By on September 13, 2009

No surprise there. Any automotive analyst worth their salt could have told you—did tell you—that Uncle Sam’s $3 billion Cash for Clunkers program was going to suck the oxygen right out of the showroom. Really, this is one for Johnny Carson. HOW BAD ARE THEY? They’re so bad that salesmen who boast, “You ain’t seen nothing yet!,” know they’re being ironic. Pause. The Associated Press doesn’t “do” irony. (Nor, apparently, sales stats.) Still, their article on September’s new car sales drought is not without merit, suffused as it is with Glengarry Glen Ross-type quotes from starving dealers, caught in the no-man’s land between no inventory and no customers. Here’s the stripper version . . .

“We’re getting some traffic, but my business is a long way from healthy,” said the longtime salesman. “We suspect it’s going to be 90 days before we get back to any kind of normalcy.”

“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.”

“We were already in a really mediocre year,” Kelleher said. “We’re just kind of back into that mode again.”

“We’re back into that let’s-wait-and-see mode,” he said. “People aren’t 100 percent sure about the economy yet.”

“That is always a difficult retail period for us. If you see numbers that suggest the market is down in September, it may be absolutely normal,” he said, adding that he isn’t worried about the rest of the year.

“I think there’s more demand out there yet, and the right dealers and the right products will bring those customers out.”

“Most dealers are in a cash-flow crunch because of the federal government not paying up on this,” he said.

“The CFC program definitely had an impact for a brief period of time, but it was like throwing a life jacket on a sinking boat,” said Dan Mahan, desk manager of Riverside Auto Mall with Jeep, Dodge, Chrysler, Toyota, Honda and Nissan outlets in Marquette, Mich.

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28 Comments on “Post Cash-for-Clunkers Sales Suck...”


  • avatar
    dejal

    Will the dealers deal in the next 3 months?

    Balise in the Springfield Mass. market a couple of months ago still had an additional markup of slightly less than $2000 on the window for Hondas + Toyotas. And we are supposed to feel sorry for these pigs?

  • avatar
    dwford

    Traffic is definitely back down to pre-Clunker levels, but there are still buyers out there. Solution is simple: go back to discounting. Yes we sold compact cars at full sticker a month ago, now we discount again. Not very surprising. At least my dealer still has cars available. My manager beefed up inventory before Clunker, so we never totally ran out, now we have truck after truck of new inventory coming. Thanks Hyundai!

    I feel sorry for the dealers that can’t get replenished. They have few customers and little inventory anyway. Why bother coming to work?

  • avatar
    qfrog

    That video was six kinds of awful. I know better than to ask for my click back.

  • avatar
    Syke

    Actually, for a local dealer’s commercial, that one was pretty good. At least it was mildly entertaining the first time through. No, I didn’t try for a second run.

  • avatar
    dwford

    Just watched that. I am sure all those upscale buyer Buick wants will come running right down when they see that ad.

  • avatar
    RedStapler

    As locally produced Ads for dealers go it was not that bad. Its No Trunk Monkey though.

  • avatar
    twotone

    Six months worth of new car buyers did so during the last three weeks. Now, sit back and read a book.

  • avatar

    How long until C4C gets resurrected Lazarus-like?

    –chuck

  • avatar
    CyCarConsulting

    Thought that was pretty clever, compared to anything Lutz and co. has come up with.

  • avatar
    gaspassoregon

    local toyota dealer 2 weeks ago had no highlander hybrids in stock after cfc. it seems none of the region’s mazda dealers had mazda5’s in stock either. not thrilling if desirable inventory is kept so low that there is no bargain to be had(but who could blame…)

  • avatar
    GS650G

    So America learns another lesson in economics. Pumps don’t stay primed for long. But the administration declared it a smashing success so it must be one.

    How about we just make C4C permanent? And include every car over 5 years old? You finish paying off the family truckster and Uncle Sugar gives you 4500 dollars of someone else’s money to buy another one.

    Honestly this program was a sop to the industry that now must really make the hard choices, like offering people their money back in 60 days or making a Fiat 500 look like a Neon with a pentastar badge on the front.

  • avatar
    fincar1

    …and speaking of payback to the dealers, how is that going? I have not seen any reports since right after c4c ended.

