Ford, GM, Chrysler Beat Sales Estimates, Toyota Slips
U.S. auto sales rose in October as buyers grew more confident in the economy and new models drew them into dealerships.
Ford sales for October beat expectations, with an increase of 23.2 percent. Analysts predicted an 18.4 percent increase over the same time last year. Ford sold 157,395 units in October vs. 132,483 a year ago.
CNBC reports auto sales on an adjusted basis. There were 27 selling days in October of 2010, while October of 2009 had 28 sales days.
Meanwhile, GM core brand sales for the month of October rose 7.1 percent on an adjusted basis from the same time last year. This is more than the expected increase of 5.2 percent analysts predicted.
GM sold 183,392 core brand units during October of this year, compared to 162,514 at the same time in 2009. GM's core brands include Buick, Cadillac, Chevrolet and GMC.
The automaker's core brand sales were up 7 percent in October of 2010 from September 2010.
GM sold a total of 183,759 units for October 2010 vs. 177,603 a year ago.
"Consumer confidence is now stabilizing, and consumers are beginning to believe that they've already weathered the worst," said Don Johnson, vice president of U.S. sales operations for GM. The economy is showing "signs of a steady recovery, and we do believe they will bode well for the auto industry."
Consumer confidence rose slightly in October, according to a report released last week by the Conference Board. That, and a rebounding stock market, may have spurred buyers to invest in a new vehicle.
Chrysler sales increased 42.1 percent in October of this year compared to the same time in 2009, beating estimates. Analysts were predicting a 32 percent increase.
Chrysler sold 90,137 units in October of 2010 compared with 65,803 units in October of 2009.
However Toyota bucked the upward trend, with sale down 0.9 percent for October of 2010, compared to the same time last year. The Japanese car maker sold 145,474 units vs. 152,165 a year ago.
Sales are forecast to hit a seasonally adjusted annual rate of 12 million in October. While that's lower than the rate's last high, of 14 million rate during the Cash for Clunkers sales stampede of August 2009, it's up from a low of 10.5 million this February.
Hyundai Motor America, the largest automaker to report Tuesday, said its U.S. sales rose 38 percent last month to 42,656 vehicles from 31,005 the previous year ( unadjusted).
New products also gave a boost to Honda whose sales climbed 16 percent. October was the first full month on the market for the Odyssey minivan, which saw October sales jump 52 percent (unadjusted). Wagons were also hot at Honda, where CR-V sales climbed 19 percent.
The automakers held back on rebates in July and August, which are typically big months for promotions, and results were mixed. July sales were slightly better than a year earlier. August sales were the worst since 1983.
But automakers have their work cut out for them when it comes to selling new cars. The average length of ownership of new vehicles continues to increase, according to a recent analysis from Polk. Consumers are now holding onto a new vehicle, on average, for 63.9 months based on second quarter 2010 data, up 4.5 months from the same time last year, according to Polk.
In general, automakers offered more incentives this October than last—about $2,800 per car, a 6 percent increase, according to the car price information service TrueCar.
"There's been so much focus on the elections, people are not as confident," says Bert Boeckmann, owner of Galpin Ford in suburban Los Angeles. "My hope is that after the election, they'll come back in."
Customers may come back when they see holiday deals on luxury cars. Those Christmas-themed commercials with the big red bows may start airing well before the holidays—a not-so-subtle attempt by automakers to remind customers that buying cars can be fun.
"This whole idea about giving a car as a gift, it's one of the long-standing holiday commercial campaigns that has really resonated with the luxury consumer," says Steve Jett, national marketing communications manager for Lexus.
Lexus and Mercedes-Benz are battling this year for the title of No. 1 luxury carmaker. It's a title Lexus has held for years, but the carmaker is lagging behind Mercedes by about 3,000 vehicles in 2010. And with newer models rolling out, the carmakers will try to push out the older models.
"It's such a sensitive segment to old-versus-new," said Caldwell.
And when it comes to holiday marketing, retailers believe it's never too soon to haul out the holly. Expect the Mercedes and Lexus Christmas commercials to start soon.
"We'll start to see those commercials by Thanksgiving, if not earlier," says Jesse Toprak, vice president of industry trends at TrueCar. "I don't know anyone who actually gives someone a car for Christmas, but those commercials are incentive to some customers to go out and buy a car."
And Ford, which is offering the biggest rebates on 2010 models in an attempt to grab market share from rivals, will probably keep up the promotions. The company is offering up to 15 percent off the sticker price on some of its 2010 models, such as the Ford Focus.
AP and Reuters contributed to this report.