There's an odd conundrum going on in the world of used cars as November 2013 wraps up: sales are increasing but so is inventory. That's good news for used car buyers who should be able to find deals going into the end of the year.

According to information from CNW Market Research, my trusted source for information about used car sales (as well as new car sales), "The overall used-car industry is looking quite good in November with an estimated 3.09 million probable sales for a 4.1 percent gain.

Low prices are clearly making an impression on used-car shoppers as they scour dealer lots more and buy from private parties less."

Dealers Gain; Casual Loses

CNW reports franchised dealers are having an excellent used-car month, estimated to be up nearly 10% vs. a year ago. This is especially true for large retailers such as CarMax and AutoNation.

But even smaller dealers are harvesting a windfall of shoppers who say they are looking to shed an older vehicle that simply doesn’t have the features and reliability needed, according to the market research firm.

That's good news because the independent dealer still deserves to be the backbone of the used car world. The onward march to dominance by franchised dealers only hurts consumers in the long run.

"As we see in the Purchase Path Study for 2013, the number of people who retained their vehicles through the recession rather than replacing them was in excess of 35 percent, a high water mark since the 1970s," said CNW.

That's an interesting number to focus on.

It goes back to my belief that Cash for Clunkers did not have the impact on cheap used cars that people think it did. Instead, the supply was drying up because people were holding on to their cars longer.

Independents, grabbing as many auction vehicles as possible at seemingly bargain basement prices, are turning them quickly on the back of higher per-unit advertising expenditures, according to CNW.

And therein lies another problem. As mentioned below, the used car supply is increasing and it's taking longer for the cars to move off the lots. That means higher finance costs for dealers as well as more advertising dealers. A downturn in the economy could threaten even more independent used car dealers.

Here is how the numbers break down for November 2013 (estimated) vs. November 2012 actual:

• Franchised dealer sales – 1,196,428 vs. 1,091,064, which is a 9.7% increase;
• Independent dealer sales – 1,139,044 vs. 1,085,540, which is a 4.9% increase; and,
• Private party sales – 749,696 vs. 787,723, which is a 4.8 percent decrease.

Pent Up Demand Continues Upward

The dam is breaking for Used Vehicle Pent Up Demand as the average delay in making that acquisition is at near low levels, the CNW research shows.

CNW estimates there are 112,500 used-vehicle intenders who are waiting in the wings to make an acquisition, up 11.9% from a year ago.

In addition, eliminating the government shut-down data for October, the number of consumers still planning to make a used purchase is at the highest level of 2013 – 95.3 percent.

Prices Soften, Lot Traffic Increases, Sales Up

"One of the major reasons we’re seeing strong used-car sales can be traced to prices being softer during the past few months," according to the CNW report.

• November’s franchised dealer transaction prices fell 1.6% vs. October to the lowest level since January-February of this year. The transaction price of $10,720 is 94.3% of the $11,367 asking price.
• For independent dealers, transaction prices for November slipped about a half-percent vs. October on a mixed history for the year. The transaction price of $9625 is also 94.3% of the asking price of $10,205.

Days' Supply Increasing

"More critical to used-car pricing are the increases seen in Days’ Supply of vehicles. CNW estimates that there will be nearly a 50 days’ supply by month’s end which will continue to put downward pressure on pricing.

"While still a far way from the days when 60 Days’ was the norm, the trend to more on-lot inventory is destined to keep floor traffic high, but prices lower than dealers would like. That also means higher financing costs for dealers, which could mean better bargains for consumers," the report concluded.