Easing credit points to higher new and used sales

Easing credit points to higher new and used sales

In a slow but steady pattern that began in January 2009, and bodes well for future sales increases, the average age of a new vehicle buyer in the U.S. has been dropping as have the FICO score and household income requirements for financing that vehicle.

According to CNW Research, which tracks this information on a monthly basis, the average age of a new vehicle buyer has fallen from 50.88 years in January 2009 to 47.26 years in May 2010, while average household income for that buyer has fallen by $4,000 from $67, 400 to $63,400. Meanwhile average FICO scores for new vehicle buyers have dropped below 750 and appear headed for the sub-700 level they had been hovering at since 1996.

CNW says all these trends suggest that new vehicle sales will continue to increase in the years ahead pending unforeseen economic stresses. That is good news for dealers who have had to weather two very difficult sales years.

Also on the good news front, CNW finds that manufacturer subvented leasing programs are having their desired effect, bringing younger and less wealthy people into the market and boosting used vehicle trade-ins for dealers. The average trade cycle on a leased vehicle is 41 months compared to more than 58 months on a cash or finance purchase.

CNW also finds that the average transaction price for a new vehicle is again on the rise ($26,492 through mid-June) suggesting that retained gross is increasing as well.