CNW: Used Sales Up 1 Percent for July
By Joe Overby, Staff Writer
July 25, 2012
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BANDON, Ore. — Despite independent dealers having some
trouble getting financing for subprime borrowers, used-vehicle sales will
likely show similar improvement in July following second-quarter growth of 1.4
percent, according to CNW Research.
Based on the first 20 days of the month, the firm is projecting 4.54 million used sales for July, which would be a 1-percent hike from the used sales of July 2011 that narrowly missed the 4.5 million mark.
This would lead to a year-to-date uptick in used sales of 3.6 percent, with seven-month totals forecasted at 23.96 million.
All of this improvement (both for year-to-date and July sales) is concentrated among franchised dealers and within private-party sales.
Independents are projected to see their numbers slide 9.2 percent year-over-year in July with 1.5 million sales. Year-to-date sales would then be 7.99 million, a 4.9-percent decrease.
Explaining why their sales are slower, CNW president Art Spinella attributes some of the decline to what one customer segment has experienced in the credit market.
He suggests that "part of the issue is the ability to receive loan approvals for subprime borrowers," arguing the projected downturn for these dealers "is linked to the ability in some major states to get the loan through financial institutions."
Spinella continued: "Add to that the demand for more trucks and lower interest in small, older cars and the net result is an unbalanced inventory compared to the desires of the local market."
Conversely, franchised dealers are expected to climb 6 percent from July 2011 and reach 1.77 million used sales, lifting their year-to-date sales to 8.72 million. The latter figure would be a 4-percent hike from the same period of 2011.
Spinella attributed the July gain for franchised shops partly to these dealers pushing "some of May and June trade-ins through the reconditioning process and onto the lots."
Meanwhile, CNW is calling for 1.28 million casual sales in July, an 8.3-percent uptick. Year-to-date, this would mean 7.25 million sales, a 14.6-percent hike.
Comparing this segment of the market to the ups-and-downs of a rubber ball, Spinella said privatae-party sales are "back on track," though still expected to lag the year-to-date pace in July.
"Private-party sales are bouncing like a rubber ball. Weak one month, sky high the next," he said.
"One major factor in the casual market is the run-up in used prices registered earlier this year. Many private sellers are basing their current asking price on the inflated values of late 2011 and early 2012," he continued. "Not able to get what these sellers expected has forced many to reconsider selling a car or truck.
"But that was last month. This month, a wave of re-priced models hit the likes of craigslist.com and sales volumes picked up by more than 8 percent," he shared. "While still running behind the year-to-date figure of 14.6 percent, the private-party market is now back on track."
Quarterly Sales Climb
The year-over-year improvement in used-vehicle sales during the second quarter (1.4 percent) was "more modest" than the new-vehicle market's growth that exceeded 16 percent. But both were respectable, Spinella said.
"On the whole, new and used sales had a decent second quarter ... Considering the state of the economy, both figures are acceptable and at least point upward. Neither, however, is the kind of barnstormer one would prefer," Spinella commented.
Specifically, there were 12.48 million used units sold, compared to 12.31 million in the second quarter of 2011, according to CNW. New sales reached 3.80 million, compared to 3.27 million in the year-ago period.
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