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Used vehicle values expected to rise

If consumers are in the market to buy a new car in 2012, they may want to think about trading in their current vehicle, as auto analysts anticipate dealers will spend top dollar for them.
Consumers can expect higher-than-average trade-in values this year, said Jonathan Banks, executive auto analyst with the National Auto Dealer Association Used Car Guide*.
January trade-in values up 8 percent
"The average trade-in value of a 3-year-old used car is 8 percent higher in January 2012 compared to last January," said Banks. "We expect this trend of higher trade-in values to continue throughout the year."
While there are a variety of factors for why used vehicles are retaining their value, Banks noted two specific aspects. Chief among them is a shortage in used vehicle supply. Banks indicates the dealers' supply of used cars is expected to diminish by as much as 7 percent this year when compared with 2011. In addition, the off-lease supply of used vehicles is anticipated to plummet by 22 percent, down from 17 percent last year.
"The depreciation rate of used vehicles this year will be slower than it has been at any other time in recent history because of reduced inventory, which will keep prices on used models in demand at a premium," said Banks.
Heavy demand for used vehicles
The other factor is used vehicle demand, which he believes will rise in 2012, primarily due to the increase of the average age of vehicles to nearly 11 years. Buying activity is expected to grow both for new and used models, Banks noted. This may come at a cost to car buyers hoping to buy at a discount, as Banks stated that the increased demand will likely lead to an uptick in prices.
KBB forecasts 10 percent increase in January auto sales
Despite the rise in sticker prices, vehicle valuation firm Kelley Blue Book** projects there was a surge in car buying activity in January. KBB forecasts that new-vehicle sales rose 10 percent in January when contrasted with the same period in 2011. Ford is expected to have a dramatic upswing in sales, rising 14 percent to 144,900 units moved compared to January 2011's 126,981.
Meanwhile, fellow American automaker Chrysler is projected to see sales volume rise nearly 32 percent over last January to 93,600 models sold. Foreign brands Hyundai-Kia and Nissan are expected to post double-digit sales growth as well.
Alec Guttierrez, senior market analyst of automotive insights for KBB, suggested higher auto sales will be an ongoing theme throughout the balance of the year, based upon KBB's analysis of projected economic conditions involving the nation's rate of unemployment, the health of the housing sector and consumer confidence levels.
"Given current market conditions and our expectations for 2012, we believe sales will continue to improve at a conservative pace in 2012," said Guttierrez.
That's not to say KBB doesn't have concerns. Gutierrez noted that the company is particularly worried about the ongoing European sovereign debt crisis and political instability in the Middle East. Should these issues not subside, it could stymie the U.S. economy and adversely impact the automotive industry specifically.
*according to NADA Used Car Guide on Jan 8, 2012
**according to Kelly Blue Book on Jan. 23, 2012

Japanese banks project better than expected year

Three of Japan "megabanks"-Mitsubishi UFJ financial group, Mizuho Financial Group and Sumitomo Mitsui Financial Group, is already expected to see heavy Bond trading gains and low levels of write-offs of bad loans, which have raised profits in recent years.
Since Japan's long battle against deflation persists, loan demand in the home is likely to remain slow, adding to pressure banks to move to expand abroad and compensate their prospects for lack of internal growth.
"We want to see if they can generate solid gains on loans under the current situation of low interest rates," says Chikako Horiuchi, Director of financial institutions of Fitch Ratings. "The driver will be overseas loans, so we must see how the banks to increase the volume in overseas loans. This will be key to determining the profit Outlook for the banks, "it added.
On Tuesday the second largest lender of Mizuho, Japan by assets, forecast net profit of ¥ 500 billion, or $ 6.26 billion, for the financial year ending in March 2013, this is well above the expected profit of 374.2 billion ¥, but to only 3.1 per cent of the year casts. The improvement is mainly due to expectations that its investment banking arm, Mizuho Securities, will swing to profit in the current year, after the loss of booking last year.
Sumitomo Mitsui expects net profit for the year, beginning on 1 April of ¥ 480 billion, down 7.4 percent last financial year, but the consensus estimates of analysts for the remuneration of 441.2 billion ¥. Mitsubishi UFJ, the largest creditor of Japan, forecast net profit of 670 billion ¥. This would represent a reduction of the rate of 31.7 of the year casts – when profit is removed from a hefty one-time accounting gain on the value of its investment in Morgan Stanley 22%-and is in line with analysts forecasts.
With limited exposure to the troubled debt of Europe Japanese banks enjoy solid income a year, which throws. Their results have been removed from trading profits of the bird Government bonds, while their large equity portfolios I have these adjustments during the January-March quarter, since the criterion high stock market index rose 19.3 percent.
Exploiting the retreat by European rivals in Asia and other markets, the Japanese banks have benefited from the sharp growth in overseas lending and an active search is based on a series of recent acquisitions. In January Sumitomo Mitsui agrees to purchase the lease of the aircraft business of the Royal Bank of Scotland, in a transaction value 7.3 billion. Mitsubishi UFTJ, whose unit is UnionBanCal says, will buy based on California Pacific, Capital Bancorp for about 1.5 billion dollars, said it may spend more than 1 trillion ¥ over the next three years, foreign acquisitions.
But forecasts for the growth of entries in the books of overseas borrowing of the largest banks in Japan is not sufficient to compensate for a fall in their home market, which still accounts for 70% to 80% of the profits. The outstanding loans of large Japanese banks fell to 30-straight month in April, down 1.3% from a year earlier, according to data from the Central Bank.