* Expected to be best October sales rate since 2007
* Last auto sales data before U.S. presidential election
* Industry on track to show 14.9 mln sales rate in October
* Storm Sandy may cost industry 100,000 vehicle sales
* High gasoline prices boost compact car demand
By Deepa Seetharaman
DETROIT, Oct 31 (Reuters) – U.S. auto sales are set to rise
11 percent in October, led by Toyota Motor Corp and
Honda Motor Co which benefited from increased demand
for compact cars as gasoline prices remained high across the
country.
The annual sales rate is expected to be 14.9 million
vehicles for the second straight month, according to a Reuters
poll of economists. This would also mark the best October since
2007, the year auto sales slowed and the U.S. economy tipped
into a recession.
Automakers will report monthly U.S. sales figures on
Thursday.
“This stability at a higher level is taking the edge off the
risk factors for the remainder of 2012 and into 2013, as the
U.S. economy wrestles with the European crisis,” said Jeff
Schuster, senior vice president of forecasting at LMC
Automotive.
Rising home prices, attractive vehicle financing options and
Americans’ growing need to replace their aging cars also spurred
more consumers to showrooms.
Disruptions from Hurricane Sandy, which hit the U.S. East
Coast on Monday night, likely cut out about 100,000 vehicle
sales – but that demand will come back in November, Jefferies
analyst Peter Nesvold said.
Over the last five years, the U.S. auto sector has undergone
a wrenching overhaul that led to plant closures, job losses and
the government-financed bankruptcy restructurings of General
Motors Co and Chrysler Group LLC in 2009. Ford
Motor Co also overhauled its U.S. operations but did not
take a government bailout.
Auto sales are an early indicator each month of U.S.
consumer demand.
An 11 percent jump in October sales would illustrate the
continued recovery of the U.S. auto industry, which three years
ago was in crisis mode as sales fell to the lowest point in
nearly three decades.
ELECTION FODDER
The October sales report will be the last before Election
Day, marking the end of a contentious U.S. presidential race
that has repeatedly thrust GM and Chrysler into the spotlight in
televised debates, stump speeches and campaign advertisements.
The merits of the U.S. government auto bailout have been
hotly debated during the presidential race, with Republican
candidate Mitt Romney criticizing President Barack Obama’s
willingness to extend direct government aid to the two U.S.
automakers.
Last week, Romney told a crowd in the crucial swing state of
Ohio that Chrysler is considering moving “all” Jeep production
to China. The automaker, which makes Jeeps in Michigan, Illinois
and Ohio, denied the claim in an Oct. 25 blog and in an email to
employees this week saying it was looking to make Jeeps in
China, but will keep up U.S. production.
Chrysler is set to show a 13 percent sales gain in October,
according to auto research company Edmunds.com. GM, the largest
U.S. automaker, is expected to report a 4.7 percent rise, while
Ford, the No. 2 U.S. automaker, may see a 3.5 percent bump.
But Detroit’s gains will lag those of Toyota and Honda.
Kelley Blue Book said Toyota, which makes the Prius hybrid, was
helped by higher fuel costs, particularly in California, where
prices rose to their highest level since mid-2008.
Toyota sales are expected to jump by 25 percent, while Honda
is set to post an 18 percent increase. Last year, the two
companies were still facing vehicle shortages after a massive
earthquake in Japan in March 2011.
“We expect fuel economy will remain buyers’ top concern,
especially in California, and small and midsize cars will
benefit while larger SUVs and cars could suffer,” Nesvold said.
The October sales report caps a busy week for the U.S. auto
industry, which saw third-quarter profit reports from all three
Detroit automakers.
GM on Wednesday posted a surprisingly strong profit on
higher sales and vehicle prices, mainly in the United States,
and said it was targeting a return to break-even levels in its
European operations by mid-decade. GM shares rose 9.5 percent to
end at $25.50 on Wednesday.
(Reporting by Deepa Seetharaman; editing by Matthew Lewis)
