New-Car Sales To Fall 2 Percent Year-Over-Year; Despite Decline, October Results Strong On Replacement Demand, Increased Incentive Spend, Ac

New-vehicle sales are expected to decline 2 percent year-over-year to a total of 1.34 million units in October 2017, resulting in an estimated 17.9 million seasonally adjusted annual rate (SAAR), according to Kelley Blue Book.

“Although the headline shows a small decline in sales, October looks relatively strong for the industry, as evidenced by the nearly 18 million SAAR,” said Tim Fleming, analyst for Kelley Blue Book. “Sales blew past expectations in September toward an 18.5 million SAAR pace, and we expect October to keep up some of that momentum. Some of the strength can be attributed to replacement demand that continues in Texas and Florida, but perhaps more importantly, higher incentive spend is playing a role. Even with production cuts this year, incentives are on the rise and have reached 11 percent of average transaction prices. This is an indicator that new-vehicle demand is still contracting, and production cuts could be on the horizon to prevent oversupplies.”
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