Which Runs Out First: Cash for Clunkers or Cars?
August 03, 2009
The race is on for which will run out first: government funding for Cash for Clunkers or the cars
popular for purchase by clunker traders.
The U.S. House handily passed a Cash for Clunkers extension that provides an added $2 billion to the program, bringing the total to $3 billion. The Senate takes up the matter this week where it faces more challenge by Democrats, who want higher fuel-economy requirements for the new vehicle bought with the clunker trade, and Republicans, who oppose more spending.
At the same time, consumers who are ditching their clunkers for the $3,500 or $4,500 credit toward the purchase of a new, more fuel-efficient vehicle face a dwindling selection and supply of the more popular vehicles.
Dozens of vehicles that are popular as clunker trades had under the ideal 60-day supply at the beginning of the month, Edmunds.com's analysis of inventory numbers showed. And those inventory levels are based on June sales -- before the Car Allowance Retail System (CARS) program kicked in July 24. More up-to-date inventory numbers won't be available until July sales are reported by manufacturers Monday.
Running on Empty
Dealers were saying even last week that they were running out of inventory. One Ford dealer tweeted AutoObserver.com saying: "It has been along time since I have seen so much bare pavement on our lot."
Toyota's top North American executive Yoshimi Inaba told reporters in Detroit -- a week before Cash for Clunkers launched -- that Toyota's inventories largely across the board -- cars to trucks -- were low, in the 30- to 40-day supply range when 60 days is considered ideal.
Hyundai, which began honoring the Cash for Clunkers incentives on July 2 by backing dealers with cash advances, said about 15 percent of its sales were from the program, with the Elantra making up a third of those sales, followed by the Sonata at 27 percent and the Accent at 19 percent. Clearly, the supplies of those models are dwindling. At the start of July, Hyundai had less than a 40-day supply of the Accent, along with the Santa Fe and Sonata, and just over a 60-day supply of the Elantra.
Ford said it would report its first year-over-year sales increase when July sales come in Monday, a dramatic spike coming from the Cash for Clunkers program. Ford's inventories across the board purposely are lean, but the most popular vehicles in exchange for clunkers are in particularly low supply. The Ford Escape and Escape Hybrid, Fusion and Fusion Hybrid, Ranger and Flex all have a 40-day or less supply, Ford confirmed.
Subaru, which on Monday reported a 34 percent sales surge for July, said inventories, indeed, are running low. "We're looking to increase production a small amount," said company spokesman Michael McHale.
Mini's Cooper and Clubman models have less than a 40-day supply. The Smart Fortwo had around a 60-day supply at the beginning of the month, but that was before Smart began promoting its $99-a-month deal. -- By Michelle Krebs
Posted by Michelle Krebs at 8:22 AM under Analysis , Companies , Featured , Ford , Toyota | Comments (1) | digg this | Seed Newsvine
Well, say what you will, but this is better than 4-5 months ago with rows of unsold cars and no end in sight.
Posted by: tomcatt630 | August 03, 2009 at 9:23 AM