Vehicle Sales Continue to Drop

Combined sales at the seven major automakers that release monthly results dropped 17% in October. The rest of the industry releases sales quarterly.

Ford Motor Co. reported U.S. sales fell 4% in October, the automaker’s fifth consecutive month of declining sales. Deliveries at Toyota Motor Corp., Honda Motor Co., Hyundai and Kia also fell for the third month in a row.

Automakers cite the semiconductor chip shortage and supply chain bottlenecks as the reason.

The seasonally adjusted annualized rate of sales came in at 11.8 million to 13.5 million. Motor Intelligence and Morgan Stanley put SAAR at 13.1 million while Cox Automotive, J.D. Power/LMC Automotive and TrueCar put it at 11.8 million to 13.5 million.

In contract, SAAR hit 16.44 million in October 2020 but has fallen every month since to a September 2021 low of 12.27 million after hitting a 2021 high of 18.5 million in April.

Morgan Stanley Analyst Adam Jonas reported industry sales fell 23% in October, with light trucks making up 81% of sales.

The Ford division saw a 3.3% drop in sales while Lincoln saw a 17% drop. Even Ford’s biggest sellers posted declines with the popular F-series pickup, down 4.7%. Overall, Ford sales dropped 7% while crossover and SUV deliveries rose 13%, as new models like the Mustang Mach-E, Bronco Sport and Bronco boost sales.

Ford shared some good news around inventory. The automaker’s inventor grew in October, increasing by 7,000 over September levels to total 243,000 at the end of October. 

Toyota Motor reported sales dropped 29% in October, with volume off 31% at the Toyota division and 15% at Lexus.

The news marks the third consecutive decline, and the largest drop in Toyota brand volume. It is also the second monthly decline at Lexus.

Toyota’s biggest sellers posted the largest declines, with the Corolla, off 61%; the RAV4, down 39%; the Tacoma, off 38%; the Highlander, down 19%, and the Camry, down 4%.

At the end of October, Toyota Motor had 111,224 Toyota and Lexus vehicles in dealer stocks and transit, up from 98,724 at the end of September, a spokesperson said.

American Honda’s October volume dropped 24% with deliveries falling 23% at the Honda division and 27% at Acura.

Some of Honda’s biggest sellers posted the greatest declines in October, with the Civic, down 39%; the CR-V, off 22%; the Accord, down 20%; and the Pilot, down 19%. Just two Honda models posted gains: the Insight, up 41%; and the HR-V, up 57%.

Hyundai saw deliveries drop 1.1% though its retail volume rose 1% to hit an October record of 52,767.

The company’s dealer stock stood at 19,894 at the end of October, down 26% from 26,717as September closed and down 86% from 142,616 at the end of October 2020.

Kia deliveries fell 7.2% to 52,067, with 82% of the company’s inventory selling during October. Subaru saw sales drop for the fifth consecutive month. This shortfall followed a 40% drop in volume last month.

All Subaru models, except the WRX/STI, posted declining sales, with the Forester plunging 67%. Company leadership blames falling sales on the semiconductor chip shortage and other materials shortages.

Mazda reported lower sales for the second consecutive month. October deliveries fell by 14%. Volvo saw volume drop or second straight month, with sales down 19%.

Analysts at Cox Automotive, J.D. Power/LMC Automotive, and TrueCar forecasted sales to fall 20% to 30% in October from October 2020. This prediction follows market increases of 13% through September. First and second quarter volume increased, but third-quarter sales dropped 13%.

Inventory levels for cars and light-trucks remain below 1 million for the third consecutive month in October, reported J.D. Power.

Tighter inventories are also lowering the average days a vehicle sits on a dealer lot before selling. J.D. Power said this figure was on pace to hit a record low of 20 days last month, down from 49 days in 2020, and down from 23 days in September.

J.D. Power and LMC analysts also expect average incentive spending per unit in October to hit a record low of $1,628, down from $3,499 in October 2020 and $4,038 in October 2019. These firms also predict average incentives, as a percentage of the average MSRP, will fall to a record low of 3.7% in October, a 4.7%-point decline from October 2020 and 6.2 percentage point decline from October 2019.

TrueCar forecasts that average incentives per vehicle will fall 39% to $2,277 in October from October 2020.

However, Valeri Tompkins, senior vice president at TrueCar, reported finance offers on full-size pickups have increased, helping the segment account for 25% of new-vehicle deliveries, an increase over May’s 15%. Ford and Ram offer 0% financing for 72 months on large pickups.

October’s average new-vehicle retail transaction hit a record $43,999, J.D. Power reported, up from the record of $42,921 set in September. The average interest rate for new vehicles last month was 4.3% with the average loan term being 70 months, reported TrueCar said.

Average incentive spending per truck, SUV and crossover in October, should hit $1,595, off $1,943 from 2020 and down $2,558 from 2019, J.D. Power said.

J.D. Power predicted fleet sales will total 142,000 in October, a drop of 15% from October 2020 and down 36% from October 2019 on a selling day adjusted basis. The firm predicted fleet deliveries will match October 2020 and account for 13% of total light-vehicle volume in October.