A monthly sales forecast developed by JD Power and LMC Automotive points to continued growth in the US light vehicle market in October.

Total US light vehicle sales in October 2014 are forecast to reach 1.27m units, a 6% gain on October 2013.

The analysts at the the two companies estimate that new vehicle retail sales will reach their highest level for the month of October since 2004 at 1.1m units. The retail seasonally adjusted annualised rate (SAAR) in October is expected to be 13.6m units, 0.7m units stronger than October 2013.

LMC Automotive is holding its 2014 US light vehicle retail sales forecast at 13.6m units and total light vehicle sales forecast at 16.4m units. SUV sales have increased 12 percent in 2014 compared with 2013, while total new vehicle sales have increased 5% for the same period. SUVs are expected to account for 34% of the light-vehicle market in 2014, up from 32% in 2013.

"The current environment of the auto industry is one of strength and stability, with the second half of the year at a 16.6 million-unit pace, more than making up for the 16.1 million-unit level in the first half of 2014," said Jeff Schuster, senior vice president of forecasting at LMC Automotive. "The market is clearly seeing a second wave of SUV popularity - with a wide variety of choices across the size spectrum - that will likely dominate market share for the foreseeable future."

"The industry continues to demonstrate strong sales growth and robust transaction prices, resulting in another record breaking month for industry consumer spending," said John Humphrey, senior vice president of the global automotive practice at JD Power.

In addition to overall better economic conditions, Humphrey said growth in retail sales and higher transaction prices are in part due to increasing consumer adoption of longer-term financing which makes purchases more affordable from a monthly payment perspective. Nearly one-third (32.6%) of all vehicles sold in October 2014 are financed with a term of 72 months or longer, tying the record set in July 2014.

North American production up in September

Following very strong sales in August that reduced a significant amount of inventory, LMC said that North American production in September increased 3.3% versus last year, resulting in an increase of over 1.4m units from September 2013. With the increase in September, production in the third quarter totalled 4.1m units, a 7.2% volume increase, compared with the third quarter of 2013 and the highest third quarter total on record. Compact SUVs experienced the largest volume growth in the third quarter, up more than 90,000 units, compared with the same period in 2013.

LMC Automotive's North American production forecast in 2014 remains at 16.8m units, a 4% increase from 16.2m units in 2013. North American production for 2015 is forecast to eclipse the 17m unit mark, with capacity utilisation continuing to run at or above the 90% level.

LMC said that vehicle inventory at the end of September was at a 64-day supply, up from 56 days at the end of August.