Remember last month when some of us were wondering whether Cash for Clunkers was actually just restoring the market, as some argued, and not stealing sales from the future? And the auto guys all said “don’t worry about it”? Well, C4C is over now so there is no spoiling the party. And suddenly folks are worried about it.
While most dealers are grateful for the boost, they’re paying for it now with fewer customers. The government rebates drew people into the market who otherwise would have kept driving their clunkers due to uncertainty over the sputtering economy. Those customers might have made their purchases later in the year.
“It was good while it lasted,” said Phil Warren, sales manager at Toyota Direct in Columbus, Ohio. “Now we’re a little bit concerned about what happens next. The program may have just taken a lot of people out of the market.”
Making matters worse, many dealers depleted their stocks with clunker sales, and automakers have been slow to ramp up production to replenish the lots. Grahl says Ford has built the cars he ordered but mysteriously hasn’t shipped them. So the selection isn’t very good for people who do want to buy.
No real surprise. And certainly most dealers are probably happy for the boost even if it does cost them some sales now, because there is no way the rest of the year would have provided as many sales as the C4C stimulus. Rather this is just a reminder that despite what advocates always say at the time, there are consequences to actions taken to juice any part of the economy. There is a price to be paid.
I am still more worried about what will become of some of the buyers who took advantage of C4C if employment does not recover quick or if there is a double dip. My bet is that is the real black hole created by the program. But for now dealer bliss has turned into the blues again. This is a great time to buy a car if you have the cash, and you can find anything left on the lot.
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