Trucks, SUVs power strong auto sales in October
DETROIT (AP) — Fans of SUVs and trucks shoved car buyers aside last month, helping the auto industry to its best October in four years.
The shift was a boon for Detroit's automakers, who posted sizeable increases in sales of pickups like the Ram and Chevy Silverado, big SUVs like the Ford Explorer and compact models like the Ford Escape.
While car sales have lost momentum from earlier in the year, some companies, including Hyundai and Volkswagen, continue to post impressive numbers and steal away their share of small car sales. Toyota and Honda, for years the category leaders, continue to struggle with earthquake-related shortages.
U.S. car and truck sales topped 1 million in October, making it the best October since 2007, before the recession hit. Sales are now tracking at a pace similar to the start of this year, before the March earthquake and tsunami cut off supplies, according to Autodata Corp. Analysts expect them to stay at that pace through the rest of this year and into 2012.
"The economy isn't expected to pick up significantly, and I think that's going to hold us in this pattern of slow growth, stability to slow growth," said Jeff Schuster, senior vice president of forecasting for LMC Automotive.
Pent-up demand helped October sales. Inventories of Japanese cars are getting close to normal, so car shoppers who spent the summer waiting for them to reappear on dealer lots could finally buy them in October.
Honda Motor Co. sales were flat compared to last October, while Toyota Motor Corp. sales fell 8 percent. That still beat the double-digit drops the companies saw over the summer. Sales of the Accord sedan, Honda's best seller, were up 5 percent. Toyota said sales of its subcompact Yaris more than doubled.
Bob Carter, Toyota's U.S. sales chief, said the company still expects to post year-over-year sales gains before the end of this year. He said dealers lost sales in October because of low supplies of Corolla sedans, but more Corollas from Toyota's new plant in Mississippi are now on their way to dealers.
Japanese carmakers still face issues in Thailand, where flooding shut down some of their suppliers. Honda has already cut North American production through Nov. 10 because of flooding-related parts shortages. The strong yen is also hurting profits, compounding their problems.
Also cutting into profits are the deals Japanese automakers are offering to get buyers back into showrooms. Auto information site TrueCar.com said Honda raised its incentives by 18 percent to an average of $2,380 per vehicle, while Nissan Motor Co.'s incentives were up 15 percent to $2,917. The average incentive for the industry was $2,669 per vehicle.
"This is the time of the year when consumers are more dialed in to the deals," said Jesse Toprak, TrueCar's vice president of industry trends and insights.
Toyota said Tuesday it will kick off its annual year-end sales event early. Although the marketing surrounding the "Toyotathon" and Lexus "December to Remember" sales events won't start until closer to Thanksgiving, the deals will be available to shoppers immediately, Carter said.
Detroit automakers barely increased their incentive spending in October, but they did shift their marketing to trucks, a typical move during football season.
Truck buyers paid attention. Ford Motor Co. said sales of its Explorer SUV more than tripled from a year ago, while F-Series truck sales were up 7 percent. Ford's overall sales were up 6 percent from a year ago, even though its car sales fell 8 percent.
Chrysler's sales rose 27 percent. Ram pickup truck sales jumped 21 percent. Sales of the new Dodge Durango also were strong.
General Motors Co.'s sales were up 2 percent. Sales of the Chevrolet Silverado pickup rose 11 percent. And the compact Chevrolet Cruze continues to post big gains a year after its introduction, with October sales up 194 percent.
Still, GM's tepid increase surprised analysts, and investors hammered the stock. GM shares fell 10 percent to close at $23.33. Ford shares fell 5 percent to $11.08, while Toyota's U.S. shares fell 2 percent to $65.26.
Toprak said snowy weather on the East Coast may have pulled ahead truck and SUV sales from later in the year. Car sales typically fall this time of year, as buyers gear up for the winter.
But Ken Czubay, Ford's vice president for U.S. sales, said car buyers also are increasingly shifting back to small SUVs and wagons, since gas prices are holding steady. Gas now averages $3.44 per gallon across the country, down from a peak near $4 in May, but still up 64 cents from a year earlier.
Other automakers reporting results Tuesday:
— Nissan said sales were up 18 percent, thanks to big increases for the Altima sedan and Rogue crossover.
— Hyundai Motor Co. said sales rose 23 percent to 545,316, besting its full-year sales record from 2010. Sales of the new Elantra small car were up 37 percent.
— Volkswagen AG said sales rose 40 percent, led by a 52 percent increase for the new Jetta sedan.