WESTLAKE VILLAGE, Calif. -

J.D. Power and Associates’ Power Information Network explained why the strength of used-vehicle values should alleviate concerns about financing terms on new models rising to record lengths.

Analysts found that the percentage of new-vehicle retail sales connected to a 72-month or longer loan is at a record amount, reaching 32.1 percent in March, an increase from 30.4 percent in March of last year.

“While longer loan terms have traditionally been a cause for concern to the industry due to the risk of purchase cycle extension, it is not necessarily as daunting as it may seem.” said John Humphrey, senior vice president of the global automotive practice at J.D. Power.

“The longer loans are being offset by more leasing and the low interest environment, which means that consumers are able to put more of their monthly payment towards their loan principal rather than interest fees,” Humphrey continued.

Humphrey also noted that strong used-vehicle values mean that consumers have more equity in their trades and can finance lower amounts.

“In addition, consumers who may have been shut out of the market in recent years are finding that a longer loan makes buying a new vehicle affordable,” he added.

This month’s average new-vehicle customer-facing retail transaction price is coming in at $28,504, according to J.D. Power. That figure is up 3 percent from March of last year.

Along with longer financing terms, analysts spotted a rise in leasing activity, too.

Leases are expected to account for 23.1 percent of new-vehicle retail transactions this month, up from 20.0 percent in March of last year.

Analysts believe all of those trends mean new-vehicle sales will remain strong in March, as both the light-vehicle retail selling rate and the total light-vehicle rate are consistent with February’s performance at 12.1 million units and 15.3 million units, respectively.

J.D. Power said March new-vehicle retail sales are expected to come in at 1,158,000 units, which represent a seasonally adjusted annualized rate (SAAR) of 12.1 million units, with volume approaching a double-digit increase from March of last year

Total light-vehicle sales this month are projected to reach 1,465,100 units, an 8-percent increase from last March 2012, with a selling rate that is consistent with the expected performance for the year.

Fleet share is expected to hold at 21 percent, according to the forecast from J.D. Power and LMC Automotive.

The outlook for 2013 remains strong and consistent with the pace expected to be set in the first quarter. LMC Automotive is holding its 2013 U.S. forecast for total light-vehicle sales at 15.3 million units and the retail light-vehicle forecast at 12.5 million units.

“Building on the current performance, we expect the economic environment to improve throughout 2013, as the likelihood of a dark cloud slowing the recovery pace diminishes,” said Jeff Schuster, senior vice president of forecasting at LMC Automotive. “Consumers do not appear phased by headwinds from Washington, as growth in auto sales are outperforming earlier expectations.”

North American Production

Analysts determined vehicle production in North America is up 3 percent through February, compared with the same period in 2012.

The firms found production of models in the compact segment is outpacing the total market, up 7 percent thus far in 2013. Production of vehicles in the midsize and large segments has increased 1 percent and likely will hold in a slower growth position as General Motors readies the ramp-up of its redesigned large pickups.

Production of compact cars and compact premium CUVs is up 15 percent in the first two months of 2013, driven by the addition of the Dodge Dart, Nissan Leaf and the redesigned Acura RDX, according to analysts.

Vehicle inventory levels in early March increased to a 64-day supply, compared with 74 days in February. Overall, there are nearly 3.2 million units currently available on dealer lots or in transit — an increase of approximately 600,000 units from March of last year.

Analysts indicated both car and truck inventories have dropped approximately 10 days from last month. Cars began March with a 61-day supply and trucks with a 68-day supply.

LMC Automotive’s forecast for North American production remains at 15.9 million units for 2013, an increase of three percent from 2012.

“While there is a significant amount of activity below the topline production in 2013 — from more than 50 new-model ramp-ups to reduced exports to Europe — the underlying trend remains positive and on target for 2013 to improve from 2012,” Schuster said.

Continue the conversation with Auto Remarketing on both LinkedIn and Twitter.