Will October's Vehicle Sales Slip for a Second Month?

Ford (NYSE: F  ) is fresh off of its third-quarter results and to nobody's surprise the company posted great numbers. It beat Wall Street estimates on top and bottom lines and posted third-quarter pre-tax profits that beat the previous company record. One very positive factor in the results was that Ford narrowed its massive losses in Europe, which allowed all of the regions outside North America to combine for a profit -- the first time that's happened since the second quarter in 2011.

Ford's announcement was enough to send rival General Motors' (NYSE: GM  ) stock price up 1.6% Thursday. Investors seem to believe a rising tide lifts all boats and that GM will post similar results when it delivers its earnings next week. Let's take a look at how analysts are projecting North America's October vehicle sales and whether the government shutdown had any ill effects for automakers.

Another slip?
September's vehicle sales fell 4%, breaking a streak of 27 consecutive months of year-over-year gains. While some were quick to judge that auto sales might already be peaking, the biggest reason for the slip in September was that Labor Day sales were pulled into August's figures.

Some analysts were also worried that the government shutdown would put a damper on vehicle sales, but we may have barely cleared that hurdle.

"It looks like the government shutdown ended just in the nick of time," Jessica Caldwell, a senior analyst with Edmunds, said in an email statement. "The week-by-week data suggests that consumers started to get jittery by the middle of the month. But with the government back to work, most lost sales should be made up in the latter half of the month, and the industry's momentum will continue the pace it enjoyed before the disruption in Washington." 

LMC Automotive and Kelley Blue Book each forecast the automotive industry's seasonally adjusted annual rate, or SAAR, to come in at 15.4 million for October. That's a healthy improvement from the 14.2 million SAAR recorded last October. Edmunds.com is predicting a slightly higher amount of 15.5 million. 

Edmunds.com is projecting Ford and Toyota  (NYSE: TM  ) to beat the industry's predicted 12.7% sales improvement over last October by posting respective increases of 15.5% and 15.2%. General Motors and Chrysler are expected to post respective sales gains of 10% and 10.8%.


Graph by Author. Information from Automotive News DataCenter.

As you can see above, automotive sales have increased steadily since bottoming out after the recession. Even as sales volume continues to increase, we have yet to see a decline in the average age of vehicles which currently sits at a record high of 11.4 years. Plenty of pent-up demand remains in North America and there's nothing stopping vehicle sales from continuing its climb higher -- not even our recent government shutdown.

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