For Car Dealers, Cash for Clunkers Rescues Summer

The government's Cash for Clunkers program has rescued many auto dealerships from an otherwise moribund summer, creating what one dealer calls "a whole buying atmosphere." "More people are buying, so it seems like the thing to do," says John Guido Jr., the general sales manager at Arlington Heights Ford. At his dealership in the Chicago suburbs, the program has nearly doubled the number of potential buyers coming into the showroom on an average Saturday. The sales boom has even extended beyond the cars sold directly through the government-sponsored incentive program, which offers up to $4,500 for trading in older, gas-guzzling vehicles. "There appears to be significant trickle-down effects for dealers from the Cash for Clunkers program," says Paul Taylor, the chief economist for NADA... "The program has increased traffic even from those who don't qualify." Guido says several potential buyers have brought in cars that are just outside the program's gas mileage restriction of 18 miles per gallon or worse. But these days, many dealers are able to offer better trade-in deals because used car prices are rising. "There's a shortage of used cars," Taylor says. "If you're selling 6.5 million fewer new cars, you've got over 4 million fewer trades coming in, because 60 percent of new car deals usually involve trades."
Source: NPR