Higher values on trade-in vehicles may boost auto sales this year, according to a report released this week by the National Automobile Dealers Association.


Jonathan Banks, executive auto analyst with the NADA Used Car Guide, explained in a statement that the average value of a 3-year-old used car is 8 percent higher this month, compared to the same period in 2011.

More importantly, Banks added, this trend is expected to continue through 2012, driven by two basic conditions: a shortage of used-vehicles and an uptick in demand for these kinds of automobiles. The supply of used vehicles is projected to drop 7 percent this year compared to 2011.

"Strong consumer demand for late-model used vehicles and a continued reduction in supply will drive up prices this year," Banks explained. "For many car buyers who are concerned about cost and economic uncertainty, the used-vehicle market will remain a viable option."

Lenders may also begin to loosen their credit decisions as demand continues to rise. Recent data from Bloomberg show last year boasted the highest auto sales in three years.