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Dealerships Recovering from Cash for Clunkers Hangover?

By Neetal Parekh on October 05, 2009 | Last updated on March 21, 2019

It has been over a month since the Car Allowance Rebate System (CARS) program-- popularized as Cash for Clunkers-- ended, but dealers are apparently still recovering from all of the heavy car sales partying.

According to some dealers, Cash for Clunkers wiped out their lot inventories, leaving bare pickings for the fall.  General Motors, Ford, and Chrysler have reportedly seen a inventories at a 25-year low.

There seems to be no argument among dealers that the program caused a boom in sales, however, six weeks after, some dealers feel that the summer sales may have taken away potential fall sales.  This, especially considering the reduction in new car sales production.  And though the program was projected to ramp up sales in the short-run, it has been tough to come down from the glitz and glam of the car sales gala.  U.S. car sales fell 23% in September after the high of July and August sales.

However, even some hangovers have their silver (or emerald) linings.  CARS brought potential buyers to lots to see new models that are in the pipeline.  And, though the ultimate economic effect of the program is under debate, it may have organically changed what Americans drive.  The average mpg of cars sold in August averaged 23 mpg, reportedly up 8% from the August 2008.   

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