Summary
With the exception of Chrysler, most major automakers saw improved U.S. sales in October. Hopefully, these results suggest the beginning of a return to what most analysts predict will be a "new normal" SAAR of 13 million vehicles.
Analysis
Despite analysts expectations of declining sales, Ford and GM both surprised to the upside with gains in October of 3.1% and 4.1% respectively. This was GM's first year over year gain since January 2008. Nissan reported sales grew by 5.6% and luxury brands like Mercedes Benz and Porsche also had better results than last year.
Of course, we are aware that these results are compared to some pretty awful results a year ago. For example, GM sales fell 45% in October '08 due to lack of available financing in the midst of the credit collapse. However, it appears that this does show that sales trends are starting to improve for automakers. According to a survey of analysts by Bloomberg, the annual sales rate in October topped 10.3 million vehicles. The 10 million benchmark is an important one and October is the first month of '09 to top this mark without government incentives skewing sales results.
Hopefully, these results suggest that stabilization in sales has begun. After yearly increases that saw annual sales over 17 million units just a few years
ago, followed by a drop earlier this year to a SAAR under 9 million, 10 or 12 million starts to look pretty good.
One thing to note is that this could just be a return to a more normal replacement rate of vehicles after much slower than normal sales rates for the past two years. With an annual sales rate of 10.3 million vehicles, it would take more than 23 years to replace all vehicles on the road in the U.S. This is well in excess of the historically normal replacement rate of about 13 years. After such a horrendous year, just to get back to more normal replacement levels is pretty remarkable.
