By David Phillips, Crain News Service
DETROIT (Nov. 5, 2014) — U.S. light-vehicle sales, led by double-digit increases at Chrysler Group L.L.C. and Nissan Motor Corp., rose 6 percent to 1.28 million in October, matching forecasts, with crossovers and light trucks fueling much of the industry's gains.
The seasonally adjusted annual sales rate, a broad measure of the industry's health, hit 16.5 million, slightly above projections and up 7 percent from 15.4 million a year earlier.
The SAAR (Seasonally Adjusted Annual Rate) has now topped 16 million every month beginning with March. In August, the SAAR surged to 17.5 million, the highest since January 2006.
“The U.S. economy has steadily improved all year, and now we are poised for a stronger expansion backed by an improved job market, higher consumer confidence and lower fuel prices,” said Kurt McNeil, General Motors Co.'s head of U.S. sales.
Chrysler Group's U.S. sales rose 22 percent while Nissan group sales were up 13 percent.
Toyota Motor Sales sold 180,580 Toyota, Scion and Lexus models last month, an increase of 7 percent. The results reflected record October demand for the Toyota RAV4 and Highlander, strong Camry shipments, as well as robust SUV volume.
“October vehicle sales were the best for the month in 10 years as an improving economy and lower gas prices drove strong SUV sales,” Bill Fay, Toyota division general manager, said in a statement. Lexus volume rose for the 12th consecutive month.
Sales edged up 0.2 percent at General Motors, with Buick volume rising 7 percent and Chevrolet deliveries up 1 percent. Sales slipped 1 percent at GMC and 8 percent at Cadillac. The company's retail volume dropped 2 percent, on lower consumer incentives, while fleet shipments rose 6 percent.
GM's car deliveries slipped 1 percent while truck volume rose 6 percent. GM said its crossover deliveries declined 8 percent on the discontinuation of the Chevrolet Captiva Sport which has been sold to only rental and fleet operators.
At Ford Motor Co., volume declined 2 percent as the company retools U.S. plants to build the redesigned F-150 pickup. The F series is Ford's top-selling nameplate. Sales fell 3 percent at the Ford division but climbed 25 percent at Lincoln.
55 consecutive monthly gains
Chrysler Group's U.S. sales continue to be buttressed by strong demand for the Jeep lineup and Ram pickups. The latest results extended the company's streak of year-on-year U.S. sales increases to 55 consecutive months.
Volume surged 52 percent at Jeep and 36 percent at Ram, with Ram pickup deliveries advancing 33 percent to nearly 40,000.
Sales rose 1 percent at Fiat and 18 percent at Chrysler Division but slipped 8 percent at Dodge. Overall, Fiat Chrysler's light-truck deliveries rose 28 percent and car demand edged up 4 percent.
“Chrysler is on a streak of growth that's virtually unheard of for American auto manufacturers,” Edmunds.com senior analyst Jessica Caldwell said. “The company's renewed focus on SUVs comes at a perfect time when gas prices are plummeting and shoppers are falling back in love with large vehicles.”
The strategy is undeniably successful, she added, but it's not invincible.
“If there is a spike in gas prices, Chrysler's weak small-car lineup may not be able to fully absorb the blow,” Ms. Caldwell said.
Aided by strong crossover and small-car demand, sales at the Nissan division rose 15 percent to 94,072 — an October record — but volume slipped 1 percent at Infiniti, the company said.
Overall, Nissan group's car deliveries rose 15 percent and light-truck volume climbed 11 percent. Demand for the Nissan Rogue compact crossover increased 14 percent while sales of the Murano midsize crossover jumped 38 percent.
Nissan division's U.S. sales have now set records in 13 consecutive months.
Fred Diaz, senior vice president for Nissan U.S. sales & marketing and operations, credited “high consumer confidence and low gas prices” for the company's results and predicted those factors “will continue to boost auto sales for the last two months of 2014.”
Nissan said deliveries of the Versa subcompact and Leaf electric vehicle each rose 29 percent, and Sentra compact volume jumped 56 percent.
The Leaf set an October U.S. sales record of 2,589. Nissan said the Leaf has set a record for most U.S. sales in a year by an EV at 24,411 — with two months to go.
Core models lift Honda
American Honda posted sales of 121,172 vehicles, an increase of 6 percent vs. October of last year. Honda Division set an October record on volume of 105,745 vehicles, a gain of 6 percent for the month. At Acura, sales rose 8 percent to 15,427.
