Analysts Stay Cautious after Automakers Cheer October New-Vehicle Sales Performances
Several automakers used descriptions such as “record” and “best since” to highlight their October new-vehicle sales performance.
But such lofty words are why analysts from Edmunds.com, TrueCar and J.D. Power and Associates sounded cautious when discussing what October’s sales numbers mean in the near term and beyond.
“High prices and inventory shortages in late April through August kept some consumers from the market. Netting it out, there were easily 200,000 sales that would have occurred this year that were deferred. These consumers started returning in September and have fueled a sales rebound,” Edmunds.com chief executive officer Jeremy Anwyl surmised.
“Depending on pricing and availability through December, most of this should play itself out by year-end,” Anwyl continued. “This suggests we should view sales in October with a degree of caution. The performance over the past few months is not the start of a trend. It is more of a mini-bubble.
“I do expect that the level of demand for vehicles will continue to rise until next year,” he went on to say. “There are a growing number of consumers for whom a new vehicle is becoming a necessity, but I expect the slope of this underlying trend to remain modest.”
J.D. Power estimated October retail seasonally adjusted annualized rate (SAAR) is expected to come in at 10.5 million units, which is at the same level as September. J.D. Power placed the total light-vehicle selling rate at 13.1 million units for the month.
“The relatively strong selling rate seen again in October suggests that the fourth quarter may close stronger than previously expected,” stated Jeff Schuster, J.D. Power’s executive director of global forecasting.
“Recent bright spots in the economy may also help calm nerves and support stable vehicle sales, but risks remain and consumer confidence is still low, tempering the outlook for 2012,” Schuster added.
TrueCar vice president of industry trends and insights Jesse Toprak told Auto Remarketing that October sales ended up where he expected with the SAAR going above the 13-million mark.
“It appears the last week of the month we saw a decline in sales,” Toprak acknowledged. “We have two reasons to blame for the lackluster finish to October. One is the instability in the financial markets. The other was the unseasonably bad weather in some parts of the country that kept shoppers away from dealers.
“The month of October was one of those months that despite some uncertainty, we were able to post over 13 million in sales, so that means the underlying demand for car buying is healthy but far from being ideal,” he went on to say. “We’re going to have a long way to recover in terms of getting back to what we’d call the normal sales, which we think is about 14.5 million units. Industry sales are about two years from reaching that point. We expect to see about 13.7 million unit sales in 2012.”
Impact on Used-Vehicle Market
While automakers talked plenty about their new-vehicle sales, Auto Remarketing asked Toprak about what the October performance means to dealers’ used-vehicle departments.