As predicted, 2013 began with a healthy used-vehicle sales gain in January. CNW Research indicated the year-over-year sales increase came in at 6.9 percent as deals originating at franchised and independent dealerships as well as private-party transactions totaled 2.35 million units.
During the first month of last year, CNW said the industry produced sales of 2.20 million vehicles.
Sales at both franchised stores and independent lots jumped by double-digits compared to a year earlier.
CNW noted that franchised dealers saw a 14.46-percent sales increase in January, climbing to 831,155 units from 726,149 units.
The January rise for independent dealers was even higher as these operators watched their sales climb by 16.8 percent to 828,685 units from 709,184 units.
Last month’s private-party sales, however, slipped more than 9 percent to 695,087 units from the year-ago figure of 768,085 units.
CNW president Art Spinella mentioned that at the midway point of January, private-party sales prospects appeared much bleaker.
“It looked as if they were really going to take a hit, so actually falling 9 percent is not as bad as it looked mid-month,” Spinella said. “Actually, there seems to be a trend going back to private party a little bit. That to me was the most significant trend shift that we saw.”
The firm noted about 5.9 million consumers were actively shopping for a used vehicle in January, down 4.6 percent versus a year ago. This metric also drew Spinella’s attention in light of how dealers enjoyed healthy sales gains last month.
“There were fewer people out looking for used cars than there were a year ago, but it was still an enormous number, almost six million,” Spinella said. “But last year was kind of a strange one anyway economically. We’re working from a very high base from last year. The conversion from shopper to buyer is obviously very strong because you have fewer people looking but more sales. The closing ration has been significantly higher than it was.”
Total value for used sales last month came in at $20.9 billion, up from $20.1 billion a year ago, according to CNW’s calculations.
“Even though January has been a relatively slow month on the used-car side, still the value of the vehicles was almost $21 billion, which is a fairly good number for this early in the year,” Spinella said.
Franchised dealer transaction prices triggered that value climb as they rose 6.83 percent from last January. The average transaction price at a franchised store moved up to $12,666 from $11,856.
“For franchised dealers, the transaction price is always a little difficult (to trend). I’m glad that it went up because there’s been some softening in used-car prices in general,” Spinella said. “That really shows on the franchise dealer side that they’re starting to get back to turning a significant amount of off-lease cars. There’s somewhat of a shift to more expensive vehicles.”
For independent dealers, they weren’t so fortunate last month as transaction prices at those lots fell 2.66 percent year-over-year to $6,837.
The January drop of private-party sales transaction prices was called “sky high” by Spinella as they fell off by 20.35 percent from $8,469 to $6,746 “as a growing number of older vehicles are sold through such Internet outlets as Craigslist.”
However, could the strong price transaction trend established at franchised dealers in January spill into the other segments and keep the value of used sales on trending higher throughout 2013?
“It’s awfully early in the year to make too much of it yet because total prices are still down,” Spinella said. “It’s a mixed bag in general. It’s still a little early to get a true sense of where total transaction prices are or will be. It’s an interesting trend number but it doesn’t really tell you much in January.”
Editor’s Note: CNW also spotted another rise in subprime sales last month. Sister publication SubPrime Auto Finance News will have more analysis from Spinella on that part of the used-vehicle market coming in Monday’s edition of SubPrime News Update.