By Nick Carey
DETROIT (Reuters) – U.S. auto sales in October likely fell close to 4 percent from the same month in 2016, though automakers’ sales were buoyed by replacement of storm-damaged vehicles and record-high consumer discounts, industry consultants J.D. Power and LMC Automotive said on Thursday.
LMC maintained its full-year forecast for new vehicle sales in 2017 of 17.1 million units.
October U.S. new vehicle sales will be about 1.32 million units, a drop of almost 3.7 percent from 1.37 million units a year earlier, the consultancies said.
The forecast was based on the first 17 selling days of October. Automakers will release U.S. sales results for the month on Nov. 1.
Major automakers’ U.S. new vehicle sales climbed to a monthly high for the year in September as consumers replaced flood-damaged cars after Hurricane Harvey hit southeast Texas in late August.[nL2N1ME0SD]
The seasonally adjusted annualized rate for October will be 17.6 million vehicles, down more than 1 percent from 17.8 million units in the same month in 2016, the consultancies said.
Retail sales to consumers, which do not include multiple fleet sales to rental agencies, businesses and government, were also set to decline more than 4 percent in October.
U.S. sales of new cars and trucks hit a record high of 17.55 million units in 2016. But a saturated market, thanks partly to a glut of nearly new used vehicles, has forced automakers to hike discounts to entice consumers to buy.
Consumer discounts hit a monthly record of $3,901, above the previous record of $3,835 set in October 2016.
“While incentives have declined from the record high set last month, the need to reduce inventory could push spending to a new all-time high level in the final months of the year,” said Thomas King, J.D. Power’s senior vice president for data and analytics.
Discounts as a percentage of the manufacturer’s recommended sale price hit 10.5 percent in October, as they have for 15 of the last 16 months. Consumer discounts of more than 10 percent are considered unhealthy for automakers in the long term as they undermine resale values.
Despite the lofty consumer discounts, the average new vehicle sold in October spent 75 days in inventory. This was the longest since July 2009, during the height of the Great Recession.
(Editing by Bernadette Baum)