Now that the government's cash-for-clunkers blowout is finally over, some fear a morning-after hangover of buyers' remorse and a sales drought for struggling auto dealers.
The offer of incentives to trade old gas guzzlers for new, more efficient vehicles resulted in 690,114 sales for which dealers applied for vouchers by the Transportation Department's Tuesday deadline. The taxpayers' cost will be nearly $2.9 billion.
Now there's a calm after the storm. Car-shopping service Edmunds.com says half as many people are researching a new car purchase on its website as were looking during the peak of the clunker frenzy. Traffic is even off 10% from June levels, ahead of the clunker kickoff on July 27.
"Cash for clunkers distorted the market in a way that benefited the industry for four weeks. Now, the payback begins," said Edmunds CEO Jeremy Anwyl in a statement.
The sales fall-off was expected, said Paul Taylor, economist for the National Automobile Dealers Association. "It's not a source of fear. It's just one more thing that needs to be managed."
Another may be larger car payments for some buyers. Thanks to the Car Allowance Rebate System, many folks who might have been used car shoppers took home new vehicles instead. In July, only 12% of shoppers who intended to buy used cars said they were swayed enough by CARS to buy new, according to survey by Kelley Blue Book. By August, it was 20%.
A CNW Marketing Research survey of about 1,000 clunker traders found that 17% now have doubts about the decision. Most said their regret is about having monthly car payments despite incentives up to $4,500. Typically, remorse hits 6% to 8% of new vehicle buyers within a month.
Home builder John Kounalis of Flower Mound, Texas, says he misses being able to throw construction scrap into the bed of his old Dodge pickup, and his new Ford Escape SUV is "going to cost me a little more money." But he does say it's refreshing to have a working horn and wipers, and dependable headlights.
And Pramit Patel of Topeka estimates he'll save $1,300 in repair bills in the next year, plus gas savings, by trading his paint-peeled 1990 Mazda MPV minivan for a Toyota Corolla. "There is a bit of nostalgia (for) the old van," he says, but a new car that's "worry-free and fun to drive makes up for the memories."