Clunkers program cut supply of used cars
The Cash for Clunkers program has decreased the supply of used cars and raised their prices, Virginia dealers and buyers said.
"It's taken the threeand fourand five-thousand-dollar cars off the market," said Tim Higginbotham, president and owner of New Millennium Auto Sales in Hanover County. "The people that can't afford a car payment, that's the car that they buy."
"Please explain to my [two] kids, each of whom will soon be in the market for a used car, why the prices are up because supply is down, a result of all those viable 'clunkers' rendered scrap by decree," said Robert H. Brick Jr., a communications technician from Chester.
Auto dealers reported 690,114 sales under the federal government's $3 billion Cash for Clunkers rebate program, according to final data that the U.S. Department of Transportation released yesterday.
Dealers have claimed rebates totaling $2.88 billion, the agency said.
In Virginia, auto dealers have applied for $98.5 million in rebates.
The federal auto-sales promotion gave rebates of up to $4,500 to owners trading in older gas-guzzling cars and trucks for new, more fuel-efficient vehicles.
"We're looking at close to 25,000 [sales of new] vehicles in Virginia alone," said Michael Allen, director of public affairs for the Virginia Automobile Dealers Association.
The new-car sales also promoted more used-car deals.
"McGeorge is also experiencing record used-car sales during this period, with 124 deals during the past 30 days," said Nick Scola, general manager with the local McGeorge Car Co. Inc. "Activity breeds activity."
The nation's used-car inventory has been contracting during the recession as individual owners, as well as rental-car and car-leasing companies, held on to vehicles rather than trade them for new ones.
Wholesale used-vehicle prices rose for the seventh consecutive month in July, up 17.8 percent since December, according to Manheim Consulting's monthly used-vehicle-value report.
"It's driven the price of used cars way up," said Charles Devegnee with Bavarian Auto Sales, a wholesale used-car company in Henrico County. "Where we were paying 10,000 [dollars], you're now paying 12 or 13 thousand" for the same sort of vehicle.
Goochland County-based CarMax Inc., the nation's largest retailer of used cars, would not discuss the impact of the Cash for Clunkers program on its business. CarMax sold more than half a million cars last year.
Sales under the program ended Monday. Cars made in the U.S. topped the most-purchased list, from the Ford Focus to the Toyota Corolla to the Honda Civic.
"American consumers and workers were the clear winners thanks to the Cash for Clunkers program," said U.S. Transportation Secretary Ray LaHood.
"Manufacturing plants have added shifts and recalled workers," LaHood said. "Moribund showrooms were brought back to life and consumers bought fuel-efficient cars that will save them money and improve the environment."
For the first six months of 2009, U.S. sales were running at the rate of 10 million new vehicles a year. Last year, dealers sold slightly more than 13 million new autos.
Contact Peter Bacqué at (804) 649-6813 or
.
Advertisement
Reader Reactions
oneuser-
You just proved my point. Our economy is built on consumer spending…and DEBT! Cash for Clunkers is just a small example of how our economy works.
Before this, few Americans were buying cars. Everyone is holding to their $$$.
An economy of people putting money in the bank and not spending is actually bad for the economy—and this is a good example.
Auto Makers, Dealerships, salesmen, and even banks who finance auto loans were hurting big time over the lack of inventory moving. This program injected some life into the industry.
When you buy a car, you finance it. Bank takes their cut on your financing rate. Sales rep gets a commission. Dealership makes money and gets rid of a unit. Automaker get’s their money back for consigning the car to the dealership.
This all keeps Americans WORKING and making money by getting it out of your pocket and transferring it somewhere else.
In order for capitalism to survive and thrive, people must spend money, which keeps people employed who sell or produce what you are buying.
This program’s impact, the jury is still out. Yes, some Americans have a new car payment. Maybe that is worth it versus potential repairs for their clunkers. And if they can’t pay for them, there is always the repo man who needs more work too!
dubiousthoughts, How are consumers spending? All this program did was help the big 3 make a larger profit. The people who bought the new cars also got a big fat payment book. This only helps to push the consumer further in debt but it does help the banking industry with the interest paid on the new car. The only winner here is the billionaires or do you think they will spend their stimulus money here in America?
bubblegum-
YOU ARE CORRECT, retail economies cannot survive-that is why we are struggling so much. Due to Globalization, we import all our “toys” and manufacture very little. Less and less people have the discretionary income to buy all these imports. Retail suffers, and more jobs are lost. Domino effect. The stimulus was designed to keep the hemmhoraging to a reasonable level, but without new industry to employ American workers, we are on borrowed time
sded -
Auto Recyclers are one of the fastest growing small business opportunities in the nation. Places like CAP strip down cars and sell the parts online to hobbyists, repair shops, and individuals. So many *new* junk cars getting in the system will help these businesses thrive.
Also, you do not want to see the ripple effect if the US Auto industry collapses. In the Central VA area alone, there are several decent size employers who are a spinoff of GM. You might think the Auto Industry is just Detriot, but if it collapeses, the ripple effect will hit many areas of the nation and numerous small businesses. For example, GM Powertrain in Fredericksburg.
dubious,
I remember seeing a few months ago, someone, I don’t remember who or where I saw it, said that economies based on retain are phony economies. What crashed last year needs to die. We don’t need stimulus, we need to pull the plug. We’d do better to scrap the whole deal and go back to subsistence farming.
Hey, have you loooked behind the dealers lots, have you looked at how many cars are in CAP or Circle Auto’s junk yard lots. well thier are plenty of 3 thousand to 5 thousand dollar cars and trucks being scrapped for no other reason than to BAIL OUT the auto industrie. do you relize that alot of these only got 2MPG less than the new one purchased.
Do you actually think these junk yards paid for the ‘clunkers’ wrong!the most vital part was destroyed. the engine. but they still will garner at least $3000 a vehicle when disassembled.
c4c proved again the general public are just a bunch of sheep
qhgirl-
This was a good program because it stimulated part of the most important aspect of our economy….consumer spending. In order for our economy to prosper, Americans must SPEND! I know it sounds insane but it is the truth since America does not manufacture much anymore. Without consumer spending, retail suffers and jobs dissappear as a result. Additionally, credit also helps our economy. This si also insane, but we need people to buy things on credit to stimilate the economy as well.
Those who need cheap cars will still get them. There are many “clunkers” left on the streets. Many of the clunkers traded in were worthless anyway, and when a person buys a car from an individual it is always a huge risk. And if the junkyards get them, that is good too because auto recyclers are a huge new business in used auto parts.
This program wins on many fronts
RTD, do you have an editor? Can you tell me the numerical value of “threeand” “fourand?“ I’ve never seen it before.
Might I suggest referring to AP Style Manual and using spell-check. Good Lord,
I’ve seen better writing & editing from high school newspapers.
Has anyone else noticed the empty back lot at McGeorge Toyota? Those people are seriously out of business!
Toyota, like Chrysler, shut down their entire US manufacturing operation when the credit market seized up. It’s going to be a while before Toyota dealers have anything to sell.
Well now that this welfare program for dealers is over people will sit back and see that it cost far more than it gained. What are the junk yards paying for these clunkers since most cars have a junk value of several thousand in used parts. Is the government going to get at least a portion of the money back for the taxpayer? Is this just more government welfare for the junk yards. Taxpayers are being ripped off by the entire program.
Post a Comment(Requires free registration)
- Please avoid offensive, vulgar, or hateful language.
- Respect others.
- Use the "Flag Comment" link when necessary.
- See the Terms and Conditions for details.
Advertisement