BANDON, Ore. -

CNW Research is projecting April’s softening used-vehicle sales trends are likely spilling into May as asking prices for these used-models rise.

“On the heels of a slight decline in April, May is again looking like it will see slightly lower sales than year ago,” president Art Spinella surmised.

“All of May’s decline can be attributed to independent dealers who are having to bid against better funded franchised dealers at auctions for prime used cars,” he explained.

“Toyota and Honda dealers are scouring auctions in ever-increasing numbers because of the shortages expected on their new-car side due to the Japanese earthquake and tsunami,” Spinella added.

CNW calculated that used-vehicle retail prices continue to climb year-over-year as new-vehicle prices firm. The firm determined average asking prices for used vehicles at franchise dealerships is up to $11,516 from $11, 283, while the average at independent lots is up to $9,954 from $9,767.

Spinella believes these gains are “raising the ‘wiggle room’ dealers can ask for their pre-owned models.”

April Used Sales Analysis by Segment

Beginning this month, CNW rolled out new analysis that took a look at used-vehicle sales by market segment.

As dealers are seeing on the new-vehicle side, Spinella indicated interest in small used vehicles has dramatically increased versus a year ago.

Of all April used sales — including franchise and independent dealers as well as private-party transactions — CNW discovered small cars accounted for 19 percent of deliveries, up from 14 percent.

“Interestingly however, SUV and crossover used sales jumped from 16.7 percent to 23.8 percent,” Spinella noted

“Inside those numbers, however, was growing interest in more fuel efficient CUVs and a diminishing interest in full-size SUVs,” he continued.

“We will expand the data over the coming months,” Spinella added.

New-Vehicle Sales Projections

Moving over to a new-vehicle discussion, CNW estimated new-vehicle sales should hit 1.26 million units this month.

“The concern is for the June through August summer selling season,” Spinella interjected. “A shortage of key Japanese products as well as shrinking used-car supplies along with lower incentives could keep the industry from a 13-million unit year.”

Spinella also shared the CNW Delivery Rate for May — which is similar to the seasonally adjusted annualized rate  — will likely come in at 12.96 million.

Discussion about Floor Traffic and Closing Ratios

CNW indicated floor traffic during the opening week of May climbed by a bit more than 9 percent, but the firm said that reading is well below the trend registered so far this year.

More importantly, CNW discovered early May closing ratios dipped for the first time since last September, falling by 6 percent versus the previous month and more than 3 percent versus a year ago.

“In part, closing ratios are down because the supply of some major Japanese-brand products has diminished dramatically in major markets causing shoppers of Hondas and Toyotas to put off an acquisition,” Spinella surmised.

“But CNW has also seen closing ratios at non-Japanese stores — with the exception of Ford and Hyundai-Kia — similarly contract,” he continued.

“A secondary reason, according to shopper surveys, is that without high incentive levels many consumers who are looking for a new vehicle simply can’t afford to make the purchase. Lack of down-payment cash is the prime issue,” Spinella went on to say.

Booming Retail Share

In more discussion about new vehicles, CNW found retail deliveries are garnering nearly 74 percent of sales in part by shortages of hot models including those from Toyota and Honda.

“Ford, for example, cancelled or postponed non-retail special programs for Explorer in order to concentrate on pure retail sales and orders,” Spinella declared.

“For dealers, this is excellent news,” he pointed out. “With shortages, they are able to ask more for existing inventory without the need to sell to discount-heavy fleets.”

Consumer Confidence Softens

Two measures CNW uses to track how consumers feel about their financial standing dipped a bit.

Analysts contend more fundamentals to this slight pullback in vehicle acquisition intentions can be found in the 1.7 percent increase in CNW’s Jitters Index, which measures concerns about home-centric issues ranging from fuel costs to taxes to food prices.

The early May Index is the first month-to-month increase since last October. Compared to last month, every major category except “child’s education” has seen a marked increase.

When compared to May of last year, increases are significant for gas prices, job stability, day-to-day needs and food prices.

“Adding to the concern, CNW’s 10-day measurement of consumer confidence among key market new-car intenders fell for the first time this year during the final days of April and continued to contract in the opening 10 days of May,” Spinella explained.

“Initial reports for the second 10-day period look as if it will slip again,” he added.

Meanwhile, CNW also noticed that its Key Market Consumer Confidence Index dropped slightly in the opening days of May to 81.55 (with 1985 equal to 100.)

Analysts pointed out September 2008 was the last time the index stood above 100.

They explained the Key Market represents those Americans who are capable and able to make a new-vehicle acquisition as well as somewhat willing to do so. The measurement excludes those who are under age, underemployed and otherwise unlikely to make a vehicle purchase.

“For the confidence number to decline at this point can be traced to worries about the economic future of the country in a general and broad sense,” Spinella stated. “Unlike the Jitters Index, it tracks the respondents’ attitude toward the country’s well being regardless of their own economic circumstances.”

CNW noted the decline in the opening week and a half of May reversed a 10-day period upward trend that began in October 2010.

“Can too much be read into this data? Without a doubt,” Spinella acknowledged.

“Confidence levels can be highly impacted by the news of the day be it economic, political or social,” he continued. But no downturn can be ignored, especially when mated to the Jitters Index and CNW’s Circle of Pain Index.

“The latter measures how widespread unemployment is by asking respondents if they have someone in their family who has lost a job; a neighbor or friend who is looking for work; whether a neighbor, friend or relative has been ‘downsized’ out of a job; and other such issues that are close to home and personal,” Spinella went on to say.

CNW determined its Circle of Pain Index has seen a major increase to 8.41 in March of this year versus 7.95 in March of last year.

The highest level was seen in March 2009 when it topped 9.0 on a 10-point scale.