All major carmakers reported better results for the month than analysts estimated, with General Motors and Toyota Motor leading the way.
U.S. auto sales expanded for the first time this year — and in a big way — as consumers started to replace vehicles following Hurricane Harvey, which probably damaged more cars than any storm in U.S. history.
All major carmakers reported better results for the month than analysts estimated, with General Motors and Toyota Motor leading the way. The industry selling rate, adjusted for seasonal trends, accelerated to the fastest since July 2005, aided by discounts to clear out 2017 models that had been crowding dealers’ lots.
For all the destruction wrought by Harvey, the storm may have been a shot in the arm for an auto market that’s been shrinking after record sales last year.
While analysts had projected the industry would have its best annualized selling rate in six months, those estimates ended up being too conservative. Buyers will keep returning to Texas showrooms for months to replace waterlogged vehicles, giving a boost to light trucks including the Toyota RAV4 crossover, Ford F-series pickups and Chevrolet Traverse sport-utility vehicle.
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“People headed right to the dealer as soon as the storm cleared,” said Michelle Krebs, an analyst at car-shopping website Autotrader. “We expect this will go into October and possibly continue in November.”
September’s sales rate climbed to 18.6 million, the fastest pace since July 2005, according to Autodata. Last month’s performance far surpassed the 17.4 million average estimate in a Bloomberg survey.
Expectations for post-hurricane recovery have piqued interest in shares that investors have been shunning for much of 2017. GM rose 3.1 percent Tuesday to $43.45, its second straight record close. Ford stock gained 2.1 percent to $12.34 and was inching higher in aftermarket trading after new Chief Executive Officer Jim Hackett announced his game plan for the automaker’s future.
But investors shouldn’t read too much into the strong September results, cautioned Mark Wakefield, head of the automotive practice at consultant AlixPartners. After a brief boost to demand, he projects sales will continue to slide, falling to 16.4 million next year.
“It’s a bump that will last at least into next month with Irma,” Wakefield said, referring to the storm that hit Florida two weeks after Harvey. “You could call September the Harvey month and October the Irma month. It was basically like a mini Cash for Clunkers.”
A 44 percent surge in RAV4 deliveries carried Toyota to its third straight month of better U.S. sales than Ford. Nissan posted a surprise gain, as the Rogue crossover was up 47 percent. GM saw sales jump 80 percent for the Chevy Equinox SUV and 51 percent for the Traverse.
Ford sold about 5,000 additional vehicles in September because of Harvey, a little more than a quarter of its more than 18,000-unit incremental gain, according to Mark LaNeve, Ford’s U.S. sales chief. F-series deliveries jumped 21 percent, while demand for Explorer SUVs was strongest from the company’s central and southeast regions.
“We expect to see some continued tail wind to our business and the industry over the next few months” from the hurricanes, LaNeve said on a conference call. “But outside of the Harvey effect, business was strong for us and for the industry.”
Researcher IHS Markit estimates consumers will purchase about 500,000 new vehicles to replace what Harvey destroyed. More buying after hurricanes Irma and Maria will begin to show up later this fall, with demand from all three storms lasting for about 18 months.
“When you have hundreds of thousands of people affected by an event of this magnitude,” said Edmunds analyst Jessica Caldwell, “not everyone will hit the market at once.”