  • avatar
    P71_CrownVic

    Fincar1:

    Terrible. Dealers are being rejected over the most petty reasons. They are the real losers in this scam…followed by the people of the Untied States and then the Automakers.

    Only the true blind will not see that this C4C scam has hurt the automakers very badly. It was not a stimulus for the auto industry it was part of a green agenda that will stop at nothing to push that agenda.

  • avatar
    kamikaze2b

    Considering this was probably done at his cubicle or his house he did a good job. In fact he made it to a website that gets 1 million hits a month, for free! These viral marketing videos are the way to go.

    This video for a flea market in Montgomery has almost 5 million views!

  • avatar
    kamikaze2b

    No editing? WTF?

    Here’s the link.

  • avatar
    ohsnapback

    Anyone with a modicum of common sense could have seen the future of car sales post-CFC: In a terrible economy, with the jobless rate still rising, and household wealth still falling, CFC for the most part pulled future sales forward, whether they were sales 6 months from now or 3 years from now.

    Also, many of the people who did utilize CFC are the types, of the pro-CFC people are to be believed, who won’t buy another car for another 10 years (and may never buy another new car absent an even bigger happy ending $$$ program by the taxpayers wit large).

    With manufactures inevitably eager to begin ramping up production again, the follow on pressure to dealers to “buy many cars now” will soon follow, and the incentives will soon follow as another glut of cars sits unclaimed and unloved on dealer lots, in plant parking lots, and at storage facilities all over the land.

    Governments distort markets, and this is not a good thing.

    To add insult to injury, CFC had a nasty side effect of screwing over anyone without a “clunker” to trade in, as dealers and manufacturers pared back or took away altogether the normal incentives to attract car sales (even some people with “clunkers” paid more for cars than they would have had the program not been in existence).

    Gotta’ love governmental induced irrationality and its inevitable unintended consequences.

  • avatar
    Dynamic88

    Anyone with a modicum of common sense could have seen the future of car sales post-CFC: In a terrible economy, with the jobless rate still rising, and household wealth still falling, CFC for the most part pulled future sales forward, whether they were sales 6 months from now or 3 years from now.

    Probably many sales were pulled forward, but now is when they are needed, not 3 years from now. Of course if you’re of the “creative destruction” mindset, then you wouldn’t mind turning the great recession into the second great depression.

    I do agree the program was flawed in execution. It didn’t do as much as hoped for the domestics – most people bought transplants. A lot of people (such as myself) didn’t have a qualifying car to turn in.

  • avatar
    segfault

    Sales may be back to pre-Clunker levels, but the used car market is still screwed up.

  • avatar
    windswords

    Like I said previously – these kinds of programs are like those energy drinks. You go great guns for a while and then you crash.

  • avatar
    Roundel

    File this in the “duh” category.
    This was to be expected, but I am still confused as to how people here still don’t understand that this program did exactly what it was meant to do….move metal.
    You can call it a “greenwash” or “bailout” or whatever word that loves to grind your gears.
    Call me Keynesian, but I cant see how this program (aside from the typical govt blunders) didnt work perfectly.
    Credit was already tight… they weren’t giving loans based upon if you had a pulse or not. If you didnt have the cash, or the credit you could not buy. So it seems this didn’t “help” the perpetuation of bad money practices.
    This program got older, less safe, less efficient vehicles off the road. This is better for all of us.
    And judging by the crap that I have seen turned in, it was highly unlikely that these people would have bought a new car when their clunker would have given up the ghost.
    They were either cheap or not able to purchase new without that extra incentive.
    This program allowed for sales that may have never happened at all, now or in the future.
    So yes, I can see that if you didn’t fall into the niche that CFC helped, then I can see someones angst.
    But if you believe that the market will fix things, inventory levels will rise again, discounts will follow and it will be “business as usual”

  • avatar
    Autosavant

    Robert,

    You are absolutely, 100% correct that the cash for clunkers program was a total failure. And the fears it would steal sales from next year were realized, and they were much worse! It stole sales even from the next MONTH!

    Read on from the Bible of the Auto Industry, Autonews.com:

    “Jesse Snyder
    Automotive News
    September 14, 2009 – 12:01 am ET

    The showroom misery after cash for clunkers was every bit as bad as dealers and automakers had feared. Maybe worse.

