Domestic New Vehicle Sales Expected to be Highest of the Year in October

Domestic retail sales of new vehicles are expected to reach their highest level of the year this month according to a new report by J.D. Power & Associates.

The report projects new vehicle sales to individuals to reach over three quarters of a million vehicles in October. The adjusted annualized rate, including new vehicle sales to fleets and daily rental companies is expected to reach 10.2 million vehicles, up from 9.5 million in September.

In a statement, J.D. Power & Associates’ executive director of global forecasting, Jeff Schuster, said, “Unlike July, August and September, which experienced some midmonth weakness, October’s robust sales pace has continued through the second week.”

The report projects total year-to-year light-vehicle sales to improve by 14 percent. Fleet sales are expected to account for 18 percent of the total sales volume.

Despite October’s strong showing, J.D. Power has lowered its full-year estimates for both 2010 and 2011 as the U.S. economic recovery continues to sputter. The reporting firm now projects full-year sales to reach 9.1 million units this year. Earlier this year, Power had projected domestic light-vehicle sales to reach 9.2 million units in 2010.

The report also predicts that the U.S. GDP for 2011 will not exceed this year’s projected rate of 2.5 percent. Based on that projection, the company has also lowered its 2011 retail sales forecast to 10.5 million units, down from its earlier estimate of 10.7 million vehicles. Total vehicle sales for 2011, including fleet sales, are also expected to reach 12.9 million units, down from the company’s previous estimate of 13.2 million vehicles.

One bright spot in the report is Power’s estimate of North American vehicle production. The report projects production to reach 11.7 million units for the year, up from 8.5 million units in 2009. The nine-month total through September of this year already exceeds the full-year total for 2009.

Last year, automakers experienced extended production shutdowns as the industry attempted to survive the weakest customer demand in nearly three decades. Chrysler Group and General Motors Company were also forced to idle their production plants as they underwent bankruptcy reorganization.

Power’s report predicts North American production to reach 12.7 million units in 2011, up 1 million units over this year’s projected total.

Schuster said increased production in the fourth quarter has been driven by increased demand for a number of models including the Ford Explorer, Chevy Cruze and Dodge Challenger and Durango.

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