Most people interested in trading in an old car – and getting a generous credit on the purchase of a new one – have apparently already rushed to participate in the program.
Marcio Jose Sanchez/AP
The so-called "Cash for Clunkers" program started out as a cash cow, spurring a big increase in automotive sales this summer. Now, the program itself may be turning into a clunker.
What's happening is that the people most interested in trading in an old car – and getting a generous credit on the purchase of a new one – already rushed to participate in the program's first wave.
Now there's no longer that big a lineup of eager consumers, according to Edmunds.com, a leading provider of automotive information. Meanwhile, Congress has provided more money for credits, so consumers aren't in an offer-expires-soon rush.
Edmunds tracks the level of car shoppers’ "intent to purchase." On Tuesday, the firm reported, purchase intent is down 31 percent from its peak in late July.
“Now that there is plenty of money in the [clunkers] program and the most eager shoppers have already participated, the sense of urgency is gone,” Jeremy Anwyl, chief executive of Edmunds.com, said in a statement. "Inventories are getting lean and prices are climbing, giving consumers reasons to sit back."
The Cash for Clunkers program, signed into law by President Obama earlier this year, has two goals – environmental and economic. The undertaking promises to curb greenhouse emissions by sending gas-guzzling cars (ones that get 18 miles per gallon or less) to the junkyard. And it could help revive the recession-battered car industry, using taxpayer cash to lure on-the-fence car shoppers to dealerships.
As the incentives went into effect this summer, a rush of eager buyers ran through the initial $1 billion. Dealerships began having a welcome problem: a shortage of popular models instead of an inventory glut. Congress appropriated $2 billion more to keep the revved-up sales going.