Mercedes-Benz sales are expected to rise in October. The brand tends to trend up in the final quarter of the year, analysts noted.

Sales are expected to continue rebounding during October as retail sales remained steady despite rising prices and lower incentives, according to observers.

J.D. Power and LMC Automotive expect retail sales for the month of October are expected to be up 3% from October 2019, signaling a continuing recovery to sales drop as the COVID-19 pandemic gripped the company.

The industry is learning to live with the pandemic though total sales for the full year are expected to fall some 800,000 units short of the total in 2019.

(Ford outpeforms GM, FCA in third quarter sales.)

“Two consecutive months of year-over-year retail sales increases demonstrates that consumer demand is showing remarkable strength,” noted Thomas King, president of J.D. Power analytics division.

Subaru is another brand that analysts say will enjoy another strong sales result in October.

“The strong sales pace is occurring despite tight inventories. The combination of strong demand and lean inventories is enabling manufacturers to reduce new-vehicle incentives and is allowing retailers to reduce the discounts they typically offer on new vehicles.”

The average number of days a new vehicle sits on a dealer lot before being sold is on pace to fall to 49 days, the first time it has fallen below 50 days in more than eight years.

Mike Manley, CEO for Fiat Chrysler, said during a conference call with analysts that leaner inventories have made the business more efficient and helped in the industry’s ongoing efforts to control costs.

The average incentive from manufacturers on new vehicles is on pace to be $3,678 per vehicle, a decrease of $425 from prior year and the second consecutive month below $4,000, J.D. Power noted.

(Ford turns $2.4 billion net profit for Q3 2020.)

Expressed as a percentage of the average vehicle MSRP, incentives for October are 8.7%, down 1.4 percentage points from a year ago and below 9% for the first time since June 2016. For context, incentive spending peaked at $4,953 per unit in April 2020. Retailers also continue to post significant growth in margins on new-vehicle sales, according to J.D. Power and LMC.

New car sales are rising despite the fact that incentives are lower than they have been in nearly five years.

Average transaction prices are projected to be up 3.1% or $1,223 from a year ago and up 0.7% or $262 from September 2020. TrueCar projects that U.S. revenue from new vehicle sales will reach more than $48 billion for October 2020, up 0.4% (based on a non-adjusted daily selling rate) from a year ago and down 2.5% from last month.

“The auto industry recovery is absolutely striking. We clawed back more new car sales each month since sales bottomed out in April and are now seeing year-over-year new car retail sales growth for two consecutive months,” said Eric Lyman, Chief Industry analyst for ALG.

“This is a phenomenal outcome for the industry, as inventory is starting to rebound and demand remains high. There are positive signals that the recovery will sustain.”

(U.S. new car sales show signs of life in September.)

“A handful of brands, such as Mercedes and Subaru, are seeing an increase in sales month-over-month which is notable given that sales typically trend stronger in September than in October,” added Lyman. “These brands were hit harder by inventory shortages previously and are starting to replenish supply and address pent up demand,” he said.

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