Market comeback continues; major auto makers post strong Q3 sales gains

General Motors, Toyota Motor Corp., Ford Motor Co., Honda, Hyundai and Kia continue to rack up solid U.S. sales gains, helped by improved inventories, strong light-truck demand, fleet shipments and more generous incentives that are providing a much needed lift to retail deliveries to counter higher interest rates.

The results released Tuesday—including double digits gains for many auto makers—signal the industry continues to rebound from the pandemic and microchip shortage, even if growth is slowing compared to the first half.

Some 30 brands released September and third-quarter results on Tuesday, posting combined sales that rose 18 percent during the period and are now up 15 percent year to date.

But one major auto maker, Stellantis, continues to struggle, with third-quarter volume slipping 1.3 percent and its two biggest brands, Jeep and Ram, posting declines of 4.2 percent and 3.5 percent. Jeep volume has now dropped nine straight quarters.

Third-quarter sales rose 21 percent at GM, with volume up 21 percent at Chevrolet, 19 percent at GMC, 54 percent at Buick and 5.8 percent at Cadillac. GM, with two U.S. assembly plants idled because of a UAW strike now in its third week, said it ended September with 442,586 cars and light trucks in U.S. dealer inventory or in transit, up from 427,973 at the close of the second quarter.

Sales jumped 14 percent to 203,904 at Toyota Motor last month, with volume up 13 percent at the Toyota division and 21 percent at Lexus. It was the fifth straight month of gains for Toyota as the company's inventories steadily rebound. Lexus deliveries have now advanced eight consecutive quarters.

On Wednesday, Ford Motor Co. said sales rose 7.7 percent in the third quarter, buoyed by some of its most profitable trucks and utilities and record electric vehicle deliveries.

Sales of Ford's EVs rose 15 percent during the quarter as the auto maker continued to ramp up production. Hybrid sales rose 41 percent, Ford said. CEO Jim Farley has said the auto maker plans to quadruple hybrid sales over the next two years.

Honda Motor Co. continues to rebound from severe supply constraints, with September sales jumping 46 percent, behind volume rising 44 percent at the Honda division and 55 percent at Acura. Honda's four biggest sellers -- Accord, Civic, HR-V and CR-V -- generated gains of 52 percent or more, with Civic up 99 percent.

The company said demand also remains strong for light trucks despite supply and logistics issues that hampered sales of the Pilot, Passport, Ridgeline and Odyssey last month.

The company said it has about 36,800 Honda models in dealer stock to start October, up from 31,900 at the beginning of September and 18,000 a year ago.

Volume rose 16 percent to 68,961 last month at Hyundai, with retail deliveries up 2 percent at 60,425, largely behind record Tucson and Santa Fe sales. Kia finished the month up 20 percent at 67,264, with retail volume advancing 14 percent to 62,661.

Kia has outsold Hyundai five out of nine months this year, and now leads in year-to-date sales by 9,527 vehicles.

Hyundai said it ended last month with U.S. inventory of 58,371 cars and light trucks, up from 53,075 at the close of August and 24,919 at the end of Sept. 2022.

Eric Watson, vice president of sales operations at Kia America, said the market is becoming more competitive now that inventory is starting to recover across all brands, giving consumers more choices.

Hyundai Motor America CEO Randy Parker, citing higher interest rates, inflation, temporary factory shutdowns and lean stockpiles, described September as a "hard-fought month" for the company and its U.S. dealers.

"We started the third quarter in an inventory trough because we pulled a lot of sales forward in the first half," Parker said Tuesday on a call with reporters. "No matter how tough the market becomes, we will remain competitive." 

Nissan Motor Co.'s third-quarter sales rose 41 percent, with the Nissan division up 41 percent and Infiniti posting its fifth straight quarterly gain with a 47 percent increase.  

Sales at Subaru have now rebounded 14 straight months, with September deliveries rising 23 percent. Mazda reported September deliveries rose 18 percent to 28,031, its 12th straight gain. Third-quarter sales slipped 1.2 percent at Volkswagen but rose 21 percent at Audi and 7.6 percent at BMW.

