The Wall Street Journal reports Auto Sales Continued Hot Streak in October.
Ford Motor Co. was the lone Detroit competitor posting an October gain, reporting a 6.4% increase compared with the same month in 2016, selling 199,698 light vehicles. Toyota Motor Corp. , Honda Motor Co., and Nissan Motor Co. also recorded year-over-year gains despite having one fewer selling day last month versus the prior October.
General Motors Co. and Fiat Chrysler Automobiles NV, however, reported declines. GM said sales fell 2% in October to 252,813 vehicles because of a decline in sales of passenger cars, reflecting a preference for trucks and sport-utility vehicles. Fiat Chrysler reported a 13% drop in sales to 153,373 vehicles in October, a decline driven by a modest fall in retail sales and a reduction in sales to fleet buyers, such as rental-car companies.
WardsAuto.com estimates overall sales fell slightly because of the disparity in reporting days, but the closely watched seasonally adjusted annual rate of sales is expected to be a robust 18.1 million, outpacing the prior October’s 17.8 million and initial expectations for a 17.5 million SAAR. Full-year auto sales through 10 months are holding close to the pace set a year ago.
Another Plateau Theory
Ford sales chief Mark LaNeve said strong underlying economic factors—including wage growth and low unemployment—are helping to keep showrooms busy and should result in a “plateau” of industry sales near record levels in coming months.
“Consumer confidence is up, the stock market is up—that really helps the psyche of our buyers,” Mr. LaNeve said on a conference call. “It’s still a backdrop of a very strong environment.”
Over 1 million vehicles were destroyed or damaged in Hurricanes Harvey and Irma. Used car buyers better beware because a Flood of Storm-Damaged Cars are now on the market.
Flood damage is easier to conceal from an untrained eye than damage from a wreck, but it can be more devastating to the engine and other key components, said Christopher Basso, spokesman for the used car research firm Carfax. Flooding can destroy a car's electronic system, affecting safety features like air bags and anti-lock brakes, while rust can rot the vehicle from the inside, Basso said.
Scafidi expects the number of flood-damaged cars to be greater for Harvey than it was for Hurricane Katrina in 2005, both because of Harvey's bigger footprint and because in the last 12 years more vehicles rely on computer technology and electronics.
"Beneath the surface, water can permanently damage computers that control everything from the gas pedal to steering," said Cliff Wood, chief operating officer at CarMax, a leading used car dealer.
It is not illegal to sell or buy a flood-damaged car, as long as both parties are aware, Scafidi said. But some sellers conceal the damage and offer a nice-looking car at a suspiciously low price.
Since Hurricane Katrina, the National Insurance Crime Bureau has offered a free vehicle identification number, or VIN, check service to see if a car has been in a flood. The service is available at www.nicb.org/vincheck. A VIN also can be entered into the National Motor Vehicle Title Information System.
Meanwhile, let's not confuse forced replacement demand with ongoing strength. Car sales were in a huge downtrend before the hurricanes and that downtrend will continue once the replacement period is over.
The same applies to ISM and PMI manufacturing strength. Much of it is related to autos. The next economic turn will likely be sharper than normal, and most will not believe it when it does happen.
Mike "Mish" Shedlock