(October 15, 2011) MCLEAN, Va. — Above average trade-in values for used cars are expected to increase new vehicle sales in the fourth quarter, says Jonathan Banks, senior analyst with the National Automobile Dealers Association (NADA) Used Car Guide.

"We expect consumer demand for small and mid-size, fuel-efficient cars to shift from the used market to the new market in the fourth quarter," Banks said.

"Automakers based in Japan will likely increase incentives to boost lost market share after the production disruptions from the earthquake and tsunami in March."

Trade-in values on many 3- to 5-year-old small cars, such as the Chevrolet Cobalt, Honda Civic and Toyota Corolla are about 10 percent higher in September than a year ago, according to the NADA Used Car Guide.

"Higher trade-in values will help facilitate new vehicle purchases because car owners have an equity built into the deal, which they can use as a down payment," Banks added. "Higher used prices will also drive more car shoppers to choose new vehicles instead of used ones because monthly payments between a new and used purchase will be closer."

Used car prices at the end of the year will still be higher than last year, but not at the levels during the peak in May and June when prices jumped 25-30 percent higher, Banks said.