New-auto sales numbers are in for the month of October, and from early projections, it looks like Americans took their collective feet off the car-buying pedal, as purchases fell both from the previous month as well as a year earlier.
Preliminary statistics suggest approximately 1.3 million new cars sold in October, according to vehicle information website Edmunds.com. That's a 5% dip from September and down close to 7% on a year-over-year basis.
For the year thus far, new-car sales are slightly behind 2015, which was a record-breaking year, with 14.4 million new passenger vehicle and trucks purchased after 10 months, Edmunds.com reported. A slight 0.2% decrease over the same period last year, 14.5 million car sales took place between Jan 1 and Oct. 31.
Car industry experts heading into 2016 were fairly bullish that automotive sales could at least rival 2015 as the best 12-month period for sales in recorded history. But with year-over-year auto purchases sliding for the last three months, there's increased uncertainty that it will happen.
However, Edmunds.com Senior Analyst Jessica Caldwell indicated that there's more to the recent sales trend than meets the eye.
"On the surface, it might look like a slow month for sales," Caldwell conceded, "but in fact, the industry's performance was much stronger than the raw numbers suggest. Even with month-to-month and year-to-year sales decreases, a 17.8 million [seasonally adjusted annual rate] in October would tie for the highest monthly sales rate of 2016."
Fewer business days in October
She added that another contributing factor to the sales slippage is that unlike September, there weren't any special weekend sales events in October, so this also played a role in depressed sales.
Indeed, as noted by Tim Fleming, an analyst for vehicle valuation firm Kelley Blue Book, October had two fewer selling days. Dealerships heavily pushed incentive packages to make up for the difference, which are special add-ons that encourage car shoppers to buy or lease.
"Higher incentives are helping boost sales, but with transaction prices at an all-time high and great consumer demand for SUVs and trucks, which are more profitable, automakers can afford the extra incentives," Fleming explained.
According to the latest data available, the average light vehicle sells for $34,372, based on new-car transaction price statistics detailed by KBB.com. That's a 2.5 percent increase from a year ago, but down 0.2 percent from August.
Fleming noted that the growth in transaction prices has been influenced by consumers showing greater interest in buying crossovers and SUVs, which tend to sell at higher values, usually by at least $5,000 more.
More car owners shopping for coverage
Meanwhile, perhaps to offset what they're spending to buy new automobiles, more Americans are shopping for a different auto insurance policy. Nearly 17.5% of consumers with credit profiles are actively looking for an alternative form of coverage, TransUnion reported from its most recent Auto Insurance Shopping Index report. Insurance shopping has been an ongoing trend since 2010, when 15.5% of the credit population examined other types of coverage offerings available. The rate has increased ever since, most recently by 0.3% from 2015.
A new automobile often serves as a stimulus for policyholders to shop around, but so does relocating. There's a 200% increase in pricing alternative forms of auto insurance the month before people move, TransUnion reported from its findings.
Industry experts at TransUnion say auto insurance shopping will likely continue to hum at a robust pace due both to a more vibrant economy and lower gas prices. Nationally, the cost of unleaded regular has stayed well below $3.00 a gallon for over a year, according to the latest numbers from the U.S Energy Information Administration.