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PLANO, Texas — As both used- and new-vehicle sales moved
higher in April, the gains didn't translate into significantly more business at
credit unions.

Industry analysis from Catalyst Strategic Solutions showed credit
union vehicle loans outstanding have decreased 2.2 percent so far this year
with an 8.2 percent decline in new-vehicle loans offset by a 1.0 percent increase
in used-vehicle contracts.

Nevertheless, Brian Turner, director and chief strategist at
Catalyst Strategic Solutions, determined vehicle loans generated through credit
unions are up 1.1 percent from one year ago as a 6.6-percent decline in new
vehicle loans has been offset by a 5.8-percent increase in used vehicle loans.

"The discrepancy between auto sales and credit union loan growth
reconciles with the latest reports from the Federal Reserve which shows that
credit union market share for nonrevolving credit has declined from 11.8
percent this time last year to 10.9 percent in February," Turner explained.

Used-Vehicle Sales Analysis

While used-car sales last month jumped more than 40 percent
from March, the year-over-year change was much more moderate, according to CNW
Research.

The firm said Tuesday that there were 3.79 million used
sales in April, which is a 40.2-percent month-over-month rise and a 7-percent
hike from April 2011.

While the 40.2-percent month-over-month upswing may seem
staggering, CNW explained that this kind of gain is actually quite typical for
this time of year.

"The big April-versus-March increase is normal as weather
conditions and refund checks nudge consumers to buy a long-needed used
vehicle," explained CNW president Art Spinella.

Breaking it down, franchised dealers sold 1.37 million used
units in April, essentially static from a year ago. Independents moved 1.24
million used vehicles, down 8.0 percent. Private-party sales climbed 18.4
percent to 1.19 million.

Looking at pricing, Spinella said the average price of a
used vehicle from a franchised dealer climbed from $11,462 in April 2011 to
$12,293 last month.

For independents, it climbed from $9,913 to $10,289. Prices
in private-party sales dipped from $8,787 to $8,538.

Offering some additional analysis, Spinella had this to say:
"One issue that may or may not be a trend: The average FICO score of those
buying a used car rose for the first time in a year."

Specifically, the average FICO score of a used-car buyer
last month was 624.83. This is up from 617.88 in March. The average score for
February was 619.02, following an average of 619.59 in January.

"Some financial institutions are tightening credit criteria
a tad for used-car buyers, especially those looking at vehicles 8 years old and
older," he added.

New-Vehicle Sales Trends, Possible Gains Ahead?

As for the most recently completed month, data provided by
the American International Automobile Dealers Association indicates that
new-vehicle sales climbed 2.3 percent year-over-year (unadjusted for business
days) in April, with the industry up 10.3 percent through the first four months
of the year.

What could push new-vehicle sales and as a result help
lenders such as credit unions boost their originations?

Used-vehicle trade-in values have been relatively high as of
late, according to analysis provided by the National Automobile Dealers
Association, which said these strong values are among a slew of factors
projected to drive stronger new-vehicle sales in coming months.

After touching on the influence of gas prices, economic
gains, an aging vehicle fleet and other factors likely to drive to a
potentially hot new-car market, NADA indicated: "Another factor expected to
boost new-car sales is higher than average trade-in values on used vehicles.
According to the NADA Used Car Guide, used-car prices continued to rise in
recent months, which have increased the trade-in values for consumers shopping
for another vehicle."

NADA chief economist Paul Taylor explained to sister
publication Auto Remarketing on Wednesday afternoon how higher trade-in values
can help new-car sales.

When used trade-in values are high, it can entice the
customer to come out and buy a new vehicle, as the consumer would have greater
equity in his or her current ride. So, it's possible that a consumer who would
normally have negative equity in the vehicle could be pushed into positive
territory because of such high trade-in values, he explained.

Taylor also pointed out that with used-supply tightness, it
has led to a "narrowing" of the price space between nearly-new vehicles and new
vehicles. In other words, a new vehicle may not be that much more expensive
than going for a late-model used version of the same thing.

As such, this is yet another factor that can lead "more
traditional used-car customers to buy new, as well," Taylor noted.

Moving along, Taylor also delved further into the various
influences projected to push new-vehicle sales upward, including the recent dip
in fuel costs. The national average for the price of regular gasoline was $3.83
as of April 27, NADA said, citing AAA.

This marks approximately an 11-cent dip from later March.

"Modest economic growth and declining gasoline prices, low
interest rates, more leasing options and aging vehicles that need to be
replaced will likely result in higher auto sales over the next several months,"
Taylor said.

Discussing the gas price trend in more detail, he added: "If
the trend of falling gasoline prices continues as expected, lower gasoline
prices will be a key contributor to sales increases in both the new- and
used-vehicle markets. Lower gasoline prices will act much like a tax decrease,
putting more money in the pockets of consumers."

Moreover, the increase in new-vehicle supply will push sales
along, as well, leading to what is expected to be greater than a 10-percent
gain in new-vehicle sales for 2012.

"As inventory levels of small and midsized cars with four-cylinder
engines return to normal after the production bottlenecks in the U.S. and Asia,
new-car sales will likely increase in future months," Taylor said.

"Light-truck sales will see a comeback during the second
quarter. Falling gasoline prices-assuming there are no oil disruptions in the
Middle East-will increase demand for both new and used sport-utility vehicles,
crossover-utility vehicles, minivans and pickup trucks," he continued.

Taylor also emphasized that May's new-car performance will
be a harbinger of what the auto business has in store the remainder of 2012
with dealerships now having their inventory mix completely reloaded.