Incentives to buy new vehicles please auto industry
— -- President Obama dangled new-car incentives in front of consumers Monday, and they were immediately embraced by the auto industry, consumer experts and some potential car buyers.
"Anything that excites the public imagination about buying a car is a good thing right now," says Gerard Murphy, president of the Washington (D.C.) Area New Automobile Dealers Association. "This is very Pavlovian, which is great. Certainly the public is very accustomed to 'cash back.' "
Legislation pending in Congress would offer incentives of up to $5,000 for vehicles that are more than 8 years old and are traded in for new vehicles that get good mileage; the better the fuel economy, the more the incentive. CSM Worldwide reported recently that vehicle sales in the European nations with these types of plans will be 400,000 more this year than they would have been without the cash incentives. The National Automobile Dealers Association and Alliance of Automobile Manufacturers, which represents major automakers except Honda, issued statements Monday supporting a cash-for-clunkers program.
Many 8-year-old vehicles might sell for more than $5,000, but Phil Reed of the car-buying site Edmunds.com says the deal is still attractive, as few want to sell vehicles on their own, and dealers would seldom give them more than the government offer.
Reed, Edmunds' senior consumer advice editor, says the warranty backing also should ease consumers' minds, because, "Even if something horrible happens, they're going to be taken care of." Reed says if one of the automakers went out of business, another brand would likely pick up the service business, which is highly profitable.
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