Cox Automotive predicts that new vehicle sales will rise in October despite ongoing economic and manufacturing headwinds.
According to the firm’s forecast, new vehicle sales will top 1.23 million units, an increase of 3.8% from last year. Although the number also represents a 7.7% decline from the previous month, Cox Automotive notes that September contains one more selling day than October. What has instead risen from September is the industry’s sales pace. The seasonally adjusted annual rate is expected to reach 15.8 million, a month-over-month increase of 100,000 and a year-over-year increase of 1.1 million.
New vehicle sales gains arrived in spite of the ongoing United Auto Workers strike, which has disrupted Detroit-Three manufacturing for more than a month. However, the strike’s effect on production, and thus inventory, has yet to be felt among dealers, who have continued to receive shipments throughout October. Charlie Chesbrough, senior economist at Cox Automotive, noted that “While the UAW strike is certainly slowing down production at select assembly plants across the U.S., the impact has not yet fully materialized for consumers in the showroom. Compared to this point last year, industry inventory levels are much higher, which is helping support—to this point at least—relatively healthy new-vehicle sales.”
Demand also showed resilience in October, as it has throughout the majority of the year. Interest rate hikes, inflation, recession concerns, political tensions and international conflict have done little to suppress new vehicle sales. As Chesbrough remarked, “…there are still enough individuals and businesses with the need and ability to buy vehicles, which has helped sustain the sales recovery.”
That being said, there is still a chance that these positive trends could change course in the coming months. In a forecast by S&P Global Mobility, analysts expressed concerns that the fourth quarter may be more complicated than new vehicle sales numbers have led many to believe. “On the surface, with a projected SAAR result of 15.7 million units, October auto sales will be stronger than they appear,” commented Chris Hopson, S&P Global Mobility principal analyst. “Underlying pressure by way of still-notable vehicle affordability concerns, potential economic slowdown and specific instances of severely limited inventory levels are likely to be a drag on auto sales for the remainder of the year.”