January is off to a solid start, with new-vehicle floor traffic up more than 12 percent, reported CNW Research. Other key indicators showed that consumers are feeling a lot better about their financial position and might be ready to act on their pent-up demand.

Closing ratios also improved during the opening half of January, increasing by 10 percent from the year-ago period, reported F&I and Showroom magazine. Same-store sales also were ahead of last year by more than nine percent, the Bandon, Ore.-based research firm reported.

“At this point of the month, it appears the industry could hit 950,000 units, up 14 percent,” wrote CNW’s Art Spinella in his monthly newsletter. “Consumers are feeling a bit less concerned about job stability, day-to-day needs and other home-centric issues.”

CNW’s Jitter Index still sits above the year-ago period, but its 0.54 drop from December 2011 did mark its fourth month of decline. The index measures consumer sentiment regarding home-centric economic issues.

Another bright spot so far in January were subprime loan approvals, which rose more than 23 percent in the opening half of January vs. a year ago. And at 11 percent, approvals are at their highest point since September 2008, but still remain well below the heyday of 45 percent in mid-2006.

Looking at transaction type, CNW reported that 24.9 percent of transactions last year resulted in leases, down from 25.6 percent in 2010. The share of cash customers also decreased last year by more than 12 percent. “Consumers are increasingly willing to go into debt to buy a car,” wrote Spinella. “While cash sales as a share of all sales grew in the recession, easier financing has and will continue to expand.”

CNW also examined sales as a share of the population. The research firm reported that 4.1 percent of the U.S. population purchased a new vehicle last year. The high-water mark for this data point was 7.5 percent in 1986 and 3.4 in 2009. Based on the number so far in 2012 (about 23.9 million), CNW estimates that sales could climb to 13.8 million vehicles, or 4.8 percent of the population.

“The industry could easily pick up more than a half million new-car sales just from the pent-up demand pool,” wrote Spinella. “Add lower credit score approvals from financing institutions and new models, and the industry easily looks like 13.8 million deliveries in 2012.”

SANTA MONICA — A sales forecast by Edmunds.com indicated that an estimated 13.6 million new cars and trucks will be sold in 2012. The website’s forecast anticipates a solid increase over 2011 new-car sales, which could come in as high as 12.8 million vehicles when December comes to a close.

“With annual sales still far below the level achieved prior to the last recession, there’s plenty of indication that pent-up demand is far from spent,” said Lacey Plache, Edmunds.com chief economist. “Improved selection and loosening credit conditions are helping to entice the millions of buyers that are waiting to jump back into the market.”

From January until April, the industry will see the tail end of the current “mini-bubble” of auto sales generated by car buyers who steered away from high prices and poor selection at dealer lots last summer following the Japanese earthquake, according to Edmunds.com. Of those months, sales are likely to peak in March, a popular car-buying month.

At that point, seasonal factors will resume as a key influence on sales in 2012, resulting in more volatile sales on a monthly basis as opposed to the flat line monthly sales that were seen this year from May through November, according to Edmunds.com. Next summer’s sales will be influenced in May by graduation-related purchases and again in August by the summer sell-down of current year models. Popular year-end sales events also should continue to keep the recent trend of strong November and December sales performances well intact.

The continued slow pace of the economic recovery and uncertainty in the months leading up to the U.S. presidential election may constrain sales growth, Plache added. Threats of a European recession and a Chinese economic slowdown also will pose a risk to growth in the auto market. And if these or other negative events shake the marketplace, new vehicle sales momentum could weaken.

WESTLAKE VILLAGE — New-vehicle retail sales are experiencing further recovery and strength through the first half of November, according to a monthly sales forecast developed by J.D. Power and Associates Power Information Network (PIN) and LMC Automotive.

November new-vehicle retail sales are projected to come in at 791,900 units, representing a seasonally adjusted annualized rate (SAAR) of 11.3 million units — the highest monthly selling rate in three and a half years, according to the report.

