SAN ANTONIO and BANDON, Ore. — While CNW Research found the
used-vehicle industry produced its best March sales performance since 2002, a
USAA survey showed the majority of younger potential car buyers might not be
spending their tax refund at dealerships right away.

According to USAA's 2013 Tax Season Survey, American
taxpayers are less optimistic about this year's tax refund than they were last
year, and more than half of those surveyed (53 percent) expect to receive a
smaller refund than they did in 2012.

Based on survey results, nearly 65 percent of Gen Xers (individuals
ages 35 to 44) expect a smaller refund than last year, compared to 42 percent
of their Millennial peers (persons ages 18 to 34).

In fact, USAA discovered more than half of Millennial
taxpayers (56 percent) expect the same or higher refund this year.

In addition to increased optimism about a higher return, the
survey showed that 63 percent of Millennials who have not yet received this
year's refund plan on stashing their cash in savings — an 11-percent increase
compared to how they allocated last year's refund.

"It's interesting — but not surprising — to see the negative
sentiment among taxpayers," said Scott Halliwell, a certified financial planner
at USAA.

"With all that's taken place in Washington over the past few
months, a lot of people are confused and concerned about how it will impact
their taxes," Halliwell went on to say. "Continued economic volatility and
ambiguity around the effects of sequestration have many confused and concerned
about their tax refunds. Interestingly, Gen Xers appear to be much more
skeptical about their refunds than their younger Millennial counterparts."

USAA explained it created the survey based on interviews conducted
Feb. 22-24 with 1,008 adults in a random sample of households.

Whether these surveyed consumers are saving their tax
refunds or spending them at dealerships, Manheim economist Tom Webb said tax
refunds switched from "being a negative to a positive" for the used-vehicle
market in March.

Webb pointed out tax refunds in January and February were
$31 billion (or 14 percent) lower than a year ago, according to the IRS. However
in March, he noted tax refunds were up $11 billion (19 percent) from last year's
level.

Despite some murky consumer feelings about potential tax
refunds, CNW Research's used-vehicle sales projection came to fruition as
analysts determined the industry produced its best March since 2002 — thanks in
part to activity associated with older vehicles and younger buyers.

Used sales surpassed 3 million in March, creating an
11-percent year-over-year lift. The total came in at just above 3 million, up
from 2.7 million a year ago. In March 2002, the used sales total was 3.1
million, according to CNW.

Breaking down the March total, CNW indicated franchised
dealers sold 1.08 million units last month, 17.34 percent more than a year ago.
Meanwhile, independent stores turned 7.14 percent more vehicles in March than
they did a year earlier, amassing 959,931 sales.

Furthermore, the firm determined private-party sales rose
8.75 percent year-over-year to 960,804.

CNW president Art Spinella explained how two factors
triggered the best March sales figure in 11 years. Spinella said there was "a
big influx" of older vehicles, units from the 1998 model-year and earlier.
Plus, he pointed out a surge in the amount of late-model vehicles available
helped to push March sales.

"The middle part of the market for the most part hasn't
changed much, anything from six to 15 years old," Spinella told SubPrime Auto
Finance News this week. "But the above-15 and the under-six (groups of vehicles) really drove the
market this month."

Meanwhile, Spinella mentioned a specific age demographic was
a catalyst in March. He noted a large amount of buyers and sellers fell between
the ages 25 and 35.

Elsewhere in CNW's March data, analysts found that core
transaction prices — including aftermarket products but excluding loan interest — slipped slightly at franchised dealerships, ticking down to $12,715 from
$12,789.

At independent stores, the decrease in core transaction
prices was a bit more pronounced as CNW said they softened to $6,765 from
$7,188.

Prices for last month's private-party sales also dropped,
falling from $7,473 to $6,939.  

Spinella recapped how CNW analyzes transaction prices and
pointed out the trends might be better than the overall movements indicated. He
said analysts "look at baskets of models", such as full-size pickup trucks and
budget cars, to get "a good mix of different products." Then CNW also considers
vehicle age within those baskets.

"What you wind up with is you're comparing this year with
last year with the same basket of products," Spinella said. "From that
standpoint, we actually saw an increase in prices. What drove the prices down
for the independents overall was the influx of older vehicles."

Finally, CNW shared two other trends from its March sales
data:

—Total value of all used sales climbed to $27.2 billion, up
from $25.4 billion a year ago.

—The number of used-car shoppers in March of this year
topped 8.1 million, a significant increase from 7.8 million during the same
month last year.

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