SANTA BARBARA, Calif. -

A seasonally adjusted annualized rate of new-vehicle sales that climbed about 12 percent in January likely bodes well for the future in terms of alleviating dealers used-supply concerns.

But the 14.2 million new-vehicle SAAR also affects residuals down the road, according to ALG. The impact, however, will likely be rather modest, the firm suggests.

“Increased sales will be impacting used market supply returning to the used vehicle market in three to four years,” analysts noted. “ALG has lowered residual values across all segments slightly at a rate amounting to (approximately) 0.1 percentage points on average.”

The used supply outlook was just one of several economic factors whose influence on residuals ALG weighed in its March-April Industry Report.

Updating its outlook on oil/gas prices, the housing and labor markets, as well as used supply, ALG found these factors combined to have a downward effect on residuals.

“The combined effect of the economic factor changes had a negative residual value impact at 36 months of (approximately) 0.3 percentage points,” officials noted. “Total declines (including expected declines) for the edition, on average, had a negative impact of (approximately) 0.9 percentage points in the 36-month term with some variation among segments.”

Segment Trends

Sharing more details on its residual analysis within the 24 individual segments, ALG found that sporty vehicles will likely have the strongest value retention three years down the road (52.1 percent), followed by mid compacts (50 percent).

Entry luxury vehicles (48.6 percent retention) ranked third, with near luxury (48.5 percent) close behind and midsize vehicles (47.9 percent) rounding out the top five.

“Strength in this segment is broad based, as 14 out of 16 models are anticipated to hold over 50 percent of their initial value,” ALG noted, referring to the sporty class.

“The sector is led by the Mazdaspeed3, with a residual value of 58 percent. Sporty cars are offering some of the lowest incentives among 2012 model-year vehicles, at $1,629 on average per vehicle, relative to an average of $2,783 per vehicle in all other sectors,” analysts continued. “The mid compact and entry luxury sectors also offer below-average incentive levels, helping them to land at the top of the heap.”

Conversely, segments in the truck and SUV sectors were at the bottom of the list for expected 36-month value retention. Full-size vans (38.2 percent) ranked the lowest, with full-size SUVs (40.5 percent) second from the bottom. Full-size pickups (43.1 percent) and midsize SUVs (44.2 percent) also were toward the lower end of the residual spectrum.

“These vehicles tend to be less refined and fuel-efficient, and incentives have risen in these segments, especially with the increase in volatility of fuel prices,” ALG said of truck and SUV segments. “Additionally, many of these vehicles are used for commercial purposes, where abuse can lead to sharp drops in value,” it added.

However, they weren’t alone.

Premium luxury vehicles had the third-lowest projected 36-month value retention (40.9 percent) and luxury vehicles were tied for sixth from the bottom at 44.5 percent. For premium luxury models, in particular, softer demand on the used side hurts their residuals, ALG explained, noting that “buyers are more price-sensitive” in the used-car arena.

What’s more, lease programs are often the major support to premium luxury sales in the new-car market. Since automakers sometimes turn to subvention to reduce monthly payments, it can harm residuals, ALG pointed out.

“These incentives may not be as visible, but they still have an effect, and the premium luxury set has the highest incentive spending of any segment,” officials added.

Looking Forward

Moving along, ALG also shared some of its residual expectations for its May/June edition.

The firm is projecting “a slightly more negative seasonal pattern,” noting that some segments will be more affected than others based on their respective depreciation rates.

ALG emphasized that additional adjustments could be on the horizon, depending on economic trends in areas such as the labor/housing markets and the overall growth pattern. The adjustments, if necessary, would be done to "reflect the current and anticipated economic situation," ALG explained.

“The expectation is that the U.S. will avoid the downturn being observed in Europe and continue on a path of slow growth. However, risks are weighted toward the downside, with the potential for greater fallout from Europe, further turmoil in the Middle East causing another oil price shock, or policy mistakes at home derailing the fragile recovery,” officials noted.

“ALG is paying close attention to these metrics, which affect the wealth of consumers, thereby having an impact on current and future big ticket item purchases such as automobiles,” they added.