“Retail light-vehicle sales in November are outperforming expectations on a month-to-date basis, providing good news as 2011 comes to a close and the focus starts to shift to 2012,” said John Humphrey, senior vice president of global automotive operations at J.D. Power and Associates. “The improving performance of the past three months suggests that the current momentum, primarily driven by replacement demand and improvements in vehicle availability, is not an aberration.”

Total light-vehicle sales in November are expected to come in at 975,600 units, an 8 percent increase year over year, according to the report. Fleet sales are expected to decrease by 6 percent compared with November 2010, but will account for 19 percent of total sales, according to F&I and Showroom magazine.

After a solid October and expectations for a strong November, LMC Automotive is increasing its forecast for 2011 to 12.7 million units (from 12.6 million units) for total light-vehicle sales and to 10.3 million units (from 10.2 million units) for retail light-vehicle sales. Additionally, LMC Automotive is maintaining its forecast for 2012 at 13.8 million units for total light-vehicle sales and 11.2 million units for retail light-vehicle sales.

“The upward forecast revision to 2011 represents the first increase to the forecast all year and tempers the cloud of uncertainty that has been over the automotive market for several months,” said Jeff Schuster, senior vice president of forecasting at LMC Automotive. “The current recovery pace appears sustainable into 2012. As long as there is not an external shock or economic setback, the selling rate could be stable above the 14 million-unit level during the second half of 2012.”

Light-vehicle production volume in North America has increased by 920,000 units, or 9 percent through the first 10 months of 2011 compared with the same period in 2010, according to LMC Automotive. The Detroit 3 OEMs are seeing nearly a 14 percent increase in year-to-date production through October, while European OEMs are up 38 percent.

Hyundai Group production is up 48 percent after increased production of existing models and additional localization of models in 2011, according to the report. Japanese manufacturers, as a group, posted an 8 percent decline year to date in October from the same period in 2010, which can be attributed the Japan earthquake disaster and flooding in Thailand.

The impact of the flooding is expected to continue through the fourth quarter, causing further downtime to their North American operations. Toyota is recovering faster than initially anticipated, with lost volume estimated to be 5,000 units in the fourth quarter. The impact to Honda is expected to be more severe due to the location of their Thai plants. Honda’s fourth-quarter loss in North America is estimated at 35,000 units.

Overall vehicle inventory improved to a 58-day supply at the beginning of November from 50 days at the beginning of October. Car inventory improved to a 53-day supply, up from 43 days in October, while truck levels are stable with a 62-day supply.

Several manufacturers continue to remain below the industry norm of a 60-day supply: Hyundai/Kia began November with 28 days’ supply, Honda was at 37 days’ supply and BMW was at 28 days’ supply, according to the report. Despite some setbacks, the 2011 North American production outlook remains on track for 12.9 million units, an increase of nearly 9 percent from 2010. While overall production volume in 2011 is the highest since 2007′s 15 million-unit level, it remains well below the mid-15 million level during the 2001-2006 time period.

SANTA MONICA – TrueCar.com is predicting that new light-vehicle sales (including fleet) will reach 1.035 million units, a 9 percent increase from October 2010 and 1.7 percent decrease from September 2011. The forecast translates into a seasonally adjusted annualized rate (SAAR) of 13.4 million units, which is on par with August 2009 SAAR levels, the vehicle information site reported.

“Consumers are no longer dragging their feet on new-vehicle purchases, as they feel the economy is moving in the right direction, ” said Jesse Toprak, vice president of industry trends and insights for TrueCar.com. “This will be the fifth straight month where SAAR will rise and the highest we’ve seen in over two years.”

Retail sales are up 9.8 percent vs. October 2010 and down 0.5 percent month over month, according to TrueCar.com. Fleet and rental sales are expected to make up 20 percent of total industry sales in October 2011, reported F&I and Showroom magazine.

The industry’s average incentive spending per unit will be approximately $2,669 in October, representing a 0.6 percent month-over-month increase and a 4.6 percent year-over-year increase. Used-car sales are estimated to be 2.741 million units, up 5.7 percent from October 2010 and down 15.1 percent from September 2011. The industry’s new-to-used ration is expected to pace out at one to three for the month.

