U.S. light-vehicle inventory remained largely in good stead to meet demand for the remainder of the year after October sales hit WardsAuto’s forecast and fell in line with the year-to-date trend.
October’s seasonally adjusted annual rate for U.S. LV deliveries of 16.35 million units was nearly spot-on with the year-to-date SAAR through September of 16.34 million.
In the aggregate, the SAAR is expected to increase over the final two months of the year. Whether November increases from October could depend on volume created by Thanksgiving holiday programs at the end of the month, which includes Dec.1.
November’s volume, based on daily selling rates, will increase over last year, but the gap will be somewhat muted because year-ago’s results were pumped up due to the government shutdown of 2013 that pulled sales from October. Accordingly, last month’s 6% year-over-year increase was slightly enhanced because of the favorable year-ago comparison.
Sales for entire-2014 are pegged at 16.35 million-16.39 million. Hitting the 16.4 million level will depend on year-end incentive activity and whether the improving U.S. economy pushes up demand more than expected.
Inventory overall is ready to meet demand, even if it tracks higher than forecast. The balanced stock levels also mean manufacturers won’t be forced to offer bargain-basement deals to relieve dealers of excess inventory before entering the seasonally low-volume first-quarter period.
U.S. LV inventory ended October at 3.55 million, 4.6% above year-ago, and 7.7% above September – a typical month-to-month increase this time of year. Days’ supply ended the month at 75, vs. the prior month’s 64 and year-ago’s 76.
By segment group, Small Cars, CUVs and Pickups outpaced the average industry year-over-year gain in October sales. Middle Cars, Large Cars and Vans posted declines, while Luxury Cars and SUVs recorded middling results.
Good gains for Small CUVs, including luxury versions, and the Jeep Wrangler – the only small SUV in the U.S. market – along with an 8.9% year-over-year rise in Small Cars, boosted overall sales of small-size LVs.
An oddity, however, was the increase in small-car deliveries. Despite year-to-date market share more than a half-percentage point below year-ago, the segment’s October penetration surged to 17.7% from 17.2% in same-month 2013.
The gain seems especially counterintuitive in a month when gasoline prices hit their lowest per-gallon figure since January 2011, according to government data.
Some small cars, such as the Kia Soul and Nissan Sentra and Versa, have been posting double-digit gains most of the year. However, some deliberate inventory cutting in the segment likely helped spur the overall increase.
Coming into October, small-car inventory was up 9.4% from like-2013, and a lot of the segment’s 1.9% sales gain year-to-date resulted from huge increases by vehicles that were tracking below or flat with year-ago, indicating some fleet or incentive activity.
The result was the year-over-year increase in small-car inventory dropped from September’s gap to 4.5% on Oct. 31.
The artificial bump in small-car share, in part, explains why sales penetration of SUVs was below year-ago after seven straight increases.
However, the main reason for the share downturn was the big declines by the Chevrolet Suburban and GMC Yukon XL. General Motor’s SUV performance was attributable to lean inventory of the new vehicles.
Including Cadillac luxury versions, inventory of GMs large SUVs was 30% below last year heading into October, with the margin closing to 24% at the end of the month. Though inventory remains significantly short of year-ago’s total, GM’s SUV sales are expected to rebound above year-ago levels through the end of 2014, particularly with Q4 being the hardcore time of year for SUV demand.
Sales of CUVs racked up a 32nd straight monthly increase, by far the longest stretch of gains of any segment group. October volume was up 12.6%, increasing the year-to-date result to 11.9% above like-2013. CUV share increased to 26.9% in October from year-ago’s 25.4%
October sales of pickups increased 9.8%, including a 19.5% gain in the Small Pickup segment and an 8.7% increase for Large Pickups.
Even with a plant closure at Ford for model changeover of segment leader F-150, inventory of all pickups ended the month 15.4% above year-ago. Dealer stocks totaled 704,000 on Oct. 31, compared to 610,000 a year ago. Volume in the segment group should easily top year-ago results in November and December, especially with GM’s new Chevrolet Colorado and GMC Canyon expected initially to include incremental sales.
Although volumes were small, first full-month sales of the Colorado and Canyon small pickups appeared to have no negative effect on GM’s large pickups, which were up 9.5% in October, well above the year-to-date increase of 3.8%.
Growth in sales of luxury vehicles continued to slow. Although finishing the month 2.7% above year-ago, luxury-vehicle market share slid to 13.4% from like-2013’s 13.9%. Luxury cars and CUVs both posted market-share declines from same-month 2013, and SUV penetration was flat.
The softening growth in luxury vehicles is showing in inventory. Luxury-vehicle inventory ended October at 399,500 units, 2.3% below year-ago’s 409,000.