The US 'cash for clunkers' party is now over with the $3bn taxpayer-funded incentive having drawn to a close. The government says it accounted for about 690,000 sales, and, according to American motor trade analysts from Edmunds.com the US car industry is likely to experience a painful hangover. It anticipates a steep decline in sales in the coming weeks based upon a significant drop in 'purchase intent' behaviour of its website visitors.
"Current purchase intent is down 50% from the cash for clunkers peak, and down 11% from the June average," said Edmunds senior analyst David Tompkins.
"Day by day, intent is slipping: Sunday activity was down 21% from Saturday, then Tuesday activity was down 16% from Monday."
"Cash for clunkers distorted the market in a way that benefited the industry for four weeks. Now the payback begins." added CEO Jeremy Anwyl. "Sales were stimulated at the start of the year's prime buying season, just when they were building on their own. People rushed into purchases that many would otherwise have made later this year. The result will be lower sales in the weeks to come."
"The sales surge depleted inventories and pushed up prices. Additionally, with inventories at low levels, many manufactures have little reason to be generous with incentives. Limited selection and higher prices will create further downward pressures on sales," senior analyst Jessica Caldwell predicted.
We can probably expect a similar negative knock-on effect when our own UK scrappage incentive ends in a few months.
Source: Just-Auto
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