Normal
0
false
false
false
EN-US
X-NONE
X-NONE

/* Style Definitions */
table.MsoNormalTable
{mso-style-name:”Table Normal”;
mso-tstyle-rowband-size:0;
mso-tstyle-colband-size:0;
mso-style-noshow:yes;
mso-style-priority:99;
mso-style-qformat:yes;
mso-style-parent:””;
mso-padding-alt:0in 5.4pt 0in 5.4pt;
mso-para-margin-top:0in;
mso-para-margin-right:0in;
mso-para-margin-bottom:10.0pt;
mso-para-margin-left:0in;
line-height:115%;
mso-pagination:widow-orphan;
font-size:10.0pt;
font-family:”Times New Roman”,”serif”;
mso-fareast-font-family:”Times New Roman”;}

BANDON, Ore., and SANTA MONICA, Calif. — The string of at
least 4 million used-vehicle sales per month appears to be over if CNW
Research's projection for August sales is accurate.

CNW is predicting the combination of used sales by franchised
and independent dealers as well as private party transactions to come in at
3.89 million this month. The May figure was 4.1 million, while both the June
and July used sales totals were 4.9 million, according to CNW data.

Joe Spina, director of remarketing at Edmunds.com, isn't
surprised used sales are softening at the heat of summer arrives.

"For the last several years there's been this substitution
of people buying used vehicles because of the uncertainty in the economy and
their real financial position. That's still going on so there is still strong
demand for used cars," Spina said.

"At the same time, new sales have been picking up," he
continued. "Used-car prices have been so high for so long, and there are some
nice new cars out there. There are some outgoing generations that are being
discounted, the Ford Fusion for example. People who are on the fence could buy
a new vehicle, and they will in a lot of cases."

Jesse Toprak, vice president of market intelligence for
TrueCar.com, views this month's used-vehicle sales pattern from the position of
how new-vehicle financing currently stands.

"What's happening is because new-vehicles have some of the
most attractive financing and leasing offers, when a consumer looks at the
actual cost of buying a new car versus a 1- or 2-year-old used car and compare
the monthly payments, a lot of times they're better off buying a brand new
car," Toprak explained.

"The phenomena of a new car potentially being cheaper than a
used car has existed for the last couple of years, and it is pushing some
consumers who initially set out to buy a used car to buy a new vehicle
instead," he pointed out.

TrueCar thinks this month's new-vehicle sales are heading
toward a SAAR level of the lower 14-million range.

"I don't see any departure from that so far," Toprak
indicated late last week. "Stable doesn't make great headlines, but that's
really what we have here. Perhaps that's healthy for the marketplace anyway
because we're still seeing decent year-over-year gains without any crazy
incentives where cars are being given away."

For large dealer groups such as Sonic Automotive — which has
placed plenty of resources into its used-vehicle operation — new- and
used-vehicle sales trending in opposite directions could be viewed negatively.

"I actually hope (new-vehicle SAAR) doesn't get to 16.5
(million). People would probably shoot me for that, but it would be disruptive
for us," said David Cosper, Sonic's vice chairman and chief financial officer.

Cosper made that comment during the recent J.P. Morgan Auto
Conference in New York when an investment analyst asked how strengthening
new-vehicle sales would affect Sonic's bottom line after it invested so much
into a used-inventory management system that sister publication Auto
Remarketing featured here.

Sonic came in ranked No. 4 on Auto Remarketing's list of the
top 125 used-car dealer groups based on 2011 sales, and company executive Hal
McLarty will be one of the keynote speakers at this year's National Remarketing
Conference. The event will touch on several elements of the used-vehicle
industry, but one often remains in the back of Cosper's mind.

"The toughest part in our business is keeping people
focused," Cosper told the J.P. Morgan gathering. "You can give them the
processes, give them the tools, give them the training, but they'll tend to
wander over time.

"We've got to find a way to manage and lead them to keep
doing the right things," he continued. "It blows my mind that there are people
that think, ‘If I do this, I'll get this outcome.' They see it, and they make
the connection. They start making more money, but then they just stop doing it.
You just want to cry sometimes.

"You really do need to keep on them a lot," he went on to
say. "You've got to keep reinforcing them, training them, encouraging them. We
have a limited ability to manage numerous different things in our business.
That's why we keep it as simple as we can.

While Spina mentioned that tight household budgets created
pent-up demand, Cosper doesn't expect an uncertain U.S. economic future to sway
used-vehicle sales – this month or later in the year.

"Personally, I think the bulk of the car-buying public is a
little shell-shocked and worn out from all the news every day that we look at
and worry about," Cosper said. "Unless it's massive, I don't think it's going
to disrupt things in part because there's a lot of pent-up demand because of
the age of vehicles. They're just coming in and sales are gradually growing. It
would need to be a pretty big deal before I think it disrupts sales."