Car sales fall off a cliff after Cash for Clunkers on clarkhoward.com

Opportunity beckons in the car market. New data for September 2009 -- the most recent full reporting month -- shows that sales fell off a cliff in the aftermath of Cash for Clunkers.

Clark watches car prices continually and has noticed that they're starting to soften. During Clunkers, prices actually went up, but that trend has now reversed. The artificial stimulus of Clunkers is gone and now the marketplace has a collective hangover!

Dealers went from round-the-clock business to have nothing to do. Manufacturers put the factories back to work and now they've got to move that inventory. In addition, we're moving into a time of the calendar year when no one is interested in buying a new car.

As previously reported, the consumer champ had predicted that there would be a rough 60-day sweet spot in the market from just before Thanksgiving to just after the New Year. The new September stats now corroborate this.

The used car market is still disrupted from Clunkers. We're still short of inventory. After all, you can't just make used cars!

The result is that used cars will bring in more money at trade-in or if you sell it on your own, and your new car will be cheaper. All because of the market disruption of Cash for Clunkers.

Clark can't think of another time ever when he could say that new car prices are depressed at time that used car prices have firmed up. Of course, this will only be a temporary phenomenon.

Having said all that, should you be buying a car? That's the ultimate question. Just because something is a deal, it doesn't mean you should necessarily buy it. The true test comes when you honestly gauge your own financial situation and the reliability of your existing car. Getting new wheels simply because you want them is not a smart move unless you're in good financial shape.

What others are saying

Should have bought a Volkswagan!!!
Skip those rice burners, go for something that is designed to race on the Auto-bon!
By Binky the Beetle @ 10/28/09 02:13:01 PMreport abuse
re: many fools
"how many of these folks are now looking at 5 year loans on something they really did not need?" - ncsteve

Not too many Steve. In my case there is no loan and I paid cash for my new Cash for Cluckers and got rid of my '99 Jeep that had 180k miles on it that was only worth $700 on a trade in. I'd be a fool not to do the transaction and get my 4,500 credit. I pay taxes just like everyone else. You are just a bit perturbed that the credit only went to a select few. And that group did not include the folks driving around in shiny new vehicles because that would not be a good CFC trade in. It went to the group of us that drive cars 10+ years or own second hand cars and trucks.

I personally know of others in my same situation that are more than capable of paying off their new CFC loan. The lie propagated by the right wing and Faux News was that this tax credit went to poor people who could not afford an automobile. Nothing is further from the truth. It went straight to the middle and upper middle class who can afford it and particularly to the fairly frugal section of that group (hence the old cluckers). These are the same people who would have bought new vehicles anyway within the next 12 months. Myself included.
By Ben @ 10/22/09 09:14:04 AMreport abuse
Autos make people dumb
The majority of people not only buy autos they don't need, they buy autos they will never own. I never understood this. What person of any intelligence wants an auto payment along with a higher insurance premium for the full coverage the lender is going to force you to carry? I think it not only has a lot to do with the selfish bug in many of us and the "I want it now" syndrome, but advertising as well. Look at all the advertising these car companies do, they make it sound like everyone and their grandma are driving around in new cars and that making payments on a new auto is the greatest thing in the world. We all know auto loans are dumb, but here is another example of stupidity and autos we have all seen on the road. That big dually truck that never seems to be hauling anything, that foreign tin car with the wing trying to be a plane, that 2k sedan with the 5k rims, the new Camaro or Mustang with the No Fear sticker in the window, or my favorite, that giant SUV with one skinny lady in it. Next time you're at a light, look around, over half of all the new and used cars on the road are bank owned, and notice how most autos have on the driver in them. It's just silly, and most Americans are silly to. Why do autos make people so dumb?
By Chris @ 10/21/09 06:34:32 PMreport abuse
Cash for Clunkers
Again the government shows its ability to take what seems a good idea at the time and turn it into a complete fiasco. I have been driving a 2002 vehicle which is already paid for, runs well because I keep up with its basic maintenace, and still looks good. I have no need for running to a dealership every two years or so, nor I have a need for any government to get in the way of what people can do well on their own...
By Pablo @ 10/21/09 05:20:39 PMreport abuse
many fools
how many of these folks are now looking at 5 year loans on something they really did not need. The really sad thing is that our wonderful gov't stole our money for this? Yes, stole - if your neighbor came to your door with a gun and demanded $200 to help him buy a new car - would that not be theft? Then why is it different when the gov't does it???
By ncsteve @ 10/21/09 12:50:18 PMreport abuse
Just another example of the government trying to play God with the economy, and of course the auto sales situation will probably end up worse off that it was before the government felt the need to intervene. Don't be surprised if the auto purchase sales tax credit gets extended too.
By anonymous @ 10/21/09 10:57:55 AMreport abuse
Cash for Clunkers: a government fiasco
Not only did Cash for Clunkers disrupt the free market, but the end, net result was that mostly American cars were turned in for mostly foreign new replacement vehicles. Only those in government could be naive enough to proclaim a fiasco like this a success.
By Steve @ 10/21/09 10:46:50 AMreport abuse
I'm so glad the guberment could use our tax dollahs to help people get vehicles they don't need.
By anonymous @ 10/21/09 10:13:44 AMreport abuse
How much do you offer?
How do you know what to offer a dealer for a car when there inventory is plentiful? Is there a website that updates car values on a regular basis based on supply?
By David @ 10/20/09 09:42:59 PMreport abuse
Thank you Clark for saying what needed to be said.
"Just because something is a deal, it doesn't mean you should necessarily buy it."

