Tax season evidently helped the used-vehicle sales market rebound nicely as the first quarter closed.
CNW Research reported monthly used-vehicle sales surpassed 3 million units for the first time this year as analysts computed the March figure came in at 3.088 million. That figure represents a gain of more than 50 percent from February’s sales amount, which was 2.055 million.
“And it wasn’t just in the franchised channel. Independents and casual sales also showed significant 50 percent increases versus February,” CNW president Art Spinella said.
CNW determined franchised dealerships sold more than 1 million used vehicles in a month for the first time in 2014 as these stores turned 1.096 million units. Sales at independent dealerships also topped the 1-million mark. Private party transactions settled just below that threshold as the firm put the total at 985,316.
During his quarterly conference call on Monday, Manheim chief economist Tom Webb praised the used-vehicle sales performance dealers enjoyed in March, touching on some of the reasons why he believes the retail side is healthy.
“Dealers are turning auction purchases quickly on their retail lots and they’re turning them efficiently,” Webb said. “As a result, profits are very, very strong. Why is that important? Because the competitive nature of the market means that dealers will keep on bidding on units up and to the point that their margins are reduced to the minimally acceptable level.
“I would say given the continued improvement in the labor market, and more importantly, a very favorable retail credit environment, I do not expect these market fundamentals to materially change in the months ahead,” he continued.
That credit seemed to be available as the amount of subprime buyers who made a used-vehicle purchase thanks to an influx of tax-refund cash significantly in March.
CNW indicated the number of subprime buyers in March rose 17 percent versus year ago and soared 57 percent above the February figure.
Meanwhile, the firm noted that sales to consumers with FICO scores below 550 spiked 51.6 percent month-over-month. Sales to those deep subprime buyers also jumped 11.8 percent in March versus the same month a year earlier.
All told, CNW said about 3 percent more units were financed in March versus a year ago.
As an industry on a year-over-year basis, CNW determined that used-vehicle climbed 2.7 percent with franchised dealer sales units up 1 percent, independent dealer sales up 4.8 percent and private party transactions gaining 2.55 percent.
“But the good news doesn’t stop there,” Spinella said. “Franchised transaction prices rose a healthy 10.8 percent on the back of growing certified pre-owned units.
“Independents also saw an increase in transaction prices but at a more modest 1.52 percent versus year ago while private party sucked a lot of newer (15-plus year old) models off the market and was able to make a 5 percent increase in transaction prices,” he continued.
Spinella pointed out that the used-vehicle industry generated these sales numbers with 13 percent fewer used shoppers searching lots versus year ago, “indicating the pent-up demand log jam may well be breaking.”