Despite Payback Fiasco, Dealers Will Regret End of Cash for Clunkers

Despite Payback Fiasco, Dealers Will Regret End of Cash for Clunkers

The much-examined Cash for Clunkers new-vehicle rebate program ends August 24 and the armchair quarterbacking has already started. Most evaluations of the program will focus on the government's inability to quickly process applications and reimburse dealers for the $3,500 or $4,500 rebates given to buyers.

The backlog of payments certainly affected dealer cashflow, particularly for smaller operations.

But according to new data from Edmunds.com, dealers (and automakers, ultimately) did enjoy more than a few offsetting perks: Besides hiking sales volumes, the Cash for Clunkers program, along with the resulting accelerated reduction of new-vehicle inventories, was responsible for immediately jacking up average transaction prices, margins -- and dealer profit.

Edmunds.com analysis of transaction data for the first three weeks of the Cash for Clunkers program shows average dealer profit rising substantially as the program progressed -- and the resulting demand hiked dealer profit. After the first week of Cash for Clunkers, average dealer profit per transaction was $1,129. After week two, the figure rose to $1,259; after the third week of the program -- the most recent data -- dealer profit was $1,342.

Automakers should be happy, too. During the same period, average MSRP jumped from $27,569 to $27,817 -- a number likely more significant than it appears because many of the most popular new vehicles purchased in the Cash for Clunkers program are comparatively inexpensive compact cars.

And average transaction prices also rose as the program continued. After week one, the average transaction price was $25,937, moving to $26,282 after week three.

The most recent top 20 new vehicles purchased in Cash for Clunkers transactions (Edmunds.com's method of model designation is slightly different from that of the Department of Transportation):

MAKE           MODEL

Ford              Escape
Ford              Focus
Honda           Civic
Jeep              Patriot
Dodge           Caliber
Toyota           Corolla
Ford              F-150
Honda           CR-V
Chevrolet       Silverado
Toyota          Camry
Chevrolet      Cobalt
Honda          Accord
Volkswagen  Jetta
Ford             Fusion
Hyundai        Elantra
Toyota          RAV4
Toyota          Prius
Dodge           Avenger
Nissan          Altima
Nissan          Versa

And the top 10 traded-in clunkers:

MAKE         MODEL
Ford            Explorer
Ford            F-150
Jeep           Grand Cherokee
Jeep           Cherokee
Chevrolet     Blazer
Chevrolet     C/K 1500 Series
Ford            Windstar
Dodge         Ram Pickup 1500
Cadillac       DeVille
Dodge         Grand Caravan

Photos courtesy Ford Motor Co.

1. Ford Escape the most popular new vehicle purchased through the Cash for Clunkers program and Ford holds three of the top 10 places.

2. Ford Explorer most traded-in "clunker" (though not this 2010 model).

Bill Visnic:  is an AutoObserver Senior Editor. Follow @AutoObserver on Twitter