BANDON, Ore. — CNW Research said the number of subprime
buyers in January soared nearly 60 percent versus a year ago while at the same
time transactions at buy-here pay-here dealerships jumped 8.2 percent year-over-year.

What do the trends say about the prospects for subprime
lenders and BHPH dealers for the rest of 2013? CNW president Art Spinella said,
"To me, that's going to be the foundation for having a really good used-car
year. Financial institutions, buy-here, pay-here, we're even seeing private
party sales in subprime. A year and a half ago, you couldn't get a loan on a
private party sale to save your life.

"The subprime buyers' market is just roaring back," Spinella
added.

After making those declarations to SubPrime Auto Finance
News, Spinella mentioned a report he noticed late last week indicating the
mortgage industry is slowly beginning to issue housing contracts without a down
payment. He explained the loosening of credit — be it in automotive, housing or
elsewhere — can only be seen as a positive sign.

"The whole lending metric is really supporting and will
likely support used cars at least for the coming year and probably further than
that," Spinella said.

"Even people who have poor credit still need to have
transportation. The industry has always been good at finding a way to get those
people into cars, and they're doing it," he went on to say.

As predicted, 2013 began with a healthy used-vehicle sales
gain in January. CNW indicated the year-over-year sales increase came in at 6.9
percent as deals originating at franchised and independent dealerships as well
as private-party transactions totaled 2.35 million units.

During the first month of last year, CNW said the industry
produced sales of 2.20 million vehicles.

Sales at both franchised stores and independent lots jumped
by double-digits compared to a year earlier.

CNW noted that franchised dealers saw a 14.46-percent sales
increase in January, climbing to 831,155 units from 726,149 units.

The January rise for independent dealers was even higher as
these operators watched their sales climb by 16.8 percent to 828,685 units from
709,184 units.

Last month's private-party sales, however, slipped more than
9 percent to 695,087 units from the year-ago figure of 768,085 units.

Spinella mentioned that at the midway point of January,
private-party sales prospects appeared much bleaker.

"It looked as if they were really going to take a hit, so
actually falling 9 percent is not as bad as it looked mid-month," Spinella
said. "Actually, there seems to be a trend going back to private party a little
bit. That to me was the most significant trend shift that we saw."

The firm noted about 5.9 million consumers were actively
shopping for a used vehicle in January, down 4.6 percent versus a year ago.
This metric also drew Spinella's attention in light of how dealers enjoyed
healthy sales gains last month.

"There were fewer people out looking for used cars than
there were a year ago, but it was still an enormous number, almost six
million," Spinella said. "But last year was kind of a strange one anyway
economically. We're working from a very high base from last year. The
conversion from shopper to buyer is obviously very strong because you have
fewer people looking but more sales. The closing ration has been significantly
higher than it was."

Total value for used sales last month came in at $20.9
billion, up from $20.1 billion a year ago, according to CNW's calculations.

"Even though January has been a relatively slow month on the
used-car side, still the value of the vehicles was almost $21 billion, which is
a fairly good number for this early in the year," Spinella said.

Franchised dealer transaction prices triggered that value
climb as they rose 6.83 percent from last January. The average transaction
price at a franchised store moved up to $12,666 from $11,856.

"For franchised dealers, the transaction price is always a
little difficult (to trend). I'm glad that it went up because there's been some
softening in used-car prices in general," Spinella said. "That really shows on
the franchise dealer side that they're starting to get back to turning a
significant amount of off-lease cars. There's somewhat of a shift to more
expensive vehicles."

For independent dealers, they weren't so fortunate last
month as transaction prices at those lots fell 2.66 percent year-over-year to
$6,837.

The January drop of private-party sales transaction prices
was called "sky high" by Spinella as they fell off by 20.35 percent from $8,469
to $6,746 "as a growing number of older vehicles are sold through such Internet
outlets as Craigslist."

However, could the strong price transaction trend
established at franchised dealers in January spill into the other segments and
keep the value of used sales on trending higher throughout 2013?

"It's awfully early in the year to make too much of it yet
because total prices are still down," Spinella said. "It's a mixed bag in
general. It's still a little early to get a true sense of where total
transaction prices are or will be. It's an interesting trend number but it doesn't
really tell you much in January.

"There are so much weather related issues that impact
January sales, which is always the case," he went on to say. "Sometimes bad
weather increases sales simply because the current vehicle can't deal with bad
weather so they have to replace it. January is always kind of an iffy month to
make too many predictions on sales. But that said, whenever you see an increase
year-over-year, it's clearly a positive sign."

Normal
0
false
false
false
EN-US
X-NONE
X-NONE

/* Style Definitions */
table.MsoNormalTable
{mso-style-name:”Table Normal”;
mso-tstyle-rowband-size:0;
mso-tstyle-colband-size:0;
mso-style-noshow:yes;
mso-style-priority:99;
mso-style-qformat:yes;
mso-style-parent:””;
mso-padding-alt:0in 5.4pt 0in 5.4pt;
mso-para-margin-top:0in;
mso-para-margin-right:0in;
mso-para-margin-bottom:10.0pt;
mso-para-margin-left:0in;
line-height:115%;
mso-pagination:widow-orphan;
font-size:11.0pt;
font-family:”Calibri”,”sans-serif”;
mso-ascii-font-family:Calibri;
mso-ascii-theme-font:minor-latin;
mso-fareast-font-family:”Times New Roman”;
mso-fareast-theme-font:minor-fareast;
mso-hansi-font-family:Calibri;
mso-hansi-theme-font:minor-latin;}

Nick Zulovich can be reached at nzulovich@subprimenews.com. Continue the conversation with SubPrime Auto Finance News on LinkedIn and Twitter.