The new-vehicle retail sales forecast for October is pointing toward a strong month in a year that has under-performed compared to the year before it, according to a forecast developed by J.D. Power and LMC Automotive.

The firms expect 1.07 million retail sales in October, a 0.6% decrease from 2016. The seasonally adjusted annualized rate (SAAR) for retail sales is expected to be 14.2 million units, down 0.3 million from 2016.

Although the expected retail sales are below the pace seen last year, the projected number that J.D. Power and LMC Automotive are projecting would be the second-highest sales month in 2017, according to the companies.

“Recovery from hurricanes Harvey and Irma continue to aid new-vehicle retail sales in October,” said Thomas King, senior vice president of the data and analytics division. “Despite one fewer weekend from last year, sales in the hurricane-affected regions continue to post gains in October.”

Sales in Florida were up 5% in Florida and roughly 3% in the South Central region, which includes Houston. On a national basis, however, October month-to-date sales are down 2.8% from the year before, King added.

And, while new vehicle retail sales were down year-over-year in October, incentive spend was up. The average incentive spending per unit in the month was at $3,901, a nearly 2% increase from the year before. Incentive spending on a month-over-month basis was down.

“While incentives have declined from the record high set last month, the need to reduce inventory could push spending to a new all-time high level in the final months of the year,” King said.

Fleet sales are expected to reach 249,500 units in October, a 3.3% increase from the year before. Fleet volume is expected to account for 19% of total light-vehicle sales in the same period, an 18% increase from the same time last year.

"The current pace of U.S. auto sales is driven, in part, by recovery from hurricanes Harvey and Irma, but it now appears to be less of an overall volume boost and for a shorter duration than previously expected,” said Jeff Schuster, senior vice president of forecasting at LMC Automotive. “Next year remains a pivotal year for auto sales, driven by conflicting variables. Tailwinds include a likely fiscal stimulus package and perhaps some insurance-delayed hurricane recovery. Headwinds may be stronger though, including used car interplay and some credit tightening. The wild card will be incentives/pricing and consumer response."

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