(Reuters) - The pace of U.S. auto sales is expected to rise 3% in October, helped by a strong recovery in consumer demand and tighter inventories at dealerships, industry consultants J.D. Power and LMC Automotive said on Wednesday.
Retail sales of new vehicles are estimated to reach about 1.2 million units in October, a 3% increase from a year ago when adjusted for selling days, the consultancies said.
This year, October had one additional selling day compared to last year. Without the adjustment, the increase would be 6.8% year over year.
"Two consecutive months of year-over-year retail sales increases demonstrates that consumer demand is showing remarkable strength," said Thomas King, president of the data and analytics division at J.D. Power.
Average incentive spending per unit in October fell $425 to $3,678 from a year ago, as lean inventories have allowed retailers to reduce the discounts they typically offer on new vehicles.
Incentive spending, which peaked at $4,953 per unit in April 2020, is below 9% for the first time since June 2016.
The shift towards more expensive trucks and sport utility vehicles (SUVs) is expected to drive average transaction prices to an all-time high of $36,755 in the month of October.
The consultancies also estimate the seasonally adjusted annualized sales pace for new vehicles in October to be about 15.9 million vehicles, down just 0.8 million units from 2019.
LMC Automotive also expects total global light-vehicle sales for the year to be about 77 million units, a decline of 15% from 2019.