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Government Shutdown Curbs New-Vehicle Sales on East Coast

By: Philly Murtha, 10/24/2013
Although the 16-day partial U.S. government shutdown curtailed new-vehicle sales in the first half of October, demand picked up during the third week, according to a monthly auto sales forecast update from J.D. Power and partner LMC Automotive. Total new-vehicle sales in October 2013 are expected to increase 8% from October 2012, when selling-day adjusted.*

New car- and light-truck sales in the Atlantic Coastal region, which had the highest concentration of employees affected by the October 1-16 shutdown, declined the most among geographic regions analyzed, compared with the same period last year. However, demand for new vehicles bounced back when the shutdown ended, according to the J.D. Power update, which is based on new-vehicle sales transaction data collected during the first 17 selling days of the month.

October sales are projected to reach nearly 1.22 million units, up from 1.09 million unit sales in the same month of 2012. That's equal to a 15.4 million-unit seasonally adjusted annual selling rate, or SAAR, which is much stronger than last October's 14.2 million-unit pace. It's also slightly ahead of the selling pace in September 2013.

"The government shutdown clearly had an impact on retail sales through government employees furloughed. In addition, vehicle shoppers involved in businesses and consumer confidence were impacted by the shutdown," according to John Humphrey, senior vice president of the global automotive practice at J.D. Power. "However, sales in the third week of the month strengthened relative to the first two weeks, which is evidence of vehicle buyers delaying their purchase until the shutdown was resolved," he said.

The outlook for calendar 2013 sales remains unchanged at 15.6 million units, according to the update. "Light-vehicle sales volume north of 16 million units in 2014 is well within reach; however, there is a higher level of risk that consumer confidence could be distracted again in the first quarter if, as expected, the debt ceiling gridlock returns," said Jeff Schuster, senior vice president of forecasting at LMC Automotive.

*October 2013 has 27 selling days while October 2012 had 26 selling days.

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