The new-vehicle selling rate remains strong this month, driven by consumers looking to replace aging rides, according to a monthly sales forecast developed by J.D. Power and Associates' Power Information Network and LMC Automotive. But what does this mean for the used market?

To find out, Auto Remarketing chatted with Deirdre Borrego, vice president and general manager of PIN, who said this trend in new-vehicle sales may mean more trade-ins for dealers.

Specifically, new-vehicle retail sales in April are projected to come in at 1.029 million, which represents a SAAR of 12.1 million units, according to PIN data and LMC Automotive.

Since the companies expect a strong proportion of these new-car buyers are looking to replace an aging vehicle, many of these deals might bring much-needed trade-ins to the lots, acting as a sourcing tool for quality, used vehicles.

“More buyers in the new-vehicle market will equate to more trades, which is good news for dealers,”  Borrego told Auto Remarketing.  She also noted that used-vehicle sales growth is bound to go hand-in-hand with growth in new sales:

“We do see cross shopping in the new and used market,” Borrego said.

Another good sign for the used-car market: PIN forecasts that overall lease maturities will rise by 447,000 leases (35 percent) to a total of 1.73 million maturities for the full year of 2013, compared with 2012.

This may bring a considerable amount of off-lease vehicles into the lanes, potentially boosting used inventory for many dealers.

“The more lease maturities coming into the market does mean an increase in used-vehicle supply for dealers. Although some of these vehicles will be purchased by dealers before they even go to auction, in terms of the overall market, it does mean we will see supply growing into 2013 and beyond,” Borrego explained.

And with fleet sales going strong, this may bode well for used inventory at auction in the next few years.  The forecast for fleet sales this month is 282,000 units, “which is slightly stronger than in April 2012, representing a 22 percent share of total sales,” the analysis indicated.

On the other hand, the closing gap between used- and new-vehicle prices may be pushing more buyers into the new market, perhaps a factor in recent new-vehicle sales growth.

In fact, the average price of used vehicles sold at franchised dealerships has  risen 3.8 percent in 2013 year-to-date, when compared to the same period during 2012.

“The strong used-vehicle prices we're seeing are supporting new-vehicle demand and are reflective of the general pricing discipline being exhibited by new-vehicle manufacturers,” said John Humphrey, senior vice president of the global automotive practice at J.D. Power and Associates.

Borrego explained further, nothing, “When used-vehicle prices are high, customers will receive more money for their trade-in, which means they have more money to spend on their new product. It could help them be able to simply afford a new vehicle, or a more expensive one.”

But with used inventory set to loosen this year, prices may begin to fall in the near future.

Beyond this month, J.D. Power and LMC Automotive say the outlook for vehicle sales in 2013 continues to improve.

LMC Automotive is raising its 2013 U.S. forecast for total light-vehicle sales to 15.4 million units from 15.3 million units. The retail light-vehicle forecast continues to round to 12.5 million units, “although the majority of the increase in the forecast is on the retail side of the market,” officials said.

“The irrepressible buying behavior of consumers is driving auto sales growth in 2013, as consumer spending remains remarkably stronger than the economy suggests it should be,” said Jeff Schuster, senior vice president of forecasting at LMC Automotive.

“If the current favorable trend in the stock markets and housing continues throughout the year, the automotive market may be poised for a breakthrough performance.”

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