Honda cited higher demand for three core nameplates — the CR-V compact crossover, Accord midsize sedan and redesigned Fit subcompact — for the results, though deliveries of the Civic compact dropped 12 percent.
Sales of the Fit rose 83 percent to 6,851 — an October record for the nameplate.
“The success of the new Fit is an important step in re-establishing small cars as a pillar in the Honda lineup,” Jeff Conrad, Honda Division general manager, said in a statement.
Subaru's sales jumped 25 percent to an October record of 43,012. The company has posted 35 consecutive months of year-over-year growth and is on track to produce its sixth successive annual sales record. Subaru said it expects to surpass its 2013 annual volume record of 424,683 vehicles sold in the coming weeks.
VW ends losing streak
Volkswagen broke a string of 18 consecutive monthly sales declines with an 8 percent rise in October volume.
Mark McNabb, COO of Volkswagen of America, credited a refreshed Jetta and all-new 2015 Golf and Golf GTI for “attracting customers and enthusiasts” and driving “increased traffic in our showrooms.”
Audi posted its 46th consecutive month of record sales, with October volume rising 17 percent to 15,150. The company said strong demand for SUVs, despite lean stockpiles, and the revamped A3 spurred the gains.
“We can confidently predict that 2014 will end as the fifth-consecutive record year for Audi sales in the U.S.,” said Mark Del Rosso, COO of Audi of America. “Our annual Season of Audi year-end sales event will bring a strong finish” to the year.
Sales rose 31 percent at Mitsubishi, 12 percent at Kia — helping set an October record of 44,694 units sold — and 1 percent at Volvo.
“Declining gas prices are bringing a steady supply of customers into the market,” said Michael Sprague, executive vice president of sales and marketing for Kia Motors America.
At the BMW Group, BMW brand sales rose 8 percent to 35,977 but Mini volume slipped 7 percent.
Land Rover posted sales of 3,643 units, down 15 percent, and Jaguar's October volume slid 34 percent to 1,007 units. The company blamed low availability of three popular models — the Range Rover Sport and LR4, and Jaguar XF sedan — for the drop in volumes.
‘Crossover sales are booming'
Light-truck demand, which has propelled the market this year, received another boost from falling gasoline prices. Overall, light truck volume rose 9 percent last month, easily outpacing the 3 percent increase in car deliveries.
“Crossover sales are booming,” said Nissan's Mr. Diaz.
In many parts of the country, average gasoline prices have dropped below $3 a gallon.
J.D. Power said last week that falling gasoline prices were prompting owners of big pickups to remain in the segment when it came time to trade in — a development that bodes especially well for the Detroit 3.
In March 2013, when gasoline prices averaged $3.71 a gallon, J.D. Power said nearly 32 percent of large-pickup owners trading in their vehicles decided to switch to another segment that offered higher fuel economy. In November and December 2013, when U.S. gasoline prices averaged $3.26 a gallon, the defection rate among large pickup owners dropped to a low of 26.2 percent.
When gasoline prices have been high, J.D. Power said large-pickup owners tended to abandon the segment and choose a compact SUV, midsize SUV or midsize car instead.
“As large pickup owners experience these low fuel prices each time they fill their tank, fewer of them are defecting from the segment,” Thomas King, vice president of the Power Information Network, said in a statement.
Solid economic growth, expanding payrolls, pent-up demand, low-rate financing and higher incentives also continue to spur industry sales.
Strongest month in a decade
TrueCar estimated average incentives among major auto makers edged up 2 percent from October 2013 to $2,629 last month, but fell 12 percent from September levels.
Larry Dominique, executive vice president of TrueCar, described the market in October as well-balanced. Incentives as a share of average transaction prices, he noted, were a “manageable” 8 percent.
The industry has to be pleased with the overall consumer shift to light trucks, he added, which means lower incentives and higher transaction prices.
Kelley Blue Book estimated the average transaction price for light vehicles in the U.S. was $33,361 in October 2014, an increase of $246, or 0.6 percent, from October 2013, and a gain of $185, or 0.7 percent, from September 2014.
“Car and truck sales have settled into a groove,” Ms. Caldwell of Edmunds.com said. “Dealers are welcoming a consistent flow of shoppers into their showrooms, and the pace will likely remain steady through the end of the year. With declining gas prices and strong truck and SUV sales, the industry is poised for a very busy holiday season.”
This report appeared on the website of Automotive News, a Detroit-based sister publication of Tire Business.