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Cash for Clunkers Audience Shrinks

June 23, 2009

Congress’ paring down of the Cash for Clunkers legislation and the expected one-month delay in its launch will cost the industry “dearly,” said CNW Research.

As of Tuesday, the $1 billion Cash for Clunkers legislation was awaiting President Obama’s signature after gaining approval by Congress last Thursday. In anticipation of the legislation’s signing, the federal government launched a Website ( on Monday, which provides information on how the process is expected to work and urges consumers to contact dealers to see if they will register for the program.

Originally slated at $4 billion and one million vehicles, the program is now expected to put $3,500 to $4,500 in the pockets of about 250,000 owners of older, gas-guzzling vehicles. And if the program is launched by July, those vehicle owners will have until November to take advantage of the program, which CNW says just isn’t long enough.

In its May issue of Retail Automotive Summary, CNW said the bulk of support and the probable use of the program was among people who had to replace their current vehicle by June and July. And with the program not expected to launch until the end of June, only about 252,000 of those surveyed by CNW said they were “strongly interested.”

“In a representative sample of potential users conducted in early June, and using the latest version of the C4C (Cash for Clunkers) legislation that puts a three-month time limit on the plan, the maximum addition to new-vehicle sales has slipped from 1.2 million to less than half a million,” wrote CNW’s Art Spinella in his monthly newsletter. “Again, this is the maximum.”

Additionally, roughly half of those who say they could wait for the program enactment said they wouldn’t be ready to buy until the first quarter of 2010.

“While auto dealers and automakers would like to see C4C expanded and extended to a full year, the data shows distribution of those sales will be regionalized and in large part going to Asian automakers,” wrote Spinella. “The environmental impact will be miniscule considering the number of vehicles actually being replaced. But a billion dollars doesn’t go as far as it once did.”

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