    “It was as still as a graveyard,” Wade Dinsmore, general manager of Anniston Dodge in Anniston, Ala., says of his showroom.

    Sales didn’t just slip back to pre-clunker levels, as many had hoped. September’s sales rate “may be the worst of the year,” says Adam Jonas, Morgan Stanley’s lead auto analyst.

    The federal incentive that ended Aug. 24 propelled the seasonally adjusted annualized sales rate for August to 13.7 million, says Jeremy Anwyl, CEO of Edmunds.com, up from 9.5 million in June, the first full month before the program. But the SAAR careened to 8.3 million from Aug. 25 to 31 before edging up to 8.9 million in the first five days of September, Anwyl says.

    Analyst George Magliano of IHS Global Insight says: “I’d settle for anything in the 9 millions” for September.

    The rest of the year “will be depressed even compared to the first half,” adds Mike Jackson of CSM Worldwide. ”

    3 BILLION Taxpayer hard-earned $, and 700,000 perfectly fine cars destroyed. FOR NOTHING!

  • avatar
    ohsnapback

    The rest of the year “will be depressed even compared to the first half,” adds Mike Jackson of CSM Worldwide. ”

    Wow. Mike Jackson is the CEO of AutoNation and I’ve seen him do/say anything to avoid appearing less than upbeat even in the worst of times.

    Scary stuff right there…

  • avatar
    Autosavant

    Mike Jackson is the CEO of AutoNation and I’ve seen him do/say anything to avoid appearing less than upbeat even in the worst of times.

    If he’s the same guy, he must be the smartest person in the Auto business.,.. at least in the USA. I ‘ve seen interviews of his and he knows what he’s talking about, and is capable of precisely articulating his thoughts.

  • avatar
    Bancho

    At least Hyundai seems to be trying to play to the people who weren’t able to participate in C4C. Honestly, they seem to be the ones leading as far as advertising goes. They were the first to advertise “giving back” your car should you lose your job and now they’re advertising to those who may have been disenfranchised by C4C for whatever reason.

    I guess this bodes well for dwford since his dealership sells Hyundai.

    @P71_crownvic:

    Though I’m tempted to ignore all your posts based on the predictable vitriol against Ford, you occasionally sneak one under the wire that has nothing to do with Ford at all, and I quite agree with. This is one of those times.

  • avatar
    RetardedSparks

    C4C will be resurrected as “Cash-for-Christmas” when the government mails out $500 gift cards to everyone to get them to buy something, anything, from retailers during the holidays.

  • avatar
    jkross22

    @Dynamic88:

    Probably many sales were pulled forward, but now is when they are needed, not 3 years from now. Of course if you’re of the “creative destruction” mindset, then you wouldn’t mind turning the great recession into the second great depression.

    I understand your point, but the reality that GM and Chrysler are dying companies seems to be a point you either don’t agree with or are ignoring. The roughly $100B (well, I guess it’s $103B) could have and should have been used for better purposes.

    For example, and I’m just pulling this out of the air, health care, public education, public access to high speed internet (esp public schools) are programs that would have yeilded a much larger ROI than the bailout of failing companies.

    Put another way, GM and Chrysler needed to die. The money propping them up was/is tremendous waste. As opposed to the other programs I mentioned that would have truly been an investment in the future, created jobs and done all of the things the bailout of the auto business was allegedly trying to do.

  • avatar
    P71_CrownVic

    @P71_crownvic:

    Though I’m tempted to ignore all your posts based on the predictable [b]truth about[/b] Ford, you occasionally sneak one under the wire that has nothing to do with Ford at all, and I quite agree with. This is one of those times.

    Fixed Bancho.

  • avatar
    Dster

    This makes me ill.

    You know what? To artificially spur retail sales this quarter, we should have people turn in their old furniture, burn it, and then let them buy new furniture with government subsidies!

    Cash for Clunkers is nothing more than a modern day version of the Broken Window Fallacy and it hurts the poor more than any other group.

    http://www.sbabg.org/2009/08/03/cash-for-clunkers-is-a-modern-day-version-of-the-broken-window-fallacy/

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