BANDON, Ore. — Approvals for subprime auto loans might have
hit a speed bump this month.

CNW Research indicated that subprime loan approvals have
softened by 3.94 percent so far in April as compared to March. President Art
Spinella elaborated about the trend in the firm's Retail Automotive Summary
last week.

"One thing to watch carefully: Month-over-month subprime
loan approvals fell in the opening weeks of April compared to March," Spinella
said.

"The near 4-percent decline could have many possible reasons
and be nothing more than a single-month anomaly, but some states are beginning
to tighten up or threaten the finance industry with additional regulations if
there is even the perception of taking advantage of low-income consumers," he
went on to say.

Despite the downward sequential trend, CNW noted that this
month's subprime approvals so far are 34.7 percent higher April of last year.

Going into this month, the subprime market was carrying some
sustained momentum.

For example, CNW said the number of subprime buyers of used
vehicles soared 53.2 percent in February versus the same month a year earlier
while purchasers with FICO scores below 550 shot up 48.3 percent
year-over-year.

While subprime approvals might be waffling a bit, CNW
pointed out that FICO scores for used-vehicle buyers continues on a downward track.

In fact, analysts found that the trend toward lower FICO
scores among used-car buyers resulted in an average of 561.3 in the opening
days of April. They added the share of sub-670 credit score buyers increased to
46.9 percent from March's reading of 46.37 percent and the year-ago mark of
35.22 percent.

So what are all of these credit-quality trends doing to
sales expectations?

Based on market indications thus far in April, it appears
the springtime "shift toward private-party sales" in the used-car business has
begun to accelerate.

CNW projected that casual sales will drive the bulk of the
expected growth in used-car sales this month (which, by the way, is forecasted
to be modest).

Overall, CNW is forecasting 3.85 million used vehicles will
be sold in April, which would be a 1.5 percent year-over-year increase.

Franchised dealers are expected to see their used sales
climb moderately (1.2 percent) from April 2012 at 1.38 million units sold,
while independents are projected to remain static from a year ago at 1.24
million.

However, CNW is predicting a 3.5 percent hike in
private-party sales, which the firm believes will total 1.23 million.

"As expected and reported, the shift toward private-party
sales is increasing as the weather turns warmer and spring begins," Spinella
said.

"Expect the trend toward private-party sales to continue for
the next four months," he added. "Overall, however, all channels are going to
finish the year ahead of 2012."

As for April, this modest gain expected for the month
follows what CNW reported to be the best March in 11 years.

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