BANDON, Ore. — While approvals for subprime deals is one of
the factors that appears to be taking some steam out of new-vehicle sales
momentum this month, CNW Research also noticed that the percentage of used-vehicle
contracts with buyers having FICO scores below 670 is at the highest point
since January 2010.

The firm indicated in the February edition of its Retail
Automotive Summary that the amount of used contracts for purchasers with credit
scores below 670 approached 45 percent in December. The trend has been steadily
going upward since last April and closed 2012 much higher than the beginning of
2010 when CNW noted the reading settled near 25 percent.

Meanwhile, the average credit score for buyers of used vehicles
is also trending lower, according to CNW. The firm noticed that the average dipped
to 580 in December after hitting a recent high of nearly 640 in November of
2011.

Nonetheless, CNW is spotting a slowdown of subprime
approvals, at least on the new-vehicle side. Subprime approvals for new models
are coming in at 34.6 percent in February. That's considerably softer than
recent months.

CNW noted that subprime approvals in January moved 60
percent higher than January of last year. December's year-over-year climb came
in at 43.2 percent. In November, the jump in subprime loan approvals was 44.6
percent while the industry produced a 47.8-percent rise in October. September
marked the strongest spike of the year-closing string at 62.5 percent.

With those numbers in mind, CNW president Art Spinella
answered the question whether the February data is a blip or a trend.

"We lean toward this being a blip rather than the beginning
of a trend," Spinella said. "Concerns about government shutdowns, rising fuel
and food prices and taxes are a drag on the industry hitting 16 million units,
but not enough of a drag on the industry to keep it from hitting 15.2 million
in 2013."

The point about outside concerns pulling on overall U.S.
retail sales — of which new-vehicle transactions are a major part of the metric — also was raised by Comerica Bank chief economist Robert Dye.

"Anecdotal reports are warning of decreased retail sales as
tax hikes reduce after-tax income," Dye said. "This is not only happening
because of higher federal taxes, but is also happening at the state level in
California, which accounts for 13 percent of U.S. economic activity. Counterbalancing
the drag from higher taxes is the positive wealth effect from increasing home
and equity prices.

"Robust job creation would certainly be an effective antidote
to higher taxes, but there is no evidence yet of an increase in hiring in
February over the moderate 157,000 job gain in January," Dye added.

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