Cash for Clunkers took car buyers out of the market

The long term effect of the Clash For Clunkers programs are now finally being fully assessed now that the smoke has cleared after the buying and selling frenzy that took place six months ago.

Some dealers say the benefit is a mixed blessing of up sales, but low inventory.

They claim that while the short-term sales were good for the retailers in 2009, its a different story in 2010, the industry is now dealing with a shortage of affordable used cars and parts. Effecting many companies that rely on them such as auto retailers, car rental, van rental agencies, and low key industrial sectors.

“We’ve had a half-dozen people in here lately looking for something in the two, three, $4,000 range,” said Mark Andersen of Park Rapids Auto Centre. Last week, a couple looked over the lot, asking for something in the $2,000 range. “You can’t find anything in that price range,” Andersen said. “They’re just not out there.”

Right from the start the Cash for Clunkers regime gave up to $3,500 – $4,500 trade-in credit value for clunkers when purchasing new cars. The majority of the auto dealers, matched those values to unload their overstocked inventories.

“Why would you sell your car for $1,000 when you could have gotten $8,000 for it?” asked Don Trumble, a mechanic at Park Rapids Auto. “It took a lot of the affordable used cars completely out of the market,” agreed Roger Anderson at Park Rapids Ford. “We used to have a bargain lot with cars (priced) starting at $500 and on up. (Cash) for Clunkers eliminated that pretty much,” he said. “They come in here and say, ‘We’ve got two to $3,000 to spend,’” Anderson said. “We tell people we can try to find something but most of ‘em want it and want it now. “Everybody that would have bought a $3,000 car now has to step it up and buy something in the $5,000 to $7,000 range.”

Anderson continued to say said that the current pricing markets take a large number of potential buyers out of the market completely, because it would entail credit that’s hard to come by nowadays.

Anderson said the Cash for Clunkers program took new car buyers out of the market prematurely that were thinking about it and decided to go ahead and pull the trigger.