WASHINGTON, D.C., and BANDON, Ore. — Although used-vehicle prices maintained their hike during March and high values seem likely to stick around, a few factors on the new-car side could change things, according to NADA Used Car Guide.

"Used-vehicle prices continued to follow an upward trend during March. Most indicators suggest the used market will continue to support high used prices," explained Jonathan Banks, senior director of editorial and data services for NADA Used Car Guide.

"However, new-vehicle incentives at the current levels will cause the resale values of used vehicles to decline because car shoppers will shift from the used to the new market, while at the same time the used-vehicle supply will increase from trade-ins," he added.

What may be important to pay attention to is the new vehicle Consumer Price Index as well as new-vehicle incentives, Banks pointed out. 

"If manufacturer incentives drive stronger new-vehicle sales, used-vehicle prices will moderate in the wholesale lanes at auctions," he suggested.

On the new-vehicle side, "catch up" sales and "cabin fever" pushed the market during March, according to Paul Taylor, the National Automobile Dealers Association's chief economist.

Apparently, many consumers were ready to get out and visit dealerships after the wintry weather that "froze out activity."

And with major OEMs reporting heavy sales, the overall market was up over 20 percent.

"The March data shows a welcome increase in new-car sales, reflecting in part some ‘catch-up' sales from snowstorms that froze out activity from Washington, D.C., to Bangor, Maine, in February," Taylor noted. "Strong sales from major automakers in March led to overall gains of more than 20 percent."

He continued: "March sales will also reflect consumers with ‘cabin fever' getting out to new-car dealerships. And April new-car sales will provide an indication of what the economy will support without intervening factors, such as ‘catch-up' sales.

"March, and to a lesser extent sales in April, will reflect the current incentive surge launched by Toyota and Honda," Taylor added.

Used Market Shows Promising Signs

Examining some used-vehicle market trends in more detail, CNW Research said in its latest Retail Automotive Summary that there were two positive signs, in particular, during March that point to a stronger used-vehicle landscape: declines in both pent-up demand and average used-car purchase delay time.

More specifically, there were 93,500 shoppers who put off a used-vehicle purchase in March. This total equals 78.6 percent of the amount in March 2009 (119,000 shoppers).

"That was a serious drop versus January and February of this year versus year ago, and a positive sign that people were coming back to the market," explained Art Spinella, president of CNW, in the late-March report.

(In January, pent-up demand equaled 95.5 percent of its respective year-ago figure, while February's pent-up demand was 94.1 percent of the level in February 2009.)

Delay times also dipped, as shoppers postponed used purchases an average of 3.06 months, down 1.3 percent from March 2009.

Moreover, the average delay time was down almost 16 percent from February, when shoppers put off used purchases an average of 3.64 months in the midst of wintry weather.

"And among those who postponed a used acquisition, a growing percentage are saying they still plan to make that purchase but they've put off the decision for the time being," Spinella explained.

Overall, CNW had projected March used-vehicle sales to come in at roughly 2.38 million units, a gain of approximately 5.5 percent from the prior-year period.

Franchised stores were projected to see their used sales climb 2.6 percent to 851,900 vehicles sold. Meanwhile, independents were forecasted to show used sales of 835,200 units, a 17.7-percent upswing from March 2009, although the most current month still "lags well behind" March 2007 and March 2008, according to CNW.

"Franchised dealers are on track to selling 852,000 units in March in part because the weather was more favorable to window shopping and those who had postponed an acquisition earlier in the year were slowly — slowly — coming back to market," Spinella said at the time of the report.

Private-party sales were expected to show continued declines, with March figures projected at 692,500 units, a 3.3-percent year-over-year dip.

CNW pointed out that Toyota issues still "dragged down" casual sales, though their impact was not as significant as it was in February.

Casual sales' share of the used market deliveries was projected to be 31.7 percent, compared to a share of more than 35 percent in March 2009.

"Why the share decline? Franchised and independent dealers are back in the game. They are hot on the trail of quality used vehicles at both auctions and on the street as well as through trade-ins," Spinella explained.

"Inventories at franchised dealerships are up 9 percent versus January, 13 percent at independent dealers," he continued. "The selections are broader and the advertising/marketing/promotion expenditures are higher per unit."

Looking forward, spring and summers should be rather promising for the used-vehicle market, as well, Spinella suggested.  

In fact, full-year used sales could reach 39 million to 40 million units.

"We expect spring and summer used-car sales to increase by 12 percent over the year-ago numbers with some months perhaps hitting comparison improvements in the high teens," he stated. "If this occurs, 39 to 40 million units are possible for the full year."