Economists polled by Econoday expected October car sales to fall to 17.0 million unit at a seasonally-adjusted annualized rate (SAAR).
Instead, sales dropped to 16.5 million units from a revised lower 17.1 million (originally 17.2 million) September reading.
Domestic sales fell to 12.7 million units SAAR from 13.4 million units.
Unit vehicle sales, at a much lower-than-expected annual rate of 16.5 million, proved very soft in October and will lower expectations for next week's retail sales report. October's pace is the slowest since April reflecting sharp slowing in light truck sales. Vehicle sales have been soft this year, averaging a 16.9 million pace versus 17.2 million and 17.1 million in the two prior years. Despite this, 2019 has been a good year for overall consumer spending and is the fundamental reason why the Federal Reserve stepped back last week from signaling any further rate cuts.
Analysts Missed the Mark
On October 29, the Detroit Bureau reported Analysts Predict October New Car Sales Will Rise Slightly
Even with the long strike by the United Auto Workers cutting off delivery of new vehicles to General Motors dealers nationwide, overall sales of new vehicles have remained on a steady course during October, analysts report in monthly sales forecasts.
Cox Automotive is predicting that during October, new light-vehicle sales, including fleet, will reach 1.37 million units, up about 2,000 units or 0.2% compared with October 2018. When compared to last month, sales are expected to rise nearly 87,000 units or 6.8%.
The SAAR in October 2019 is estimated to be 16.9 million, down slightly from last month’s 17.2 million level and down from last year’s 17.5 million-unit pace. This October has 27 selling days, one more than last October, and four more than last month, according to Charlie Chesbrough, senior economist at Cox Automotive.
Affordability issues, a result of higher interest rates and higher vehicle prices, are leaving many potential new-vehicle buyers out of the market.
Fleet activity, which has been very strong in 2019, as it was in 2018, is the key unknown for October’s sales performance. Worsening economic news and aggressive fleet activity earlier in the year suggests some pullback should be expected, Chesbrough said.
GM Sales in China Slump
On October 10, the Detroit Free Press reported GM's China Sales Continue to Slump in Third Quarter as US Automakers Lose Market Share.
General Motors' sales in China fell by 17.5% in the third quarter from the same period in 2018, the company's fifth consecutive quarterly decline in the world's largest auto market.
The company said it delivered 689,531 vehicles in China during the period "in the midst of the continued soft vehicle market."
4th-Quarter Rocky Start
- Vehicle Sales Down 3.5%
- Domestic Sales Down 5.2%
- Sharp slowdown in light trucks.
The light truck category includes SUVs.
It remains to be seen how much the GM strike affected these numbers.
What's clear for now is that fourth-quarter retail sales and GDP are off to a rocky start.
Mike "Mish" Shedlock