GM's sales up 0.2%; Chrysler up 21.7%; Ford falls 1.7%
Falling gas prices and rising incentives last month sent more customers into showrooms and helped U.S. auto sales to their best October since 2004. Analysts predict the trend will continue through the rest of the year when holiday shopping begins.
Automakers sold 1.28 million cars and trucks last month, a 6.1 percent increase from the same month last year, according to Autodata Corp.
California-based TrueCar said average selling prices were up nearly $800 over the same time a year ago, and incentive spending by automakers was up 2.2 percent.
"October was another strong month for the automotive sector, driven by a combination of low fuel prices, available credit and the ongoing pent-up demand factor," Karl Brauer, senior analyst at Kelley Blue Book, said. "What's changed in recent months is the drop in fuel prices, leading to higher average transaction prices from increased large truck and SUV sales. This is great news for automakers, as these vehicles offer increased profit versus small and mid-size cars, though it also creates the potential for buyers' remorse if the price of gas rises suddenly."
Automakers are expected to sell 16.46 million vehicles in the U.S. 2014, which would put it up 900,000 from 2013. It would be the industry's best sales year since 16.6 million were sold in 2006.
Chrysler Group LLC and General Motors Co. each posted October sales gains driven by strong truck and SUV sales, while Ford Motor Co. had a small decline compared to a year ago as it manages inventory in preparation for the introduction of the 2015 F-150 pickup.
Chrysler posted its best October sales results since 2001, up 21.7 percent to 166,755, thanks to strong performances by its Jeep and Ram brands. GM's sales increased 0.2 percent to 226,819, its best October numbers since 2007. Ford sales fell 1.8 percent, although it saw strong performances by its sport utilities and its Lincoln luxury brand, specifically the MKC crossover.
'Fuel to the fire'
On Monday, AAA Michigan said average gas prices in the Great Lakes state and across the country have dropped below $3 a gallon for the first time in nearly four years. That price drop has helped truck and SUV sales, which have been hot this year as customers switch from small cars to the sporty, fuel-efficient vehicles. Trucks and SUVs commanded 53.5 percent of the market in October, continuing a trend seen all year.
Sales of GM's Buick Encore increased 32.7 percent last month, leading Buick to a 6.5 percent sales increase. Ford sold more than 2,100 MKC crossovers last month as the newest offering to the Lincoln lineup continued to be popular, and its Escape SUV set an October sales record, up 12 percent. And Chrysler's new Jeep Cherokee SUV posted an October sales record and was the brand's highest-volume seller for the second-straight month.
In the highly-competitive full-size pickup segment, Chevy Silverado sales increased 10.1 percent and Ram pickup sales increased 33.5 percent. Ford is holding back inventory of its F-series as it makes the switch to the new truck, but it still sold more than 63,000 last month, which Kelley Blue Book analyst Alec Gutierrez called a "tremendous, tremendous volume."
"Gas prices coming down, that added a lot of fuel to the fire, but that fire was already roaring," Gutierrez said of SUV and truck sales.
Sales of some small and fuel-efficient cars did rise in October, including the Chevy Cruze which rose 51 percent and Nissan Leaf sales posted an October record, up 29.3. Volkswagen's new Golf GTI was up 67.1 percent.
"When shoppers are paying less at the pump, they have more money in the bank to save up on big purchases," said Edmunds.com senior analyst Jessica Caldwell. "So while gas prices certainly breathe extra life into the Tahoes and Range Rovers of the world, the wealth effect is just as likely to motivate shoppers to pull the trigger on all vehicles big and small."
GM was helped by sales of the new Colorado and Canyon mid-size pickups, but was hurt by the loss of the compact crossover Captiva Sport, a fleet vehicle it stopped selling in the U.S. over the summer. Chevrolet will begin selling a small Trax crossover in early 2015. Sales for GM's luxury Cadillac brand were down 8 percent, but the Escalade and CTS sold well, up 30 percent and 49.3 percent, respectively.
"The U.S. economy has steadily improved all year and now we are poised for a stronger expansion backed by an improved job market, higher consumer confidence and lower fuel prices," Kurt McNeil, GM's U.S. vice president of sales operations said.
Chrysler was boosted by Jeep sales, which increased 51.7 percent over the same month last year, and Ram truck sales increased 35.9 percent. Overall, nine Chrysler Group vehicles posted best-ever October numbers and every Chrysler, Jeep and Ram vehicle saw year-over-year sales growth in October.
Kelley Blue Book's Strand said a stabilizing economy and rise in consumer confidence helped sales and should continue through 2014: "Momentum in the market should be prolonged through the end of the year."
Melissa Burden contributed.