The slow-motion auto sales recovery may have reached a turning point -- and not just because of the healthy 13 percent October increase and the fact that the annual selling rate was the best since the heady cash-for-clunkers days of the summer of 2009.
It's because -- for the first time this year -- retail customers rather than fleet buyers drove the gains.
And some executives and analysts expect retail sales to lead the recovery from here on.
"Retail sales carried the ball in October," said George Pipas, chief sales analyst for Ford Motor Co. "I think that consumers will take over. In 2011, retail will outperform fleet nearly every month."
Ford was up 15 percent overall in October, but retail volume soared 23 percent.
Industrywide, retail sales rose 16 percent from October 2009 while fleet volume rose 4 percent, according to J.D. Power and Associates.
That's a sharp reversal from the first nine months, when retail grew an anemic 3 percent while fleet sales soared 48 percent -- providing all the punch in an otherwise sluggish recovery.
"This is the first month we've seen retail perform better than fleet," said Toyota brand boss Bob Carter. "That's an encouraging sign."
Through October, U.S. sales are up 11 percent from 2009. October's seasonally adjusted annual selling rate was the highest in 14 months, at 12.3 million, according to AutoData Corp. It's also a higher SAAR than the 11.8 million in September.
Except for Toyota Motor Corp.'s 4 percent loss, all major automakers reported October gains. General Motors Co.'s 4 percent rise was the smallest increase among the top seven U.S. sellers. Hyundai-Kia Automotive, up 38 percent, and Chrysler Group, up 37 percent, led the major players in percentage terms.
American Honda Motor and Nissan North America both gained 16 percent, and Ford rose 15 percent.
"Retail is driving growth," said TrueCar.com analyst Jesse Toprak. "It shows real consumer demand" going into the next phase of recovery.
"The recovery is in place," he said. "It's slow but moving in the right direction."
Jeff Schuster, chief automotive forecaster at J.D. Power, said that even though the overall economy is lackluster and factory incentives are down from 2009 peaks, underlying support exists for retail auto sales.
Schuster said three factors are behind the retail surge:
1. More consumers with weak credit are getting loans.
2. Buyers have come to accept that blockbuster incentives aren't just around the corner.
3. Shoppers have become less sensitive to bad economic news.
A higher percentage of transactions involving buyers with weak credit means more buyers under age 30 are getting funded.
"They were the first to exit when the recession started," Schuster said. "But now they're starting to get credit, and so they're back in the market."
He added that buyers are becoming conditioned to lower incentives: "They're getting used to not expecting super deals."
Ford's Pipas said October looked good in part because October 2009 sales were weak. He said that in year-over-year comparisons, retail will look better than fleet for the next 12 months "because fleet recovered faster than retail."
After the Lehman Brothers collapse in the fall of 2008, the entire U.S. auto market tanked in the ensuing credit crunch. But businesses deferred vehicle purchases even more than consumers did, Pipas said.
Fleet sales started to revive in the fourth quarter last year.
"Fleet came back first, especially in the first half," and now consumers are coming back, he said.
Still, monthly sales have bounced up and down all year, cautioned analyst Rebecca Lindland of IHS Automotive. "Nobody wants to hang out a 'mission accomplished' banner quite yet," she said.
Schuster is also cautious but encouraged by retail gains. "It's not a trend yet, but we had a good start to September and it stayed strong, and October was consistently strong start to end," he said.
"It may be too early to call it a turning point, but it feels that way."
Jamie LaReau and Mark Rechtin contributed to this report