1 million new cars and trucks rolling this month. Back in 2001, the incentive deals moved 1.6 million new vehicles into personal garages in October. 

The company also notes that this month gets the extra benefit of having an extra week -- although October won't be quite as strong as September, which moved 1.2 million units. To be sure, October also didn’t benefit from having Labor Day, traditionally strong for dealerships. 



John Humphrey, SVP of global automotive at J.D. Power, said in a statement: “The expectation is that we would see some weakness in subsequent months, but that hasn’t been the case.” He added that through the first 18 days in October, retail sales are up 7% compared with the same period a year ago.

Thomas King, VP of Power Information Network (PIN) at J.D. Power, tells Marketing Daily that the right lens from which to view monthly sales performance, one that sidesteps complications around calendar discrepancies, is the seasonally adjusted rate, or SAAR.

“This year patterns are thrown off because Labor Day fell in September, not August. He says that last month, the best September in a decade, retail SAAR was 15.3 million. This month, he says, it will be around 14.3 million. If you include fleet sales, October will be a 17.4 million SAAR month. 

And, has been the case all year, and much of last, truck and SUV sales have been strong. This month J.D. Power predicts that truck sales will be up 15% year over year, while car sales will drop 2.6%, with pickups and SUVs accounting for 58% of retail sales so far in October. Incentives on cars are $650 per unit higher than truck incentive spending, per the firm. But that hasn’t helped much, per Humphrey. “While incentive spending on cars has risen 16% year over year, truck incentive spending is up just 2% compared with October 2014.”

King says trucks are benefiting not only from low gas prices, but from fresh vehicles in the category and vastly improved fuel efficiency. “Trucks are strong because of structural reasons, but there are also large numbers of new products, such as small SUVs and those vehicles have good fuel economy, and new designs; folks are responding.”

J.D. Power sees a strong market continuing through year-end. LMC Automotive says it is raising its 2015 total light-vehicle sales forecast to 17.3 million units from 17.2 million units and its retail light-vehicle forecast to 14.2 million units from 14.1 million units. 

“The tenacious pace of auto sales since May, combined with the current favorable position of the U.S. economy, is increasing the level of upside potential to 2015 by 100,000 units, while nearly wiping out any downside risk,” said Jeff Schuster, SVP of forecasting at LMC Automotive, in a statement. “Looking forward, the forecast for 2016 is 17.6 million units, but growing economic stability and consumer confidence could easily push light-vehicle sales toward 17.8 million units next year.”

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