U.S. vehicle sales fell modestly in October

U.S. vehicle sales fell 1.1% month-on-month (m/m) to 15.5 million (annualized) units in October – coming in below consensus expectations for 15.6 million units.

Unadjusted sales volumes were 1.20 million units or 1.6% above year-ago levels. The average daily selling rate (DSR) was 48,011 – calculated over 25 days – up from October 2022's 45,444 daily rate.

Passenger vehicle sales declined 2.2% year-on-year (y/y) while sales of light-trucks ticked up by 2.6% y/y. Light-trucks accounted for 80% of last month's sales, slightly higher than its 78% share in October 2022.

Light vehicle sales began the final quarter of 2023 on a weaker footing as higher interest rates and the UAW strike weighed on volumes. Despite the resolution of the strike at the end of the month, Wards Intelligence estimates that the roughly 6-week long disruption to production resulted in 35k lost deliveries in October. Production was running at a pre-pandemic pace prior to the strike and is expected to rebound in the near-term. However, given the scale of the disruption peaked in October, it is likely November sales will continue to see some lingering effects.

On aggregate, light vehicle sales have remained resilient in recent months as pent-up demand continued to filter through the industry and sustained strength in the labor market supported consumer buying power. However, with the average new vehicle auto loan sporting a financing rate close to 10%, elevated prices are becoming progressively more difficult for consumers and businesses to stomach. Although the Federal Reserve left the policy rate unchanged yesterday, high rates are expected to continue to be a headwind for sales for the foreseeable future.