Used-vehicle sales in franchised and independent lots showed signs of improvement in March, with a possible 5.5 percent gain over the year-ago period, according to CNW Market Research.
Franchised dealerships are on track to sell 852,000 units in March as the weather improved and consumers who had delayed purchases slowly returned to the market, wrote CNW’s Art Spinella.
There were 93,500 consumers with pent-up demand in March, down from the 119,000 consumers recorded in the year-ago period. Spinella, who refers to consumers who have delayed their vehicle purchases as “postponers,” wrote in the firm newsletter that the decline in the number of postponers is a positive sign that buyers are returning to the market.
Another sign of the market’s gradual improvement is the continued decline in the postponement (or average delay) of used-vehicle purchases. In March, the average delay was 3.06 months, down 1.3 percent from the year-ago figure of 3.1 months. In February, the average delay was 3.64 months due to weather-related issues.
Among independent dealerships, sales are expected to increase to 835,000 units based on the first half of March. “While the gain is impressive, it still lags well behind the 880,000 in 2008 and 972,000 in 2007,” Spinella wrote.
Private-party sales are expected to hit 692,000 units, down 3 percent from the year-ago period. However, these types of sales represent only 31.7 percent of total used deliveries, down from more than 35 percent a year ago.
The decline in private-party sales is due to the improved performance of franchised and independent dealers. “They are hot on the trail of quality used vehicles at both auctions and on the street, as well as through trade-ins … The selections are broader and the advertising/marketing/promoting expenditures are higher per unit,” wrote Spinella.
Inventories at franchised and independent dealers are up month-over-month at 9 percent and 13 percent, respectively.
The improvement in overall used-vehicle sales this month hints at a stronger spring and summer selling season, according to Spinella. “We expect spring and summer used-car sales to increase by 12 percent over the year-ago numbers, with some months perhaps hitting comparison improvements in the high teens. If this occurs, 39- to 40-million units are possible for the full year.”