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The Month That Defied Expectations: October’s Auto Sales

2017 has been a rough year for many automakers. The industry as a whole experienced eight months of declining sales, with only a few manufacturers making positive gains. September brought breathing room as it was the first month of the year to show some positive revenue growth. Unfortunately, October revisited the negative growth trend, but only slightly. Some patterns have shown up throughout the year that was also a part of the October sales picture, but there were a few surprises.

The Overall Picture

Compared to last year, the industry experienced a one percent decline in October’s monthly auto sales, coming in at 1,329,802. At this point in 2016, the industry saw 14,185,901 units sold, this year’s number is approximately 230,000 units short. This means manufacturers will have to play catch-up in the last two months of 2017 to approach last year’s numbers. However, all news is not bad, Kelley Blue Book and Edmunds projected substantial decreases for this month ranging from 2 to 4 percent. So, October 2017 exceeded expectations, but it was not enough to stay on par with September’s gains.

Hurricane Replacement Vehicles Pushed October Past Sales Projections

In the last month or so, many analysts 
predicted the automobiles lost in August’s hurricanes would have an impact on auto sales throughout the year’s third quarter, and these projections look to be correct. According to Thomas King, Senior Vice President of Data and Analytics at J.D. Power noted that sales in hurricane-hit areas like Florida and Houston posted gains of five and three percent respectively. He also remarked that while car replacement sales due to the hurricane are a driver for October sales, the impact will continue into the new year since insurance-delayed recovery purchase will still happen in early 2018.

A Month Of Customer Incentives

Dealers have experienced difficulties in getting newer vehicles off of the lot. New cars have stayed on dealer lots an average of 75 days after acquisition, the highest average since July 2009. Therefore, dealers have had to pull out all the stops to sell new cars. In the first two weeks of October, incentives averaged $3,901 and decreased to $3,804 in the last weeks of October, an 8.4 percent increase from the same time the previous year. Transaction prices are up $615 to finish at $32,185 in October, so discounts are not taking a lot of revenue from dealers. However, the rise in price cuts are a trend to watch, and if manufacturers do have to continue to raise these incentives, then this could reveal problematic trends for new vehicle sales.

October’s Winners and Losers

Subaru continues to defy logic with 71 months of sales increases, and the best October showing the manufacturer has ever had. Consumers are still enamored by sport-utility vehicles (SUVs) and crossovers, and Subaru has supplied the perfect mix of small and mid-sized SUVs to continue their winning streak. Volkswagen and Audi were also positively impacted by the power of the crossover. Each put up 11.9 and 9.6 percent growth since last year respectively.

Toyota and Ford also experienced minimal gains in October due to their large variety of larger vehicles for consumers. While these numbers are not unexpected for these brands, October had a couple of surprises up its sleeve. Hyundai experienced a 15 percent decline, but their Genesis brand saw a significant increase of 48.7 percent compared to October 2016. The Genesis is Hyundai’s successful attempt to create an affordable premium automobile with top-notch safety features, and the concept has won over consumers to defy expectation. The other major story of October is Nissan’s gains. Edmunds and Kelley Blue Book projected the brand would see an approximate 5 percent decline in sales, Nissan’s actual sales saw 8.4 percent gains. Again, people love their crossovers and larger vehicles, the Nissan Rogue saw a 43 percent boost, and their other larger cars rose 13 percent in sales.

In the last two months of the year, the story of the auto industry will center around year-end incentives and the impact of hurricane-damaged vehicles.

Chanell Turner
Chanell Turner
Investigative Journalist for CBT News

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