Bumper US auto sales in October, but VW hit by scandal

Shoppers flocked to US car dealerships in October, with most automakers reporting strong sales gains on Tuesday, but the emissions scandal plaguing Volkswagen (Other OTC: VLKAF - news) took its toll.

Fortified by incomes from steady employment gains and lured by still ultra-low interest rates, households bought new cars from the just-launched 2016 model year and the still-fresh 2015 vintage at the best single-month pace since 2005.

According to Autodata, automakers sold nearly 1.46 million cars and trucks during the month, a 13.6 percent surge from a year ago, and much stronger than analysts had forecast.

That took the total number of cars sold so far in 2015 to 14.5 million, possibly putting the industry on track to have its best year ever, surpassing the 17.4 million light vehicles sold in 2000.

General Motors (NYSE: GM - news) , Ford and the US arm of Fiat Chrysler Automobiles, FCA US, all reported their best October in at least 11 years, while Toyota, number three in US sales, registered an all-time record for the month.

But while each of the big four showed double-digit gains in the world's hottest car market, Volkswagen model sales were flat from a year ago, with the company acknowledging the challenge it faces after it was shown to have placed software on its diesel cars to cheat US emissions regulations.

"We would like to again thank our customers for their patience and loyalty," Mark McNabb, chief operating officer of Volkswagen of America, said in a statement.

"Volkswagen is committed to making things right and actively working to restore trust."

- SUVs, crossovers booming -

Sport utility vehicles and crossovers continued to lead the way in the US market, from Toyota's entry-level RAV4 to Cadillac's pricey Escalade (NasdaqGM: ESCA - news) and SRX SUVs.

?October was a huge month for the industry, smashing expectations and continuing its hot streak,? said Bill Fay, Toyota group vice president.

GM, the US market leader, said sales came in just shy of 263,000 cars and trucks in the month, up 15.9 percent from October 2014. Sales of Silverado pickups, Chevrolet Equinox and the lower-priced Malibu sedan were strongest.

GM's Cadillac luxury sedans continued to suffer, but SUVs kept the division growing.

"The redesign of our full-size trucks and SUVs, and our move into the small crossover and mid-size pickup segments were smart bets and our timing couldn't be better with industry sales at record levels," said Kurt McNeil, GM's US vice president of sales operations.

Ford sales rose 13.4 percent year-on-year to 214,000 cars and trucks, helped by strong gains in the compact Focus and the full-sized Explorer SUV.

Sales of Ford's industry-leading F series pickup trucks though grew only a modest 3.3 percent, and for the first 10 months of the year were only 1.5 percent higher, as the company promotes its lighter, more fuel-efficient aluminum-bodied F-150 in a market awash in cheap gasoline.

Japanese rival Toyota, the world's largest automaker, topped 200,000 units led by the RAV4 and Toyota Highlander SUVs.

FCA US's Jeep division sales, with the hit Cherokee SUV, led the way for the company's 14.7 percent year-on-year gain, with 195,545 vehicles sold last month. Jeep division sales jumped 33 percent from a year ago as they continue to anchor total sales for Italian parent Fiat Chrysler.

- VW losing ground -

But Volkswagen clearly appeared at risk of being left behind in the sales boom.

The German giant, the world's second-largest automaker behind Toyota, has suffered a severe blow with its admission that it placed illegal software "defeat devices" on its 2.0 liter diesel engines to trick regulators into believing they adhered to pollution standards.

US researchers revealed in September that the diesel cars release poisonous nitrogen oxides at up to 40 times the allowed levels.

The issue involved 11 million 2009-2015 VWs, Audis and other models worldwide.

On Monday, US regulators said the company's 2014-2016 3.0 liter diesel engines, installed in VWs, Audis and the Porsche Cayenne, also had defeat devices. VW has contested that finding.

That clearly weighed on Volkswagen's US sales last month. VW-model sales rose a meager 0.2 percent from October 2014 to 30,387 units.

Helping the company out overall though was a 16.8 percent jump in Audi (LSE: 0FG8.L - news) -brand sales to 17,700 cars.

"In this year of booming auto sales, no automaker should be relieved to see flat year-over-year performance, but this may be the best that Volkswagen can hope for this month," said Edmunds senior analyst Jessica Caldwell.