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Boost from ‘Clunkers’ won’t last long

Alisa Roth Aug 3, 2009

Boost from ‘Clunkers’ won’t last long

Alisa Roth Aug 3, 2009


Kai Ryssdal: The monthly sales numbers that came out of Detroit today tell the story of what a smash cash for clunkers has been so far. Ford, GM and Chrysler all reported sharply higher sales in July than they had in June. And even though they’re still not selling as many cars as they were a year ago at this time, the Big Three’s not going to turn its nose up at government-financed incentive programs. The Senate has until the end of the week to decide whether to put more money into Cash for Clunkers — $2 billion is the figure being talked about. But no matter what happens in Washington, the deal’s going to run out sometime. Which does make one wonder how dealers will keep buyers coming into the showrooms when it’s gone. Marketplace’s Alisa Roth has more.

ALISA ROTH: Nobody in the auto industry thinks Cash for Clunkers is going to save the business. Erich Merkle is a consultant to the industry. He says the program is a one-off. It attracted a different kind of driver.

ERICH MERKLE: A lot of these people are folks that probably would not likely be new-car buyers.

The automakers’ regular customers upgrade their vehicles every few years. Their cars were less likely to qualify for the program.

But Merkle says those buyers are the ones carmakers are counting on.

MERKLE: When the traditional new carbuyer comes back in the market. And we also see recovery in fleet sales, we’re going to see sales snap back pretty hard.

He doesn’t think those buyers will be back until the end of this year. Or maybe not until next.

The money from Cash for Clunkers is tiding car companies over until that happens. Meanwhile, they’re jockeying for position.

George Augustaitis follows the auto industry for consultants CSM Worldwide. He says they’re trying everything from fuel-efficient cars to new marketing tactics.

GEORGE AUGUSTAITIS: Ford’s putting as much product in the pipeline as they can. Chrysler and GM are putting money on the hood, they’re really trying to get financing.

None of that will matter unless the economy gets better. And people can get the credit they need to buy cars again.

Gary Dilts from JD Power Automotive says cash for clunkers has given carmakers a hand. But the industry’s still in a terrible state.

GARY DILTS: Let’s not pretend paradise is breaking out here. It’s still an industry that’s running at about an 11-million unit rate in the month of July. It’s not going to be too hard to see an industry better than that, even without a clunker program.

This week, the Senate will keep fighting it out over Cash for Clunkers. But Dilts says the auto industry is already moving on.

I’m Alisa Roth for Marketplace.

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