October 2010 U.S. Auto Sales Wrap-Up

DETROIT, Nov 3, 2010; David Bailey writing for Reuters reported that U.S. auto sales hit their highest growth rate of 2010 in October while the largest automakers Toyota Motor Corp and General Motors sputtered behind rivals amid the gradual industry recovery.

Still reeling from the aftermath of a wave of safety recalls earlier this year, Toyota posted a 4 percent sales decline. The top global automaker was the only company to report a drop in sales for the month.

GM, which is expected to provide pricing details on its planned IPO as soon as Wednesday, reported a 3.5 percent sales increase overall supported by its pickups and SUVs.

Other major automakers all posted double-digit gains.

Ford Motor Co continued to gain share in its home market with a 19 percent sales increase overall, supported by pickup trucks. Ford trailed GM for the U.S. top spot in total sales, but widened its lead over the No. 3 seller in the U.S. market, Toyota.

J.P. Morgan analyst Himanshu Patel called the Ford result "better than expected." Ford shares were up more than 4 percent on Wednesday afternoon, hitting their highest level since 2004.

U.S. auto sales sank to the lowest levels in more than a quarter century in 2009 under the severe recession and so far this year have been recovering at a slower pace than the industry or its analysts had expected.

October auto sales reflected a slow recovery in consumer spending that has fallen short of initial expectations for the year, Nationwide chief economist Paul Ballew said.

"It looks we're going to be here at the end of the year where we thought we would be at the beginning of the year," Ballew said of auto industry sales.

Toyota has recalled more than 14 million vehicles worldwide over the past 12 months, a record for an auto brand once considered the gold standard for quality and safety.

Toyota's sales decline in October came as more consumers opted to buy larger trucks and sport utility vehicles, a category where the Detroit-based automakers have traditionally been strong.

Lifted by stable gasoline prices, sales of light trucks accounted for 52 percent of overall sales in October, the highest share since 2007.

"That accounted for a little bit of the drop," said Toyota brand chief Bob Carter.

Analysts said Toyota's lingering image problems from a wave of safety recalls earlier this year also appeared to have weighed on its results. The Japanese automaker vowed to step up sales incentives by offering lower financing and lease rates over the remainder of the year.

GM's sales rose 12.8 percent for Chevrolet, Cadillac, Buick and GMC, the four brands that survived its 2009 restructuring in a bankruptcy funded and directed by the Obama administration.

LITTLE RISK SEEN OF DOUBLE-DIP

With very little remaining inventory of 2010 models, GM was also able to push average sale prices higher by about $3,100, it said.

"We don't see a big risk at all of a double-dip," GM's U.S. sales chief, Don Johnson, told reporters on a conference call.

Johnson said consumers have begun to hold on to vehicles longer than in the past in a fundamental shift in buying habits, but GM is confident it has restructured its business to run profitably even in a slower-growth market.

Separately, GM said in a statement released Wednesday afternoon that it posted a net profit of between $1.9 billion and $2.1 billion for the third quarter.

The release of preliminary GM results was one of the final hurdles to clear before the automaker filed an amended statement with U.S. securities regulators setting a pricing range for shares in its IPO.

Meanwhile, Chrysler's sales rose 37 percent, the seventh consecutive month of year-on-year gains from the prior year when it emerged from its government-funded bankruptcy under the management control of Italy's Fiat.

Honda and Nissan Motor Co sales rose 16 percent each.

Ben Poore, who heads U.S. sales for Nissan's luxury Infiniti brand, said the October sales reflected a waning of the deep uncertainty that had overshadowed the U.S. market.

"Consumers like certainty and that's starting to happen and should continue now that we have the election out of the way," Poore said.

South Korea's Hyundai Motor Co said its U.S. sales rose nearly 38 percent while its Kia Motors affiliate posted a nearly 39 percent increase.

Volkswagen, Audi, BMW, Subaru and Porsche also reported sales increases in October from a year earlier on Tuesday.

Overall, the October results represented the first time that the closely watched sales rate had topped 12 million vehicles since the Lehman bankruptcy in September 2008, excluding the August 2009 sales that were boosted by the U.S. government's "cash for clunkers" incentive program.

Sales remain well below the pre-recession levels of 2007 when annualized sales rates were in the 16 million range most months.

Reporting for Reuters by David Bailey, Kevin Krolicki, Bernie Woodall and Deepa Seetharaman, editing by Matthew Lewis