Genesis posted record September sales of 6,644, up 35 percent, and record third-quarter deliveries of 19,427, up 23 percent.

Still to report: Mercedes-Benz, Volvo and JLR third-quarter results are due later in the month.

Analysts expect sales to rise 13 to 14 percent in September and 15 to 16 percent for the third quarter. Every auto maker is expected to post higher third-quarter volume, though analysts project sales will fall below second-quarter deliveries at many companies. The market rose 17 percent in the second quarter and 13 percent in the first half.

The U.S. light-vehicle market, hobbled by the pandemic and then a severe microchip shortage, continues to rebound, driven by pent-up demand and higher rental and commercial fleet shipments, though elevated new-vehicle prices and interest rates are keeping retail demand in check.

So far, the UAW strike is not believed to have slowed sales. With about a sixth of the U.S. union members who work for auto makers now picketing, the Detroit 3 are projected to be losing about 6,000 vehicles of production a day.

The average transaction price for a new vehicle in the U.S. remains above $45,000. With interest rates continuing to rise in August and September—despite the Federal Reserve pausing its own hikes—average interest rates on new-vehicle loans are hovering around 9 percent, Cox Automotive said, the highest level in 23 years.

Moody's Analytics estimates that the typical American household now requires 42 weeks of income to buy a new light vehicle, up from 33 weeks three years ago.

"Going forward, demand will be limited by pricing and interest rates," Cox Automotive Chief Economist Jonathan Smoke said.

The seasonally adjusted annual rate of sales for September is forecast to come in at 15.2 million to 15.5 million vehicles, based on the range of estimates from J.D. Power-GlobalData, Cox Automotive, S&P Global Mobility and Edmunds, up from 13.7 million a year earlier and 15.2 million in August.

U.S. inventories stood at 2.2 million at the start of September, or about 813,000 additional cars and light trucks compared with September 2022, Cox Automotive said. That is the highest level of car and light trucks in stock or transit since spring 2021. Retail inventory levels in September were expected to finish around 1.3 million vehicles, a 15 percent increase over August and 36 percent higher than last year, but still well below pre-pandemic levels, J.D. Power-GlobalData said.

Honda, Kia, Toyota, Lexus, Subaru, Cadillac, Hyundai, Chevrolet, BMW and Volkswagen had the lowest days' supply of vehicles last month while Dodge, Chrysler, Lincoln, Ram, Infiniti and Jeep had the highest stockpiles, Cox said.

With inventories still lean and the market shifting to more expensive light trucks, namely pickups and crossovers, the average new-vehicle retail transaction price in September was expected to reach $45,516, down $94 from September 2022 and below the record $47,362 set in December 2022, J.D. Power-GlobalData said.

The average incentive per new vehicle in September was on track to rise to $1,806 from $999 in September 2022, according to J.D. Power-GlobalData. Incentive spending as a percentage of the average sticker price, a closely watched barometer of discounting, was expected to increase to 3.7 percent, up 1.6 percentage points from September 2022.

Average incentive spending per vehicle for trucks, crossovers, SUVs and vans in September was expected to be $1,921, up $889 from a year ago, while average incentive spending on cars was tracking at $1,340, up $470 from a year ago, J.D. Power-GlobalData said.

• There were 26 selling days last month vs. 25 in September 2022.
• Fleet shipments, a major driver behind the industry's sales gains this year, are projected to tally 214,360 in September, an increase of 56 percent from September 2022 on a selling day-adjusted basis, J.D. Power-GlobalData said, with fleet volume accounting for 16 percent of total light-vehicle sales, up from 12 percent a year earlier
• The average monthly payment on a new vehicle in the third quarter hit an all-time high of $736, up slightly from $733 in the second quarter, Edmunds said.
• The share of U.S. consumers who financed a new vehicle with a monthly payment of $1,000 or more increased to an all-time high of 18 percent in the third quarter from a previous record of 17 percent last quarter, Edmunds said.

Carly Schaffner contributed to this report.