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October Auto Sales Could Be Best in Over 2 Years

Analysts anticipate best month since Cash-for-Clunkers.

by on Oct.31, 2011

The Chrysler 200 has been scoring big gains for the smallest of the Detroit makers.

If American consumers are reining in their spending that’s news to new car dealers who appear to have rang up one of the best months since the deep recession began three years ago.

Preliminary data suggests that the annualized sales rate for October could approach a relatively torrid 13.4 million to 13.6 million, an increase of as much as 15%, year-over-year – and a sign that momentum may be returning to the automotive market.

In recent weeks, industry analysts have been steadily paring back their forecasts for all of 2011 to less than 13 million.  With just two months left in the year, the apparent surge could bode well for 2012, however.

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“Consumers are no longer dragging their feet on new vehicle purchases as they feel the economy is moving in the right direction, ” said Jesse Toprak, Vice President of Industry Trends and Insights for TrueCar.com. “This will be the fifth straight month where SAAR (the Seasonally Adjusted Annual sales Rate) will rise and the highest we’ve seen in over two years.“

Since August 2009, in fact, and that month’s sales were heavily inflated by the government-funded Cash for Clunkers program.

Makers will release their sales data later this week but forecasts vary only slightly in what analysts anticipate seeing.  WardsAuto issued one of the most bullish forecasts, predicting a 15.4% gain in light-vehicle sales for October totaling 1.052 million.  That would equal a 13.6 million SAAR, which is adjusted to reflect the normal seasonal ups-and-downs of the auto market.

TrueCar anticipates total sales will come at a slightly lower 1.035 million, which would bring the SAAR to 13.4 million.

But that would still be a significant improvement from recent months, when the industry was clearly losing momentum.  The SAAR was an anemic 13.1 million in September.  It stood at 12.2 million in October 2010.

Whether the trendline is now pointing up remains a matter of debate.

“October’s sales numbers are certainly a bright spot in a sluggish economy, but it would be a mistake to believe that this momentum is the ‘new normal,’ said Jessica Caldwell, senior analyst at Edmunds.com. “Unless early holiday incentives inspire droves of buyers in November, we don’t expect sales to increase on the same trajectory as we have seen in the last two months.”

According to TrueCar, the biggest gains among the top seven carmakers will be posted by Chrysler, which it expects to be up 32.7% compared to October 2010, and Nissan, with an 18.7% year-over-year increase.

Hyundai and Korean sibling Kia are expected to show a 9.3% gain, with Ford up 7.4% and GM rising 4.9% for the month.

But there were still problems at Honda, with a projected 2.8% decline for October, and Toyota, which saw a 7.2% dip.  Those makers continue to struggle to get inventory levels back up to normal after the March 11 earthquake and tsunami that crippled much of the Japanese auto industry.

Honda’s chief American executive, John Mendel, told TheDetroitBureau.com last week that he anticipated a turnaround to begin over the next few months as production and inventory levels climb back to normal levels.

(For more on that story, Click Here.)

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