US car sales rise modestly in October

US car sales moved modestly higher in October with economic uncertainty offset by replacement demand and improved supplies of Japanese vehicles.

Nonetheless, both General Motors and Toyota fell short of expectations, with GM edging up by 1.9 per cent from a year earlier, and Toyota posting a 7.8 per cent decline. GM shares were down more than 8 per cent at $23.70 in early afternoon trading.


According to preliminary estimates, US light-vehicle sales totalled 13.2m to 13.3m units last month, slightly above September and up from 12.3m in October 2010.

Don Johnson, head of GM’s north American sales operations, said that while the US economy was growing slowly, carmakers were benefiting from pent-up replacement demand.

“There remain a significant number of people who are able to buy a vehicle”, Mr Johnson said.

Ford Motor said that low interest rates were also buoying demand.

Ford sales gained 6 per cent and Chrysler 27 per cent, giving the smallest Detroit carmaker its best October in four years

Three of GM’s four brands posted declines. The exception was Chevrolet, GM’s flagship brand which makes up 70 per cent of its US sales.

Sales of the Chevy Volt extended-range electric car reached its highest level of the year. Even so, Volt deliveries in the first 10 months of the year amounted to only half the 10,000-unit target set by GM for 2011 as a whole.

Ford’s sales were held back by an 11 per cent decline in its luxury Lincoln brand, which the company has struggled to re-invigorate. At Chrysler, the small Jeep Compass, once derided as among the carmaker’s least attractive models, posted its highest monthly sales ever.

Toyota and Honda have been recovering from supply disruptions caused by the earthquake in Japan. But they have been hit again by the floods in Thailand, with both trimming production in recent days at their north American plants.

Sales at Nissan, the smallest of the three main Japanese carmakers, gained 18 per cent.

The Japanese carmakers have stepped up discounts and other promotions to regain market share. TrueCar, an online car-pricing service, estimates that Toyota and Honda incentives were 13 per cent and 18 per cent higher respectively than a year earlier, compared with low single-digit increases at GM and Ford.

The two German luxury brands, BMW and Mercedes-Benz, have also stepped up incentives in a bid to gain market share. GM said that BMW discounts were more than $1,000 per vehicle higher than its Cadillac brand last month.

GM said that sub-prime customers rose to 8 per cent of its car-financing business last month, from 6.6 per cent in the first nine months of the year. “It’s slowly growing, but it’s growing at a nice manageable pace”, Mr Johnson said.