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CNW Sees Troubling Signs After C4C

September 29, 2009

While the Cash for Clunkers (C4C) program did wonders to the dealer psyche, at least one market research firm sees some troubling signs in its aftermath.

Aside from reporting that showrooms have gone barren post C4C – noting in its report that that program might have absorbed the backlog of potential buyers – CNW Market Research said it’s seeing FICO scores reversing course.

After 10 months of consistent declines in the average FICO score of new-vehicle buyers, CNW said it’s seen a troubling increase in the first 20 days of September.

“The indication is a retightening of credit, which can effectively strangle new-car sales prospects,” the firm wrote in its September report. “It could also contribute to those with lower credit scores electing to stay out of the new-car market.”

CNW also noted that its data is showing a reverse in August of both median age and average income buyers.

“As with FICO scores, this could be attributed to either tighter credit or lower credit-score shoppers dropping out of the market,” wrote CNW. “Either way, it adds to a possible second significant and deep dip in auto sales. We’ll have a better fix on this issue after the September data is compiled to see if this is the beginning of a trend or simply C4C fallout.”

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