Strike, along with higher prices, hurts U.S. sales

Retail demand for new vehicles is cooling along with the temperatures outside in the wake of high interest rates and elevated prices, even as inventories and incentives rebound.

U.S. light-vehicle sales edged up 1.8 percent to 1.2 million in October, GlobalData said in a preliminary estimate, while Motor Intelligence said the seasonally adjusted annual rate of sales slowed to 15.66 million vehicles, down from 15.73 million in September and the 2023 high of 16.22 million set in June.

October increases for several brands — 1.8 percent at Toyota, 1.5 percent at Kia and 0.3 percent at Hyundai — were the smallest gains seen all year. Higher fleet shipments at Hyundai offset a 7 percent drop in retail deliveries that occurred despite higher inventory.

Sales dropped 5.2 percent at Ford Motor Co., snapping a streak of 10 monthly gains as the six-week UAW strike against the Detroit 3 impacted output of key nameplates such as the Ranger and Bronco. Volume also fell at Mazda for the first time in a year, with car and light-truck sales both lower. Cox Automotive said fleet shipments, which jumped double-digit percentages each month this year, dropped in October, likely a result of the strike.

U.S. new light-vehicle sales were projected to advance 3 to 4 percent last month by J.D. Power and GlobalData, S&P Global Mobility and Cox Automotive, as the industry rebounds from chronic inventory shortages stemming from depleted microchip supplies. Combined sales of the seven automakers reporting monthly results rose 5.5 percent in October.

By comparison, U.S. sales rose 17 percent in the third quarter and 14 percent in the first nine months of the year.

GlobalData estimated the daily sales rate fell to 48,000 vehicles in October from 51,600 in September, the lowest level since February.

"The restart of student loan repayments in October was a further headwind to add to the mix of high interest rates, sticky inflation and some lingering supply chain issues," said David Oakley, manager of sales forecasting for the Americas at GlobalData. "Nevertheless, the market has shown resilience all year, and with the UAW strikes now resolved — pending ratification of the tentative agreements — there is still an opportunity for a robust final two months of 2023 if [automakers] can entice consumers with attractive offers."

GlobalData, citing the end of the UAW strike, pushed its 2023 forecast for U.S. light-vehicle sales back up to 15.4 million, after adjusting it down to 15.3 million at the start of the walkouts. The company is maintaining its 2024 sales outlook at 16 million.

"The overall risk in the economy and general affordability risk is expected to keep the market from achieving a higher level of recovery," Oakley said.

Luke Junk, senior research analyst at Baird, noted retail and fleet sales underperformed across the industry last month, in part because of the strike.

"We continue to see a resilient new U.S. auto buyer, but note strike impacts could be more visible in November," Junk said in a note last week.

Citing high interest rates, pricing, consumer pessimism, geopolitics and the prospect of a U.S. government shutdown, Charles Chesbrough, Cox Automotive senior economist, expects the seasonally adjusted annual rate of sales to cool more as the year closes.

October was a mixed bag among brands.

While Ford division sales were down more than 5 percent, Lincoln fell 4.5 percent. U.S. deliveries of Ford F-Series pickups dropped 5.1 percent, Ranger volume slid 89 percent, Bronco sales skidded 56 percent and Transit sales dropped 24 percent, the automaker said. Sales of three other key models rose, with the Explorer up 4.7 percent, the Bronco Sport up 13 percent and the Escape up 26 percent.

Output and sales of the Ranger, Super Duty, Expedition and Bronco were slowed by the strike, Ford said. The company ended October with gross U.S. car and light-truck stocks of 419,200, up from 340,900 a year earlier and basically flat vs. 419,700 at the end of September.

Sales of the Toyota brand's top sellers were mixed as the company still struggles with some of the industry's lowest inventories. The Corolla was up 34 percent, the Prius was down 51 percent, the Camry was down 17 percent, the RAV4 was up 20 percent, the 4Runner was down 8.7 percent, the Tundra was up 11 percent and the Tacoma was down 17 percent.

Toyota said U.S. sales of its Highlander, another core model, dropped 47 percent to 9,536 vehicles last month, but this was offset by 7,571 deliveries of its new Grand Highlander, which features a larger third-row seat.

Toyota outsold General Motors in October for the first time since July 2022, by an estimated 8,000 vehicles, GlobalData said.

Honda Motor Co., still hampered by what it calls "supply constraints for some models," reported a 33 percent October sales increase, with the Honda brand up 34 percent and Acura jumping 22 percent. Honda's core models racked up big gains. The Civic was up 52 percent, the Accord was up 31 percent and the CR-V was up 53 percent.

Lance Woelfer, assistant vice president for auto sales at American Honda, said the company sees U.S. industry sales totaling 15.7 million vehicles in 2023 and that Honda is targeting owners with incentives to drive loyalty. Many Honda owners, among the industry's most devoted, have been waiting on the sidelines for the automaker's inventory to recover.

Behind Hyundai's slight rise last month were five nameplates — the Elantra, Ioniq 5, Kona, Palisade and Venue — posting double-digit gains. This offset four models that saw double-digit declines — the Nexo, Santa Cruz, Santa Fe and Sonata.

But in a sign the industry continues to get more competitive, Randy Parker, CEO of Hyundai Motor America, said the automaker kicked off its winter sales promotions, supported by strong marketing, on Wednesday, Nov. 1.

"Hyundai is rolling into November with momentum," Parker said. "We're confident we are going to finish 2023 with all-time record performance."

The company closed October with U.S. inventories of 69,951 cars and light trucks, up from 58,371 at the end of September and 31,529 a year earlier.

U.S. deliveries increased 1.5 percent to 59,164 vehicles at Kia, setting an October record. Although sales dropped for three core models — the Seltos, Sportage and Sorento — Kia's electric vehicle sales rose 83 percent.

Eric Watson, vice president of sales operations at Kia America, said the automaker expects to surpass its full-year 2022 sales by mid-November, putting it "on track to achieve a record-breaking annual sales performance for 2023."

Through October, Kia has outsold Hyundai in the U.S. by 7,886 vehicles this year.

Carly Schaffner contributed to this report.