Significant automakers posted mixed U.S. brand-new vehicle sales in October, though America’s affection with high-margin pickup trucks and SUVs stayed in full bloom as larger, costlier vehicles fared better than passenger cars.
WardsAuto put the seasonally-adjusted annualized rate (SAAR) for light automobile sales in October at a robust level of 18 million units.
However after a long boom cycle, automakers are still ill-prepared for the small decline in sales expected for full-year 2017 and have taken too few steps to cut production, stated Doug Mehl, a partner in consultancy A.T. Kearney’s automotive practice.
“When you make a new vehicle you have volume presumptions tagged to it and who wants to be the person who says ‘I’m going to earn less of this actually cool Model’?” Mehl stated. “However eventually the market is the reality and it’s going to require companies one way or other here.”
General Motors reported a sales drop of 2.2 percent for the month, with customer sales fell 6.6 percent. Sales of high-margin pickup, sport utility vehicles and crossovers all increased.
GM also cut its stock of unsold vehicles. The automaker has worked to lower its volume of excess inventory, including through substantial production shutdowns in the 3rd quarter. GM had stated its stock would increase in October.
“We are heading into the 4th quarter with good momentum, because of a strong U.S. economy and really strong pickup and crossover sales,” stated Kurt McNeil, GM vice president for U.S. sales operations.
GM somewhat decreased consumer discounts as a percentage of average transaction rates to 13.5 percent, from 13.7 percent in the 3rd quarter.
Industry experts think consumer discounts above 10 percent of the average transaction rate are unhealthy as they deteriorate resale values and are unsustainable in the long term.
J.D. Power and LMC Automotive stated last week that based on initial October sales numbers, discounts have gone beyond 10 percent in 15 of the last 16 months.
