Used-vehicle sales appear to be headed toward the 4-million-unit range this month, which would beat the figures from last August by more than 4 percent, according to TrueCar.com.
Specifically, TrueCar is calling for 3.99 million used sales this month, which would be a 4.7-percent increase from a year ago.
“It’s mostly an inventory-driven increase,” Jesse Toprak, the company’s vice president of market intelligence, explained to Auto Remarketing on Wednesday afternoon.
In essence, the increase in new-car sales volumes in recent years has now led to “slightly” greater availability of used units aged three years or newer, Toprak said. There are simply more of these cars out there.
Also driving the year-over-year increase has been sales of the $10,000-and-under crop of used units, as Toprak noted, “That business remains strong.”
Granted, the nearly 4 million used sales expected industry-wide in August would be down 13.3 percent from July, TrueCar noted. But Toprak attributes this mostly to “seasonality.”
Given the Labor Day Weekend, end-of-summer clearance and end-of-model-year sales, the new-vehicle market is naturally stronger, he explained, noting that “new-car sales sort of grab the limelight in August.”
On this front, TrueCar is forecasting 1.26 million new-vehicle sales (including fleet), which would be a 17.2-percent year-over-year gain and an 8.9-percent sequential uptick. New-vehicle retail sales are projected to jump 14.3 percent year-over-year and 9.7 percent sequentially, according to TrueCar.
CNW Offers Used Projections
Elsewhere in the used-car market, CNW issued a sales forecast on Aug. 21, calling for 3.89 million used sales this month, compared to 3.81 million in August 2011.
The firm projected to year-to-date sales through August to settle at 27.88 million, compared to 26.93 million used sales in the opening eight months of last year.
“August usually is a relatively slow month for used sales, but this year’s numbers are distressing, especially for independent dealers,” said CNW president Art Spinella.
Getting into specifics, CNW is predicting franchised dealers to move 1.52 million used vehicles in August, which would beat last year’s numbers by 6.3 percent. Year-to-date numbers would then be at 10.27 million for a 4.6-percent increase.
Casual sales are projected to climb 12.6 percent to 1.08 million, with year-to-date private-party sales up 14.6 percent at 8.34 million.
However, CNW expects independents to dip 9 percent with 1.30 million sales for the month. It is calling for their year-to-date sales to come in at 9.27 million, which would be down 5.6 percent.
“Private-party sales continue to sparkle as more consumers offer their cars on websites such as craigslist and other no-charge outlets,” Spinella shared.
“The independent dealer body is torn. In some regions of the country, used sales by indies are soaring while in other parts of the country, they are in the tank,” he continued. “Regardless of regional differences, independents on the whole are on track to a 9-percent decline in August.”
Webb Says Used Profitability on Rise
In the August Auto Industry Brief written by Manheim’s Tom Webb and distributed Wednesday, the chief economist of Manheim consulting recapped CNW’s report on July used-vehicle sales and August projections.
Then, Webb turned to used-vehicle profitability and shared how the nation’s public dealer groups are an example of an ongoing trend.
“Operating efficiencies, quick inventory turns, and strong F&I income have enabled dealers to make good profits in their used vehicle operations, despite a narrowing in gross margins,” Webb noted.
“Confirmation of this industry-wide trend was provided by the earnings reports of the publicly traded dealership groups,” he continued. “On a sales-weighted basis, their same-store used retail unit volumes rose for the 13th consecutive quarter. Gross margins, however, have declined on a year-over-year basis for 10 consecutive quarters.”