No big scares are expected from the new-vehicle market in the U.S. this October. When reported on Friday, Cox Automotive is forecasting October U.S. new-vehicle sales volume to finish at nearly 1.37 million, up slightly from last year. However, with an extra selling day this October compared to last year, the volume gain reveals some market weakness. The sales pace is expected to decline from last year's 17.5 million level to 16.9 million this year.

According to Charlie Chesbrough, senior economist at Cox Automotive: "A flat market with one extra selling day should deliver a 3-4% increase. So, with sales expected to rise by a minimal amount, the extra selling day reveals some market weakening. Compared to last month, sales are expected to rise 6.8% or nearly 87,000 units; however, with four additional selling days, the adjusted pace shows the market declining from September's 17.2 million level."

After an extremely volatile light vehicle market during the first half of the year, where the seasonally adjusted annual rate (SAAR) had months with nearly one-million-unit swings, the market has settled into a relatively stable pace of nearly 17 million since May. However, retail sales have been in decline in 2019, as they were in 2018, and this trend is expected to continue in October. Affordability issues, a result of high interest rates and high 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 pull-back should be expected.

In addition to economic factors negatively influencing October results, the numbers announced on Friday could reveal a significant impact from the GM strike. The implications of the 40-day GM strike on October's sales volume are difficult to quantify, but some decline is likely. GM sales were on a hot streak, up 6% over last year in Q3 while the total industry was nearly flat.

GM had higher than industry average inventory supply going into the production shut-down period. And, availability issues have seemed minimal based on dealer and customer comments. So, retail sales are unlikely to see a significant impact, although one would expect that some buyers around the country would be unwilling to cross picket lines. The bigger threat is fleet activity, which could drop dramatically. Any order fulfillment due during the strike period was likely delayed, thus fleet delivery volume is expected to be lower.

There is also a possibility of stronger than expected sales performance this October. During the model-year rollover period, which occurs every fall as old- and new-vehicle inventory must "share the shelves," OEMs implement aggressive pricing strategies to move older inventory off dealer lots. The number of incentive programs offered this October appear to be near record levels, and heavy discounts are likely rising to offset softening retail demand.

The October sales record occurred in 2001 as heavy incentives and "Keep America Rolling" marketing programs in the wake of the 9/11 attacks lifted the sales volume to 1.72 million and a 21.7 million SAAR. Exceeding this record is highly unlikely this year.

October 2019 Sales Forecast Highlights

In October, new light-vehicle sales, including fleet, are forecast to reach 1.37 million units, up about 2,000 units or 0.2% compared to 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 pace. This October has 27 selling days, one more than last October, and four more than last month. The increase in selling days is lowering the SAAR estimates even though overall sales volume is expected to rise.

October 2019 Forecast

All percentages are based on raw volume, not daily selling rate.