Overhaulin'

What will happen next to car dealerships when the Cash for Clunkers program end this Monday?

Dealerships have been selling a lot of cars for the past month. Many people with old car in their driveway came in and trade for car with more fuel friendly. Car dealerships across the nation selling more cars than 2 months ago. GM, Chrysler and other manufactures say they will make more cars and more jobs to meet the demand for CARS program. My questions are What will happen next to car dealerships and manufactures when the Cash for Clunkers end? Will consumers buy cars and dealers sell more and manufactures make more cars?

Public Comments

1. The cash for clunkers program may be a disaster for many car dealers. The rebates were given, but the government hasn't payed the dealers yet. There are reports of dealers going back to customers and asking for the money back as well. I would expect the used car market will face a bit of a glut.
2. The buying spree will end, but taxpayer debt will last forever. Sorry, but it's stupid to bill the taxpayer in an attempt to stimulate the economy. Traditional cost cutting and tax reduction is the only way to cure America's woes. Rule of thumb......If it sounds too good to be true, it is. Vote wiser in the future.
3. After the program ends, many dealers will find that sales slow down to almost nothing. Any rebate or incentive program causes people to buy vehicles earlier than they normally would. Many of the people who may have purchased a car in October or November will have already purchased with the clunker program, so sales will be slow. Those who do not have to buy a car now, and who have a clunker type car will hold off purchase, in the hope that the program is revived. The dealers will also have a problem, because the clunker program has taken away another source of profit. When a dealer takes a car in trade, they appraise the car and put what is called Cash Value (CV) on it. It does not matter what the paperwork that the buyer sees lists for a trade, they have the CV as what they have actually given for the car. The used car department then decides what to do with the car. They may sell it to a wholesale dealer, they may take it to the auction themselves, or they may decide to put the vehicle on the used car lot and sell it retail. The goal of the used car manager is to make a profit on every car. For example, if someone brings in a car that has major mechanical problems, I may put a CV on it of $100. The deal may show an allowance of $700 for the car, but $600 of that is discount off the price of the car that they are purchasing. I want to sell that car for a profit, and most likely will get $125-$175 for it, either from a wholesale dealer, or a junk buyer. $25-$75 profit is not much, and on nicer cars the dealer will make more. If you figure that the dealer does 100 clunker deals (which the dealer is only given a $50 allowance and has to pay for the destruction of the motor, meaning that they do not make much) that would have averaged a $150 profit per used car, that is a loss of potential profit to the dealer of $15,000. Add to that the fact that many dealers have not yet been paid for the clunkers, and may actually be owed $400,000 or more, and you can see that the dealers are going to have a serious cash flow problem. More than one will end up having to file bankruptcy from this.
4. It simply means that the government will no longer honor $4500 for old cars that qualified under "cash for clunkers" program. That's all. You can still trade in your car the old fashioned way but you'd probably get a lot less money for it from the dealer. Cash for clunkers program was derived to help drive more customers into showrooms to buy new fuel efficient cars and that's exactly what it did. Government didn't realize how successful this program would be and initially allocated $1 billion but with the higher demand, $2 billion more was approved. Now, that the funds are exhausted, the program will end today.
5. Overall "Cash for Clunkers" didn't do it's job. The people who traded in cars, for the most part could have gotten the same amount as trade in value, making more used cars available. The people who own the actual "Clunkers" didn't trade cars, because they still could not afford a new car, with 4500.00 off..... The economy will not return to normal, until people get back to work, and see that they are going to stay working.......