Very well said! I'd bet that 90%+ of those who trade in and buy new didn't NEED a new car. I'd bet that they could have spent 10% of the price of that new car to repair/renew the older car to put it in perfect running order and continue driving. American's aren't into buying what they NEED anymore --it's about buying what they WANT to keep their ego inflated at maximum levels to impress people they don't know, and don't care about anyway.
By Another Old Guy @ 10/20/09 08:14:30 PMreport abuse

Should have bought a Volkswagan!!!

Skip those rice burners, go for something that is designed to race on the Auto-bon!

By Binky the Beetle @ 10/28/09 02:13:01 PMreport abuse

re: many fools

"how many of these folks are now looking at 5 year loans on something they really did not need?" - ncsteve

Not too many Steve. In my case there is no loan and I paid cash for my new Cash for Cluckers and got rid of my '99 Jeep that had 180k miles on it that was only worth $700 on a trade in. I'd be a fool not to do the transaction and get my 4,500 credit. I pay taxes just like everyone else. You are just a bit perturbed that the credit only went to a select few. And that group did not include the folks driving around in shiny new vehicles because that would not be a good CFC trade in. It went to the group of us that drive cars 10+ years or own second hand cars and trucks.

I personally know of others in my same situation that are more than capable of paying off their new CFC loan. The lie propagated by the right wing and Faux News was that this tax credit went to poor people who could not afford an automobile. Nothing is further from the truth. It went straight to the middle and upper middle class who can afford it and particularly to the fairly frugal section of that group (hence the old cluckers). These are the same people who would have bought new vehicles anyway within the next 12 months. Myself included.

By Ben @ 10/22/09 09:14:04 AMreport abuse

Autos make people dumb

The majority of people not only buy autos they don't need, they buy autos they will never own. I never understood this. What person of any intelligence wants an auto payment along with a higher insurance premium for the full coverage the lender is going to force you to carry? I think it not only has a lot to do with the selfish bug in many of us and the "I want it now" syndrome, but advertising as well. Look at all the advertising these car companies do, they make it sound like everyone and their grandma are driving around in new cars and that making payments on a new auto is the greatest thing in the world. We all know auto loans are dumb, but here is another example of stupidity and autos we have all seen on the road. That big dually truck that never seems to be hauling anything, that foreign tin car with the wing trying to be a plane, that 2k sedan with the 5k rims, the new Camaro or Mustang with the No Fear sticker in the window, or my favorite, that giant SUV with one skinny lady in it. Next time you're at a light, look around, over half of all the new and used cars on the road are bank owned, and notice how most autos have on the driver in them. It's just silly, and most Americans are silly to. Why do autos make people so dumb?

By Chris @ 10/21/09 06:34:32 PMreport abuse

Cash for Clunkers

Again the government shows its ability to take what seems a good idea at the time and turn it into a complete fiasco. I have been driving a 2002 vehicle which is already paid for, runs well because I keep up with its basic maintenace, and still looks good. I have no need for running to a dealership every two years or so, nor I have a need for any government to get in the way of what people can do well on their own...

By Pablo @ 10/21/09 05:20:39 PMreport abuse

many fools

how many of these folks are now looking at 5 year loans on something they really did not need. The really sad thing is that our wonderful gov't stole our money for this? Yes, stole - if your neighbor came to your door with a gun and demanded $200 to help him buy a new car - would that not be theft? Then why is it different when the gov't does it???

By ncsteve @ 10/21/09 12:50:18 PMreport abuse

Just another example of the government trying to play God with the economy, and of course the auto sales situation will probably end up worse off that it was before the government felt the need to intervene. Don't be surprised if the auto purchase sales tax credit gets extended too.

By anonymous @ 10/21/09 10:57:55 AMreport abuse

Cash for Clunkers: a government fiasco

Not only did Cash for Clunkers disrupt the free market, but the end, net result was that mostly American cars were turned in for mostly foreign new replacement vehicles. Only those in government could be naive enough to proclaim a fiasco like this a success.

By Steve @ 10/21/09 10:46:50 AMreport abuse

I'm so glad the guberment could use our tax dollahs to help people get vehicles they don't need.

By anonymous @ 10/21/09 10:13:44 AMreport abuse

How much do you offer?

How do you know what to offer a dealer for a car when there inventory is plentiful? Is there a website that updates car values on a regular basis based on supply?

By David @ 10/20/09 09:42:59 PMreport abuse

Thank you Clark for saying what needed to be said.

"Just because something is a deal, it doesn't mean you should necessarily buy it."

Very well said! I'd bet that 90%+ of those who trade in and buy new didn't NEED a new car. I'd bet that they could have spent 10% of the price of that new car to repair/renew the older car to put it in perfect running order and continue driving. American's aren't into buying what they NEED anymore --it's about buying what they WANT to keep their ego inflated at maximum levels to impress people they don't know, and don't care about anyway.

By Another Old Guy @ 10/20/09 08:14:30 PMreport abuse

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Oct 20, 2009 -- Car sales fall off a cliff after Cash for Clunkers

What others are saying