“Japanese automakers have seen substantial improvement in inventory this month and buyers are responding to the better availability of product as well as higher incentives,” said Kristen Andersson, automotive analyst at TrueCar.com.

Unit Sales Forecast

Market Share Forecast

Incentive Spending Forecast

BANDON — October kicked off to a strong start after the new-car industry broke out of its summer funk in the second half of September, according to the Bandon, Ore.-based CNW Research. Floor traffic was up and closing ratios were on the rise, which could push the sales pace to its highest level this year.

Driven by higher incentive levels and greater trade-in values, consumers marched back into showrooms during the first week of October, with floor traffic up nearly 18 percent vs. September and 3.3 percent vs. the year-ago month. Closing ratios jumped 10.2 percent vs. September and 7.39 percent increase vs. the same month last year, reported F&I and Showroom magazine.

“On the back of higher incentives and greater trade-in value, the new-car industry broke out during the second half of September and the opening days of October look to be carrying that good vibe forward,” wrote CNW’s Art Spinella in his monthly e-newsletter. “October could be the high-water SAAR (Seasonally Adjusted Annual Rate) mark of the year, reaching a 14.2 million delivery rate compared to 12.3 million a year ago.”

Concerns about the economy still persist, however, with CNW’s Jitters Index, which measures consumer sentiment regarding home-centric economic issues, edging up 0.8 percent from last month.

“Consumers continue to be concerned about their homecentric economic outlook,” Spinella wrote.

Confidence among shoppers intending to purchase a vehicle was at 74.29, a level that typically signals a need for more incentives. “Historically, this occurred when the confidence number fell below 75 and that’s the case today,” Spinella added.

The auto finance landscape also continued to show improvement. According to CNW, subprime approvals were up 3.8 percent in the opening days of October vs. September, and 8.4 percent vs. a year ago. This marked the first time in months that approvals for that credit segment climbed on a sequential basis.

Additional, the average FICO score of new-car buyers climbed to 691.8 during the opening days of October, compared to 708 last year and 691.4 in September.

CNW also noted that the used-vehicle market may have hit a low point in terms of inventory levels. According to the market research firm, the used-vehicle days’ supply was down nearly 20 percent vs. a year ago. “It appears the industry has reached the low point in inventory volume, which has been followed by softer prices,” Spinella wrote. “That will continue to be the case over the coming few months at least.”

Spinella also noted what is becoming a troubling trend: The gap between MSRP and transaction price is shrinking. The different between the two prices was down to 84.3 percent. While this is not historically a bad ratio, it does indicate a weakening in demand that is being offset by more incentive spending, which has increased 9 percent since last month. And with 80 percent of new-car intenders saying they expect a major incentive if and when they buy, dealer and manufacturer profits could feel the pain in the coming months.

“We’re looking at a yellow caution flag,” Spinella wrote. “If the MSRP-TP gap falls below 83 percent, dealer and manufacturer profits will undoubtedly be damageed. If it falls below 80 percent, it would be time to head for the hills.

SANTA MONICA, Calif. — An early look at January auto sales indicates a Seasonally Adjusted Annual Rate (SAAR), of about 10.5 million, according to Edmunds.com.

This may be disappointing to industry observers, but Edmunds.com’s December analysis forecasted that January SAAR was likely to come in lower than December.

“The discount opportunities between Christmas and New Year’s have become legend. The story is so compelling that the deals don’t actually have to be good, but people will still buy,” said Edmunds.com CEO Jeremy Anwyl. “There is no such story in January. Deal sensitive shoppers are waiting for Presidents’ Day weekend for the deals that they’ve been programmed to expect.”

Seasonal adjustments used to calculate SAAR assume that January sales will be worse than December’s. Edmunds.com predicts that the raw sales numbers will show a more precipitous drop but, despite the January SAAR, believes 2010 auto sales are on track to hit 11.5 million units.