U.S. car sales should surge higher in October, led by an outstanding performance by Chrysler, and particularly Jeep. As Kelly Blue Book (KBB) points out, October sales usually represent a slump compared to other months.
However, KBB researchers expect another pattern:
New-vehicle sales are expected to increase 5.4 percent year-over-year to a total of 1.27 million units, resulting in an estimated 16.3 million seasonally adjusted annual rate (SAAR). October is typically the second weakest month of the year for sales, only above January. Many consumers take advantage of Labor Day deals in September, or wait for Black Friday and other holiday sales in the coming months.
The momentum of U.S. car sales for the past two years has exceeded most expectations. The economic recovery has not been terribly strong. Middle-class wages have barely moved up in a decade, so modest inflation over the period has undermined buying power. People kept cars through the recession, and pent-up demand from drivers with decade-old vehicles has triggered month-after-month of improvements. Low interest rates have kept loan costs down, and some manufacturers have offered zero percent financing to move inventory.
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While recent earnings for Ford Motor Co. (NYSE: F) and General Motors Co. (NYSE: GM) have been strong, along with U.S. car sales, the smaller of the Big Three, now part of Fiat Chrysler Automobiles N.V. (NYSE: FCAU), has had the best of it.
In its latest quarterly report, the management of Chrysler Group said:
Chrysler Group LLC today reported preliminary financial results for the second quarter and first half of 2014, including net income of $619 million for the quarter, up 22 percent from $507 million in the year-ago quarter.
Also:
Net revenue for the second quarter was $20.5 billion, up 14 percent from $18 billion a year ago. Net revenue for the first half of the year was $39.4 billion, compared with $33.4 billion a year ago. Increased shipments of vehicles such as the Ram pickup and the all-new Jeep Cherokee drove the year-over-year improvements
Jeep is expected to remain the star, at least for October. Kelly Blue Book researchers forecast:
The newly minted Fiat Chrysler Automobiles should enjoy another strong month in October with expected growth approaching 20 percent. Once again, the majority of its growth is attributed to the Jeep Cherokee, which launched late last year. If you exclude the Jeep Cherokee, Fiat Chrysler’s impressive growth in 2014 drops from 14.7 percent to 5.2 percent.
Chrysler does not have huge sales overseas as GM and Ford do. For the time being, that does not seem to matter.
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