Auto sales continued to be a bright spot in an improving economy in October, despite lost sales due to Hurricane Sandy and uncertainty associated with the November 6 election.
GM reported its best October sales since 2007.
"This is obviously very encouraging," said Kurt McNeil, vice president of US sales, on GM's sales conference call with analysts and reporters. "Momentum is even more important and we think it's real." GM benefited from increased sales for four cars -- Cruze, Sonic, Spark, and Volt -- with Cruze sales rising 34% to 19,121, making it the best-selling GM vehicle after Silverado.
McNeil said light-vehicle sales have increased for eight consecutive quarters.
"All of these gains to date have come without a tailwind from residential housing," he said. "Housing has been the missing link in the economic recovery and the auto recovery," he said, and now it is coming back.
McNeil added that campaign rhetoric has also impacted auto sales.
"They've made the economy a center point of their mudslinging, but we think that once we get past the election all of these strong economic fundamentals are going to continue to play," he said.
As for lost sales due to Hurricane Sandy, Ford analyst Erich Merkle estimated the impact on Ford at 2,000 to 3,000 lost sales, with the industry impact at 20,000 to 25,000 lost sales.
"You will see the sales come back in November or December after the situation normalizes," Merkle said. Edmunds.com estimated the impact at 30,000 lost sales, noting that the last three days of October account for about 17% of monthly sales, on average, and about 20% of US auto sales come from the area impacted by Sandy.
GM economist Sue Yingzi Sue said, "From a historical perspective, after disasters, economic activity picks up pretty quickly ... A large part of the sales will be recouped this year." The lost sales impacted the seasonally adjusted annualized sales rate, reducing it by at least 300,000 vehicles. GM's McNeil said the November rate was around 14 million to 14.2 million. It might have reached 14.5 million.
Another positive sign for the auto industry is that incentive spending declined. TrueCar.com estimated that the average incentive for light vehicles was $2,353 in October, down $140 or 5.6% from a year earlier and down $71 or 3% from September 2012.
"Incentives are at their lowest levels in more than a year as automakers have been able to offer very attractive lease and finance specials at a very low cost, thanks to the historically low interest rates and high residual values," said TrueCar analyst Jesse Toprak, in a prepared statement.
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