"Clunkers" Interest Dwindling
By Bill Visnic August 18, 2009The buying furor instigated by the federal Cash for Clunkers program has peaked and is slipping quickly, according to a new analysis from Edmunds.com, whose data researchers also say it could be mere weeks before auto-industry sales are back to pre-Clunkers levels. 
Studying new-vehicle purchase intent, Edmunds.com analysts say figures are down 31 percent from the peak roughly one week after the Car Allowance Rebate System (CARS), the official name of Cash for Clunkers, began on July 24. Edmunds analysts have determined purchase intent is a reliable indicator of actual sales that can be expected to come in the following 90 days.
It appears that like many other wide-scope auto-industry incentive programs of the past, the steam may be running out of Cash for Clunkers after several weeks of furious buying by consumers initially unsure of whether the federal funding would run dry.
"Now that there is plenty of money in the program and the most eager shoppers have already participated, the sense of urgency is gone, and the pace of [purchase] intent decline is accelerating," said Jeremy Anwyl, CEO of Edmunds.com.
Edmunds.com's research describes the Cash for Clunkers phenomenon in three distinct waves. The first came from well-informed buyers who wanted a new vehicle but were waiting for the program to start. The next wave was "mass market" buyers affected by the rush of advertising that promoted the CARS program.
The final phase of Cash for Clunkers buying -- the one currently under way -- is comprised of customers who wanted to participate in the program but probably had to get paperwork or other compliance-related details in order.
Moreover, automakers now are scrambling to replenish depleted vehicle inventories for the most popular new vehicles, typically compact cars and crossover models that help buyers maximize their Cash for Clunkers rebate.
"Inventories are lean, prices are climbing and consumers are sitting back," said Anwyl of the marked decline in CARS-driven purchase intent.
At the peak of the Cash for Clunkers frenzy, the industry's Seasonally Adjusted Annual Rate (SAAR) of sales approached 20 million units. Prior to the program's inception, SAAR had been struggling to exceed the 10-million-unit level. -- Bill Visnic
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