The U.S. is speeding toward what could be a record year for auto sales.
Sales of new cars and trucks rose by double-digit percentages at most major automakers in October, and companies are raising their expectations for the rest of the year. Ford now expects total U.S. sales of 17.4 million this year, just topping the record of 17.35 million from 2001.
General Motors’ U.S. sales rose almost 16 percent over last October. Ford and Toyota reported 13 percent gains. Nissan sales rose 12.5 percent over a year ago, and Fiat Chrysler’s were up nearly 15 percent. Honda sales rose 8.6 percent. Volkswagen, mired in an emissions-cheating scandal, posted a small gain.
U.S. sales rose 14 percent to nearly 1.5 million, according to Autodata Corp. It was the best October since 2001, when zero-percent financing offers after the Sept. 11 terrorist attacks pushed sales to 1.6 million, according to the LMC Automotive forecasting firm.
GM said sales have run at an annual rate of 17.8 million for the past six months, putting the year on track to break the annual record. And the pace likely won’t slow as year-end-shopping-season promotions begin in November.
“It’s going to be hard not to hit that record at this pace,” said Jeff Schuster, senior vice president of auto sales forecasting for LMC Automotive. Schuster said the industry roared back from weak sales in the early months of the year.
Sales have been greased by cheap financing, low gas prices and an improving economy. Schuster said buyers are using the extra cash to buy bigger vehicles loaded with features. For example, sales of the eight-seat Cadillac Escalade rose 47 percent.
Automakers induced buyers further by offering incentives on outgoing 2015 models. TrueCar said the car companies spent 14.1 percent more than last October on cash-back promotions and other deals. Chevrolet was offering zero-percent financing for up to 72 months on a 2015 Camaro, while Toyota advertised $2,000 cash back on a 2015 Avalon sedan.
The deals are expected to continue. On Tuesday, Ford said it will offer no-haggle prices below the standard retail price on most vehicles through the end of this year. The discounts vary, but on a 2016 Ford Explorer, the starting price drops by $1,121 to $29,929.
Whether Ford’s rivals will follow remains to be seen. Incentive-spending usually declines in November and picks up again in December, but Mark LaNeve, Ford’s U.S. marketing chief, said he’s already seeing Black Friday car deals advertised.
“We’re in a strong market, but it’s a very competitive market with a lot of activity out there,” he said.
LaNeve reassured investors that Ford won’t spend more on incentives than it did in October, but will simply shift the money around.
Industry analysts worry that, as U.S. sales peak and eventually slow, automakers will fall into the trap they did a decade ago, resorting to heavy discounting in order to keep growing their sales. That lowered industry profits and slashed cars’ resale values.
Eric Lyman, TrueCar’s vice president of industry analysis, says pent-up demand from the recession should peter out in the middle of 2016. After that, automakers could face a period of declining sales. Deals popping up over the next few months are one hedge against that.
“This is probably the first we’re seeing automakers react to a possible decline in future demand,” Lyman said.
Volkswagen offered $2,000 to its customers last month to blunt the impact of its diesel emissions scandal, but the Volkswagen brand sold just 74 more cars in October than it did a year ago. VW’s other brands, Audi and Porsche, saw little impact because the scandal mostly affected four-cylinder diesels in Volkswagens. Audi sales rose 17 percent in October, while Porsche’s rose 11 percent.
That could change. The U.S. Environmental Protection Agency on Monday accused VW of cheating on six-cylinder Audi and Porsche models, a charge VW denies.
Among other automakers that reported Tuesday:
– GM sold almost 263,000 vehicles last month, led by a 10 percent increase in sales of the Chevrolet Silverado pickup to nearly 52,000. Sales of the Chevrolet brand rose almost 18 percent for its best October in 11 years.
– Ford’s sales jumped to nearly 214,000. The recently updated Edge SUV saw big gains, while sales of the sporty Mustang more than doubled. Ford’s biggest seller, the F-Series pickup, rose 3 percent to 65,500.
– Toyota’s sales totaled 204,045. Car sales rose 9.5 percent, while SUV and truck sales jumped 19 percent thanks to strong sellers like the RAV4 SUV and the new Tacoma pickup. Sales of the Lexus luxury brand rose 13 percent.
– Fiat Chrysler saw its strongest October since 2001, with sales of about 196,000 led by Jeep’s 33 percent increase.
– Honda saw its best October ever, with sales of 131,651. Honda’s SUV sales jumped 15 percent on strong demand for two recently updated SUVs, the Honda Pilot and the Acura RDX.
– Nissan sales rose to just over 116,000. Sales of the Nissan Rogue small crossover SUV jumped 70 percent.