After September sales surge, what’s next?

Like a bolt from the blue, the U.S. auto selling pace in September turned hotter than any month in the last 12 years.

Confounding forecasters’ modest expectations, sales totaled 1.53 million, jumping 6.3 percent from a year earlier. That ended eight straight months of declines from 2016’s record pace.

The seasonally adjusted annualized selling rate was 18.6 million, the best since July 2005 and the sixth-highest SAAR on record. The Bloomberg consensus forecast of analysts had been 17.4 million.

So what happened in September? Automakers and analysts cite a combination of post-Hurricane Harvey replacement demand, makeup deals from storm-delayed August purchases, higher fleet volume, a five-weekend sales month, attractive new products and more effective incentives aimed at clearing out aging 2017 models.

And the more important question: Will it continue?

Analyst Alec Gutierrez of Kelley Blue Book said hurricane replacement sales will provide a modest boost for two or three months. But he says the lift isn't enough to change his full-year forecast of 17.1 million, which would be down from last year's 17.6 million sales.

Still, auto company economists say U.S. market fundamentals support growth in the months ahead. Last week, Ford Chief Economist Emily Kolinski Morris predicted fourth-quarter growth "in the 2 percent-plus range" for the general economy. General Motors Chief Economist Mustafa Mohatarem called the economy "the main force" driving auto volume.

"With the U.S. economy strengthening, retail sales should remain strong for the foreseeable future," he said.

September's seasonally adjusted annualized selling rate was among the highest in recent history.

Indeed, September was so strong that two automakers cured their sales year so far. Toyota Motor Sales and American Honda were down through eight months, but strong Septembers flipped them into positive territory.

And some see September as the first round of a fourth-quarter skirmish among automakers as victims of Hurricanes Harvey and Irma replace storm-damaged vehicles.

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