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AP News

Ahead of the Bell: October Auto Sales

DETROIT (AP) — For auto sales, the government shutdown proved to a speed bump, but not a stop sign.

Some car buyers may have initially moved to the sidelines, industry analysts and dealers say, but across the nation they returned to showrooms once the government got back to business in the middle of the month.

As a result, analysts are expecting October sales to run at an annual rate of around 15.4 million, about the same as the rest of the year. Some are predicting a stronger recovery than others, with forecasts of year-over-year increases ranging from 8 percent to almost 13 percent.

Auto sales have consistently been a bright spot in the U.S. economy. Sales are running at an annual rate of around 15.5 million, far above the 2009 trough of 10.4 million and closing in on pre-recession sales exceeding 16 million.

"It looks like the government shutdown ended just in the nick of time," said Jessica Caldwell, senior analyst at the auto website. "Consumers started to get jittery by the middle of the month. But with the government back to work, most lost sales should be made up in the latter half of the month."

The 16-day shutdown began Oct. 1, ending with a temporary deal that pushes off a showdown over spending cuts until January.

One area that may not have recovered, though, is Washington, D.C. Jeff Pohanka, owner of a 13-dealer chain in the Maryland and Virginia suburbs, said government workers and others are still holding back on purchases due to fear of another shutdown early next year.

"We're having some aftershocks," said Pohanka, whose dealerships sell brands made by U.S. and Asian automakers.

One of his dealers is reporting showroom traffic that's 30 percent lower than September, Pohanka said. He expects his entire chain to finish the month flat or slightly down from September, which was a disappointing month for Pohanka and the entire industry.

Industry analysts say the rest of the country fared better.

"The industry didn't escape the turmoil in Washington, but the disruption was not enough stop the auto recovery," said Jeff Schuster, senior vice president of forecasting for LMC Automotive.

October likely saw a big battle over pickup truck sales, with General Motors raising prices on its reworked Chevrolet Silverado and GMC Sierra, and Ford and Chrysler offering discounts to clear out 2013 models.

Buckingham Research analyst Joseph Amaturo wrote in a note to investors that Ford sales should be up 14 percent compared with October of 2012, while GM's sales will rise 8 percent "due to the competitive selling environment related to Ford's aggressive incentive spending, particularly full-size pickup trucks."

Edmunds expects GM sales to rise 10 percent from a year ago, while Ford should be up more than 15. Nissan is expected to lead the way with nearly a 19 percent increase.

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