Chrysler sets the pace as industry sales climb 8 percent

U.S. light vehicle sales--led by Chrysler--rose 8 percent in October to an estimated 1.02 million units, matching forecasts and enough to keep the industry's rebound on track despite ongoing economic uncertainties.

It was the eighth consecutive month in which U.S. car and light truck sales surpassed 1 million units.

Chrysler produced a 27 percent gain in October U.S. sales and led all major automakers amid expectations that the month would be among the year's strongest.

Chrysler's advance marked the fifth consecutive increase of 20 percent or more and its 19th straight monthly advance. General Motors was up 2 percent, well below its gains of recent months. Ford Motor Co. advanced 6 percent.

Toyota Motor Corp. said sales fell 8 percent in October, but it was the smallest decline amid the automaker's 6-month slide following the March earthquake in Japan. American Honda said its U.S. sales fell less than 1 percent last month, marking its smallest decline in a six-month drop after the quake.

Hyundai and Kia continued recent gains and remain on pace to set new U.S. sales records.

The Volkswagen brand, led by the new, U.S.-built Pasat, recorded a 40 percent increase. And Nissan North America's sales rose 18 percent.

Ford's increase came on the strength of a 13 percent gain at the Ford division; Lincoln sales were off 11 percent.

GM's 2 percent increase was help by a 6 percent gain at Chevrolet and continued strong demand for large pickups and fuel-efficient models. GMC, Buick and Cadillac were down.

GM said car sales increased 4 percent, crossover sales fell 1 percent and demand for trucks, vans and SUVs advanced 2 percent.

It was the fifth straight monthly sales gain for GM.

Incentives

TrueCar.com estimates GM's incentives averaged $3,182 per model last month, up 2.7 percent from October 2010 but down 3.3 percent from September.

While Chevrolet Silverado shipments climbed 7 percent to 36,656, GM said its full-size truck inventory rose on a selling-day basis to 104 days supply, from 88 days at the end of September.

GM's current large pickup lineup is among the oldest in the segment and the automaker has been offering rebates as high as $5,000 on the Silverado and GMC Sierra in recent months.

Sales hit a seasonally adjusted annual rate of 13.26 million units, just shy of the 2011 high of 13.29 million rate set in February.

It was also the second consecutive month and fifth month this year the SAAR has topped 13 million units.

The sales rate hit a 2011 low of 11.54 million units in June--when Japanese stockpiles neared lows following the March earthquake in Japan.

"The relatively strong selling rate seen again in October suggests that the fourth quarter may close stronger than previously expected," Jeff Schuster, executive director of global forecasting at J.D. Power and Associates, said in a statement. "Recent bright spots in the economy may also help calm nerves and support stable vehicle sales, but risks remain and consumer confidence is still low, tempering the outlook for 2012."

Light-vehicle sales are up 10 percent to 10.5 million units through September.

Despite mixed economic signals and weak consumer confidence levels, analysts had said October U.S. auto sales would reach the highest rate in at least eight months.

Light vehicle sales are being aided by pent-up demand from consumers trading in aging vehicles, healthy discounts, wider credit availability, new product offerings and improved inventory among Japanese automakers.

The Ford brand was helped by a 38 percent gain in SUV sales, led by the Explorer and Escape. Ford brand utility vehicles are up 31 percent this year to 471,787.

Ford's overall car sales slipped 8 percent compared to last year. But in October, the Ford Fiesta, Focus and Fusion each generated higher retail sales than a year ago, offsetting lower fleet shipments, the automaker said.

Chrysler said it was helped by strong demand for the Chrysler 200 and 300 sedans, the Jeep Compass and Dodge Journey crossovers, the Jeep Liberty SUV, and the Ram pickup truck.

Among the industry's top seven manufacturers, Chrysler offered the highest average incentive last month--$3,303--according to TrueCar.

Volkswagen AG said sales at the VW brand jumped 40 percent last month to 28,028 units. VW said the results marked its best October since 2001. Sales of the new Passat sedan hit 5,040 units--the best month for the model since December 2005.

TrueCar estimates industry incentives averaged $2,669 per vehicle in October, up slightly from September and almost 5 percent higher than October 2010. Honda, Nissan and Toyota--moving to draw buyers back to showrooms as stockpiles rebuild--hiked incentives the most from a year ago, TruCar said.

"Consumers are no longer dragging their feet on new vehicle purchases as they feel the economy is moving in the right direction, " said Jesse Toprak, an analyst with TrueCar.

Japanese automakers--hurt in late spring and all summer following the March earthquake in Japan--started October with U.S. inventory of 575,000 units, according to the Automotive News Data Center. That is up 9 percent from 527,800 units at the start of September.

But the quake is still hampering supplies, with Nissan's Infiniti brand reporting a 14 percent drop in sales last month.

Severe flooding has interrupted auto parts and vehicle assembly in Thailand and is expected to have a negative impact on U.S. supplies of Asian-brand models in coming months.

By David Phillips- Automotive News