It was a bit of a rocky road to begin 2019, but certified pre-owned vehicle sales are likely to reach another record year, according to Cox Automotive.

Its analysts are calling for 2.75 million CPO sales this year, which would be up from 2.70 million in 2018.

That would be the ninth straight record years for the CPO market, despite sales falling 1.67 percent year-over-year in January and coming in flat (down 0.28 percent) in February.

“CPO sales are being driven by favorable supply as well as strong used retail demand,” Cox Automotive analysts wrote in an analysis released Wednesday. “As new-vehicle transaction prices keep going up, affordability pushes more consumers into the used-vehicle market, particularly these gently-used, high-content vehicles.”

Overall, there was an estimated 2-percent lift in the used-car retail market last month, Cox Automotive said a report accompanying the latest Manheim Used Vehicle Value Index.

The seasonally adjusted annualized rate for used-car sales in February showed some improvement as well, coming in at 39.4 million, Cox estimates.

In January, it was 38.8 million; and in February 2018, it was 38.6 million.

Overall dealer sentiment is up, albeit still in “negative territory.” The Cox Automotive Dealer Sentiment Index climbed from 44 (out of 100) in the fourth quarter to 48 in the first quarter of 2019.  There was also improvement in the expectations dealer have for the next quarter.

“We’ve seen a turnaround in dealer sentiment and the outlook for the future this quarter compared to the fourth quarter,” Cox Automotive Chief Economist Jonathan Smoke. “However, gone is the euphoria we saw this time last year as views of new- and used-vehicle sales are lower.”

Among the other drivers of dealer tentativeness, one was a slower tax refund season. But dealers in the used-car space should take heart.

In a separate “Smoke on Cars” commentary, the Cox chief economist wrote that the signs are bright for the used-car market.

“While tax refunds are down in total and a large number of people are clearly surprised and even in a situation of owing when they are used to getting a refund, most people are still getting refunds. The average refund may end down compared to last year, but it will still be substantial,
Smoke wrote.

“The best news for the used-car market is that a sizable number of households getting a refund do plan to use that money to buy or finance a vehicle,” he said. “And many of the households most likely to buy used appear to be those more likely to be positively surprised by receiving a bigger refund.

“The more severe impact on those who previously itemized will disproportionately fall on high tax states and higher income households, so there will be differences in the used-car market regionally,” Smoke said.

Going back to the Dealer Sentiment index, the overall score when dealers were asked how they would describe the current used-vehicle sales environment was 53, up from 51 in the fourth quarter.

For independents, it was 48, but that’s up from 46 in Q4. For franchised dealers it was 66, compared with 68 in Q4.

Asked about current used-vehicle inventory levels, the score for dealers overall climbed from 48 to 54. For franchised dealers, it rose from 54 to 62.

For independents, it climbed from 46 to 52.