Strong November sales and an increase in consumer demand has the industry poised for another healthy sales month in December, CNW Research’s Art Spinella predicted in his monthly “State of the Industry” report.

Retail sales as a share of total sales increased 64.2 percent in November, according to CNW. Total new- and used-vehicle sales increased 4.8 percent in November, following a spike of 26 percent in October. Based on preliminary data, total vehicle sales could be up as much as 8 percent in December, according to Spinella.

The performance of December sales will depend on the influx of consumers who are entering the new-vehicle market. So far in the fourth quarter, CNW’s measure of new-to-market share has climbed to more than 46 percent.

“In fact, this month may be the most positive outlook this early in a month since pre-2007,” Spinella wrote. “If it is, the first quarter of next year should be extremely bright.”

Floor traffic has jumped more than 33 percent for new cars and more than 54 percent for used cars this month, compared to 20 percent and 6 percent, respectively, in November.

This increase in consumer demand, however, has caused a decline in the average delay of new-vehicle acquisitions. In November, the delay was about 8.2 months, down 12 percent from 9.3 months recorded in the year-ago period. 

Another positive indicator of the industry’s improving health is the shrinking gap between average transactions prices and MSRPs, according to Spinella. The gap hit 85 percent in November and may close, based on preliminary date, to nearly 86 percent in December.

Meanwhile, loan approvals continued to increase for subprime buyers, reaching 8.51 percent in November. In November, 66.29 percent of near-prime loans were approved, while 84.17 percent of prime loans received approvals.

November also became the sixth consecutive month to see an increase in the share of finance units, which Spinella attributed to looser credit, a general acceptance of lower credit scores and the willingness of banks to lend on private-party sales. Spinella added that the increase in used-vehicle financing may continue in December and into the first quarter of next year, putting the industry back on track to a 40 million unit year.

So far, used-vehicle sales among franchised, independent and private-party channels are off to a strong start in December. Compared to the year-ago period, franchised dealers are up more than 3 percent, independent dealers are up 13 percent and private-party sales are up nearly 12 percent.

In addition, leasing continued to be a preferred source of financing in November for almost all automakers. Ford equaled the industry average with 25.4 percent of vehicles leased, while 29.28 percent of Toyotas and 28.46 percent of Hondas were leased last month.

“The drive for leasing among some automakers – especially second-tier Asian and weaker Detroit nameplates – is the extremely positive results leasing has on brand loyalty,” Spinella wrote.

This year, 39 percent of customers who took out leases back in 2008 ended up selecting the same brand at the end of their lease term. The share is slightly higher for lessees who had short leases written in 2009.