October New Vehicle Retail Sales Pace Remains Strong Amidst Recovery from Hurricanes

"Recovery from Hurricanes Harvey and Irma continue to aid new-vehicle retail sales in October," said Thomas King, Senior Vice President of the Data and Analytics Division at J.D. Power. "Despite one fewer weekend than last year, sales in the Hurricane-affected regions continue to post gains in October. While on a national basis, October month-to-date sales are down 2.8% from last year, in the Southeast region, which includes Florida, sales are up 5% as shoppers complete purchases postponed during the storm and replace damaged vehicles. In contrast, sales in the South Central region, which includes Houston, are up only 3% as the recovery from the storm begins to wind down."

Incentive spending in October remains aggressive as manufacturers clear out record inventories of prior model year vehicles. Average incentive spending per unit to date in October remains at $3,901, surpassing the previous high for an October of $3,835 in October 2016. New model year vehicles also continue to account for just 29% of sales so far in October, compared with 41% last year.

"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," King said.

J.D. Power and LMC Automotive U.S. Sales and SAAR Comparisons

• The average new-vehicle retail transaction price to date in October is $32,185, a record for the month, surpassing the previous high for the month of $31,570 set in October 2016.
• Consumers are on pace to spend $34.5 billion on new vehicles in October, down nearly $1 billion from last year's level.
• Average incentive spending per unit to date in October is $3,901 per unit, surpassing the previous high for the month of $3,835 set in October 2016. Spending on trucks and SUVs is $3,842, up $73 from last year. Spending on cars is $4,015, up $69.
• Incentives as a percentage of MSRP are at 10.5% so far in October, exceeding the 10% level for 15th time in the past 16 months.
• Trucks account for 66% of new-vehicle retail sales through Oct. 22—the highest level ever for the month of October—making it the 16th consecutive month above 60%.
• Days to turn, the average number of days a new vehicle sits on a dealer lot before being sold to a retail customer, is 75 through Oct. 22. This is the highest level since July 2009 (80 days).
• Fleet sales are expected to total 249,500 units in October, up 3.3% from October 2016 on a selling day adjusted basis. Fleet volume is expected to account for 19% of total light-vehicle sales, up from 18% in October 2016.

Jeff Schuster, senior vice president of forecasting at LMC Automotive, said, "The current pace of U.S. auto sales is driven, in part, by recovery from hurricanes Harvey and Irma, but it now appears to be less of an overall volume boost and for a shorter duration than previously expected. Next year remains a pivotal year for auto sales, driven by conflicting varables. Tailwinds include a likely fiscal stimulus package and perhaps some insurance-delayed hurricane recovery. Headwinds may be stronger though, including used car interplay and some credit tightening. The wild card will be incentives/pricing and consumer response."

LMC's outlook for 2017 total light-vehicle sales is holding at 17.1 million units, a decrease of 2.3% from 2016. The outlook for retail light-vehicle remains at 13.9 million, down 1.3% from 2016. Looking forward to 2018, total light-vehicle sales are forecasted at just under 17.0 million unit, with retail light-vehicles at 13.8 million units.

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Media Relations Contacts
Geno Effler; J.D. Power; Costa Mesa, Calif.; 714-621-6224; [email protected]
Emmie Littlejohn; LMC Automotive; Troy, Mich.; 248-817-2100; [email protected]

No advertising or other promotional use can be made of the information in this release without the express prior written consent of J.D. Power or LMC Automotive. www.jdpower.com/corporate  www.lmc-auto.com

SOURCE J.D. Power

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