U.S. October auto sales increase show stabilizing in industry

The jobless rate hit a 26-year high of 9.8 percent in September and is expected to rise to 9.9 percent when the October rate is released Friday. Consumer confidence continued to deteriorate last month amid pessimism about future earnings and worries the economic climate would worsen in the next few months.

Emily Kolinski Morris, Ford's top economist, said uncertainty will continue as long as employment keeps declining, but she said October sales show a real underlying demand for new vehicles after the distorting effects of the clunkers program during July and August. Clunkers offered up to US$4,500 rebates for people who traded in older models for more fuel efficient vehicles.

The economy, Kolinski Morris said, is in transition from recession to recovery with financial markets improving.

And the auto industry still has to see its way through a number of economic challenges, said Bob Carter, a Toyota vice president.

“We expect the recovery to be very gradual, extending into next year and beyond,” he said.

GM was obviously concerned about its incentive spending, with new sales chief Susan Docherty saying that the company had to bring the numbers down. GM spent US$4,100 per vehicle last month as it paid to phase out the Saturn and Pontiac brands. It also had to unload a large number of 2009 pickup trucks.

In October, 52 percent of GM's sales were 2009 models, 47 percent were new 2010s and one percent were from 2008. By contrast, 80 percent of Ford's sales were 2010 models.

GM, Docherty said, plans to reduce incentives as it sells down older models and ships more newly launched vehicles.

Despite GM's spending, industry-wide incentives were down about US$100 per vehicle compared to September, said Jesse Toprak, chief analyst for the car-pricing Web site TrueCar.com.

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