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An increasing proportion of U.S. auto buyers are opting for used vehicles despite incentives offered to arrest the brutal decline in new car and light truck sales, according to industry forecasters.

The combination of lower used car prices and promotions such as extended warranties drove 50% of customers at franchised dealers to opt for "pre-owned" vehicles in January, according to sales tracker Edmunds.com.

The proportion compares with 37% just two years ago. Edmunds also found in a 90-day survey conducted November through January that about 500,000 consumers who would normally buy new vehicles opted for used cars and trucks.

"People no longer feel they have to have the nicest, newest car on the road," said Jesse Toprak, an analyst at Edmunds. "They're realizing that the used cars of today are not the used cars of a few years ago, and that realization is not positive for new car sales."

Auto makers are counting on a spike in demand for replacement vehicles to reverse the worst sales slump in decades. The U.S. annualized rate is expected to fall to around 9 million when companies report February sales Tuesday.

While some auto makers point to some stabilization in residual car values, prices will be pressured as more supply comes to market.

About 2.6 million cars and trucks, an 8.3% increase over last year, are projected to come off lease this year and go directly to the used car industry, said Tom Webb, chief economist with Manheim Consulting, which tracks the used sector.

Additionally, many consumers are no longer renewing leases because auto makers have scaled back the practice as their lending arms have struggled to secure finance.

Dan and Judy Turner recently joined the used-car crowd. The Michigan couple flipped through the ads and listened to the deals for the past month before finally agreeing to put down their money on a used 2008 Chevrolet Malibu.

"Why buy new now?" said Dan Turner.

"We both are employed but with this economy you just don't know," said Turner outside a used car dealership in Troy, Mich.

Dealers are devoting more space to used cars on their lots, while parts and repair specialists such as AutoZone Inc. (AZO) - which reports earnings Tuesday - have also noted drivers are hanging onto vehicles longer.

"New cars are frozen to the ground, but it's an absolute used car frenzy," said John Rogin, a Pontiac-Buick-GMC dealer on Livonia, Mich.

Used cars and parts and service departments have long been a stable revenue stream for dealers, who find themselves under pressure from slowing new sales and manufacturers' efforts to streamline distribution.

The U.S. new car sales data, alongside declines already reported in international markets, provide another test of Detroit's auto makers to survive the downturn.

The shift to used cars, however, won't last forever since used car prices will increase as demand shrinks, reducing the differential with new vehicles.

"The growth in used car sales is somewhat self limiting," said Paul Taylor, chief economist of the National Automobile Dealers Association's Industry Analysis.

Financing remains generally cheaper and easier to obtain on new cars compared to used, Taylor added.

This shift will probably take another 18 to 24 months, said Dale Pollak, a 13-year dealer veteran and chairman of vAuto, which provides software that helps dealerships track inventory and pricing.

-By Sharon Terlep and Jeff Bennett, Dow Jones Newswires; 248-204-5532; sharon.terlep@dowjones.com and (248) 204 5542; jeff.bennett@dowjones.com.