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" Cash For Clunkers " Runs Out Of Gas - Demand Falling Away Fast

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Interest in Cash for Clunkers sputters

In 'Gold Rush mentality,' demand for cars peaked in July and could fall to pre-Clunkers levels next week, report says.

Julianne Pepitone, CNNMoney.com contributing writer

Last Updated: August 11, 2009: 2:58 PM ET

NEW YORK (CNNMoney.com) -- After sparking an initial rush to showrooms, the Cash for Clunkers program seems to be running out of fuel.

Interest in Cash for Clunkers has fallen 15% since its peak, and the number of people planning to buy cars could fall to pre-Clunkers levels by next week, an auto research group said Tuesday.

Under the Clunkers program, which launched July 27, vehicles purchased after July 1 are eligible for refund vouchers worth $3,500 to $4,500 on traded-in cars with a fuel economy rating of 18 miles per gallon or less.

The program proved wildly popular, running through its initial $1 billion in its first week and leading lawmakers to approve an additional $2 billion in funding on August 7.

But interest in the program peaked on July 29, and demand has waned, according to the report from Edmunds.com.

The report, which cited Internet shopping data, said if current trends continue auto purchase intent will fall back to pre-Cash for Clunker levels by August 20.

The original money set aside for Clunkers "was very low in relation to the size of the auto market," said Michelle Krebs, senior analyst at Edmunds.com, in a prepared statement. "This created a Gold Rush mentality where consumers hurried to take advantage before funding ran out."

The additional $2 billion in funding removed the urgency to participate, Krebs said.

Still, the report predicted auto sales will improve over the summer as customers bargain-hunt before new models hit the showroom.

"The real risk is this fall," said Jessica Caldwell, a director at Edmunds.com, adding that that economy will have to "have picked up to keep sales at current levels. "


That bubble didn't last very long. :lol:

Edited by MOP

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That bubble didn't last very long. :lol:

It's an interesting situation... 'cash for clunkers' advantaged a very narrow demographic... i.e. one swayed by a £2k deal (where a £1k deal were probably always available...) over-and-above ~40-60% off for a 3-year-old - or much more for a 5-year-old.

People running 'clunkers' are more often savvy when it comes to value for money. A friend, last year, with 2 clunkers on the drive and £20K in cash, set out to try and update. New cars didn't get a look in - though the cash could buy two without trade-in. We found the first replacement - a 3-year-old top-spec Audi A4 diesel... £11K... a deal much more than £2K better than any "new" car on offer. The next replacement is more difficult... for a sports car currently valued at about £1000 - but no 'equal' more modern can be found for under £25K... and, in spite of extreme abuse, the clunker soldiers on better than most modern cars - if inefficiently with respect to fuel. What hope is there for a £1K bribe if the replacement is ~£30K and no more desirable?

Essentially, if you've new-car money, it goes much more than £2K further if you accept a used vehicle. This isn't a scheme for the masses - it's a carefully managed bribe for select individuals. If you don't fit the demographic, it makes no sense... I'm curious to discover if the scheme was motivated in light of statistical analysis of voter demographics.

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Like you say limited demographic, and they'd still have to be people generally not very good with figures as new cars in nearly all circumstances carry a premium that outweighs any cash offer.

I'd suggest the aim of this deal was two-fold, not just to prop up new car sales but also to limit supply to a certain extend of vehicles further down the used car chain - restrict second hand car availability a bit (even if it is part of the wedge of supply at he very bottom) and the residual values of the rest will tend to float back up somewhat.

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People running 'clunkers' are more often savvy when it comes to value for money.

I've never worked out who are these people that the scheme is set up for. If someone is happy driving around in a 10-year-old banger, will they all of a sudden want to buy a brand new car? How does someone change, overnight, from a 'I couldn't care less what my car looks like' geezer to a 'I want a shiny new little motor on the drive' one? They seem different people.

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What was completely ridiculous was that it was dressed up with all these green credentials.

Scrap a car with 18mpg or worse and get one with 22mpg or better.

A difference of all of 4mpg.

Why not a reasonable mpg, like 30? Oh, because that would mean that almost all the replacement cars would be foreign.

Do I get any impression that the US motor car industry is in the slightest bit interested in fuel economy?

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the scheme is genius - no idea why all the doom

you can get rid of your 10 year old bag of nails


..and get a stylish, brand new, 21C design masterpiece


who wouldn't...

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Coming to the US of A next year...........


Karma is a b*tch - :lol::lol::lol:

And since it's now officially 'after the goldrush' time for a song......


Edit: After houses, the biggest single purchase is a car. Outside of government spending, and with collapsed house sales, the only other way to keep expanding (offsetting falls in) debt is to ramp up car sales. Looks like it failed - unless they just double the payment.


Edited by For no one

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