Cash-For-Clunkers Expected to Go Out With a Bang: Edmunds Projects 15-Million Weekend SAARBy Bill Visnic August 24, 2009
The federal Cash-For-Clunkers incentive program ends today, and despite frustrating administrative snarls, the program's close was expected to have prompted a rush of last-minute new-vehicle purchases over the weekend leading up to the program's shutdown at 8:00 p.m.
Whatever its problems, Cash-For-Clunkers certainly will be credited for injecting life into auto showrooms that had been moribund until the program began in late July. The industry's Seasonally Adjusted Annualized Rate of sales had struggled all year to broach the 10-million mark, but before the actual transaction details for the program's last weekend can be assessed, Edmunds.com is projecting the SAAR for the final weekend of the Cash-For-Clunkers program to be 15 million.
The final burst of sales should in turn generate an August SAAR of 13 to 13.5 million, said Edmunds forecasters.
In the first weeks of the Car Allowance Rebate System, the official name of Cash-For-Clunkers, the frenzy of buyers eager to take advantage of the program's original $1 billion funding produced a SAAR that exceeded 18 million.
But the government quickly agreed to fund the program with an additional $2 billion, easing the get-it-before-it's-gone frenzy of CARS' first week. As the perceived need to turn a quick deal eased, Edmunds.com analysis of transaction data for the past several weeks indicated a steady dropoff in Cash-For-Clunkers deals.
And maybe more influencing on CARS' last-gasp weekend, many dealers and dealer groups across the nation announced last week they were turning their backs on the clunker program because of much-publicized foot-dragging by the U.S. Department of Transportation - the agency administering the Car Allowance Rebate System, the official name of Cash-For-Clunkers - on reimbursing the $3,500 and $4,500 consumer rebates. Some dealers reportedly were waiting for tens and even hundreds of thousands of dollars or more in backed-up payments.
About half of the Greater New York Auto Dealers Association's 450 dealers prominently said they were pulling out of the Cash-For-Clunkers program late last week. Bloomberg reported that 41 percent of the Group 1 Automotive mega-dealer group's outlets also were opting out before the final weekend even began.
And the nation's largest auto-dealer chain, AutoNation Inc., reportedly also completely shut down CARS transactions across its giant network prior to the weekend. The government reportedly owed the company $45 million in reimbursements. As of late on Friday, there were nearly a half-million sales applications submitted.
As if to grind salt in the wound of administrative woes that stuck with the program since its start, the CARS website was said to have been shut down briefly last Friday, perhaps in an eleventh-hour attempt to increase capacity for the weekend's expected crush of applications.
Transportation Secretary Ray LaHood said early Monday the Cash-For-Clunkers program will account for between 700,000 and 800,000 new-vehicle transactions.
Despite the headaches, AutoNation president Mike Maroone nonetheless told Bloomberg television that Cash-For-Clunkers "has been an unbelievable program." - Bill Visnic