BANDON, Ore. — As time passes, more and more consumers with lower credit ratings are finding they can get approval to purchase vehicles, which is helping to bolster the overall sales totals, CNW Research recently revealed.

In fact, Art Spinella, president of CNW Research, pointed out, "December's early returns show a continuation of the decline in average FICO score for new-car buyers — 702 versus 706 in November and 726.5 a year ago.

"The share of buyers under FICO 670 climbed to over 11 percent in December, versus 7.8 percent a year ago," he added.

While Spinella went on to explain that approvals are rising for subprime buyers, he noted that the overall total still remains down from several years ago.

"While still only a fraction of what it was in the ‘let-‘em-roll times' a few years ago, the December approval rate for subprime buyers hit a yearlong high of 8.5 percent. For comparison purposes, in August 2006, better than 46 percent of subprime applicants found an approving lender," he said.

"Even the most creditworthy shoppers are running into slightly resistant lenders even if only a couple of percentage points below the '06 figures," Spinella continued.

Moving on to the near-prime segment, which CNW reports makes up most of the finance contracts, the company said approvals are getting better.

"About 66 percent of November shoppers falling in the 620 to 679 FICO category were approved. In January 2006, that figure was 59 percent with the low point being 46.6 percent in December 2008," Spinella said.

Thanks to dealers who are working hard to convince consumers they can get approved for new-car loans, even with tarnished credit, Spinella said more consumers are believing this is true.

"The number of consumers who now say they probably couldn't get a loan has dropped to a more historic level of 9 percent from a high of nearly a third," Spinella stressed. "That turnaround can be traced mostly to dealership local advertising, which has hammered the notion of ‘finance doctors' who can get ‘almost anyone' financed."

CNW also offered a breakdown of approvals. In January 2010, about 69.44 percent of shoppers approved for loans were prime at a 680 FICO or above, while 53.17 percent were considered near-prime at 620-679 FICOs and 5.27 percent were subprime at a 620 FICO or below.

Fast forward to April, and CNW found that 78.13 percent of approvals were prime, 59.73 percent were near-prime and 5.26 percent were subprime.

In July, 82.69 percent of approvals were prime, 60.72 percent were near-prime and 5.34 percent were subprime.

Continuing on to October, CNW discovered the approval rate was 83.92 percent for prime, 64.71 percent for near-prime and 7.62 percent for subprime.

And finally, in November, the approval rate was 84.17 percent for prime, 66.29 percent for near-prime and 8.51 percent for subprime.

"Subprime approvals, as with all categories, are up versus a year ago, but the 100-plus increase in the lowest credit score group is also having a major effect on current and potential sales volumes," Spinella pointed out. "These folks have been cut out of the market for quite some time and are now able to purchase a new car or truck more easily. Certainly not as prevalent as in the subprime heyday, but the increases are an economic boost to the auto industry."

Spinella went on to suggest, "All this (consumer demand) can be impacted by weather — up or down 100,000 units this month — but the core demand is certainly in existence. In fact, this month may be the most positive outlook this early in a month since pre-2007. If it is, the first quarter of next year should be extremely bright."

The CNW president is predicting that based on the opening days of December, the industry could surpass 1.1 million unit sales, beating December 2009 by almost 10 percent.

"In the industry's favor, a staggering increase in floor traffic versus a year ago — up more than 33 percent for new cars and more than 54 percent for used. That compares to November's 20 percent and 6 percent, respectively," he explained.

"Add to that a 6.64-percent bump in closing ratios and it is no surprise that in the opening week of December, same-store sales are up more than 27 percent. Granted, all of that is based on early returns for the month, but regardless of the final outcome, the trend is clearly upward," Spinella continued.

In other news from the company, Spinella pointed out that the share of used vehicles financed is growing.

"Another month, another increase in the share of used vehicles that are financed," Spinella revealed. "With looser credit, a general acceptance of lower credit scores and banks increasingly willing to lend on private-party sales, November saw the sixth straight month increase in the share of finance units.

"All indications are that this will continue in December and the first quarter of 2011, putting the industry back on track to a 40-million unit year. Note, however, no one is opening the spigot all the way, as was common a few years ago," he added.