BANDON, Ore. — Despite financing approvals for subprime
borrowers edging slightly lower so far this month, overall used-vehicle sales
this month are on pace to beat last September's total by more than 4 percent.

No matter the financing trends, there could be even more
buyers waiting in the wings as pent-up demand increased for the third straight
month, according to CNW Research.

In fact, CNW president Art Spinella said the need to replace
older vehicles continues to be the "driving force" of the used-car market.

CNW is projecting that, industry-wide, there will be 3.66
million used sales this month (a sum that includes franchised and independent
dealer sales plus private-party numbers). This would be a 4.2-percent
improvement over last September and continues to put the used-car market on
track to beat full-year 2012 figures.

The year-to-date figures mentioned in CNW's latest Retail
Automotive Summary (32.26 million) beat the year-ago figures by 3.5 percent.

The big story for September, CNW says, is the leap (albeit,
expected) made by casual sales, which "regained momentum" and are expected to
show a 20.6-percent improvement and hit 1.01 units.

"Most of the increase can be traced to back-to-school
acquisitions, older models and lower private-party prices," Spinella said in
the report.

Meanwhile, franchised stores are projected to bring in 1.39
million used sales this month, which would be up from 1.34 million a year ago.
Independents are expected to see their numbers fall 6.1 percent year-over-year
with 1.25 million used sales.

"Franchised dealers are seeing a September gain that
outpaces the year-to-date increase slightly (4.1 percent against 3.9 percent),"
Spinella continued. "Independent dealers were active, but continue to be
hardest hit by the increases in private-party sales.

"That's somewhat deceiving, however, because there is a
typical decline in the number of independent outlets at the end of the summer –
more so this year than last.  Of the
active independents, sales are actually on a par or slightly higher than last
year."

And all of this activity is coming with subprime approvals so
far in September coming in at a pace 3.26 percent below the same month last
year. The pace is also slightly off from August, but just 0.46 percent.

Nevertheless looking forward, it appears the used-car market
may have more good times in store.

The amount of consumers postponing a purchase who plan to
buy within six months is at 98,500 for September, CNW indicates. Not only is
this roughly a 3.7-percent year-over-year gain, it marks the third consecutive
month-over-month increase.

"Equally important, the number still planning to acquire a
car or truck remains at 94.75 percent, the second highest of 2013," Spinella
added.

The average delay time in September is 2.16 months, compared
to 2.96 months a year ago.The delay time has fallen on a sequential basis for
two months in a row. Year-over-year, it has dropped each month of 2013 except
January.

What about those who delayed purchases earlier in the year?
Well, CNW indicates that 91 percent of consumers postponing a purchase in the
first quarter have now bought a car. On top of that, an additional 4 percent
say they will do so in a month or two, at the most.

As for the shoppers who put off a purchase in Q2, 84 percent
have gone back and purchased.

"Both return rates are above the averages for the past five
years indicating the pent-up demand is turning into a robust pool of potential
buyers," Spinella noted.

Offering more context, he added: "Unlike the new-car market,
the driving force in used remains the need to replace an aging vehicle. That
will likely continue until October."

Joe Overby can be reached at joverby@subprimenews.com. Continue the conversation with SubPrime Auto Finance News on LinkedIn and Twitter.

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