As I’ve been saying for some time the automobile dealers have already sold off inventory and are now looking for more production to meet the demand that’s been created by the “Cash for Clunkers” program:
NEW YORK — The nation’s car dealers have a new worry: they’re running out of vehicles.
As the “cash-for-clunkers” program reaches its next chapter, and consumers pour into showrooms, some dealers say their stock of new cars — especially for fuel-efficient smaller models — is waning.
At Larry Miller Honda in Boise, Idaho, about two-thirds of the car lot is empty. The dealership is nearly out of 2009 models — something that usually doesn’t happen until the late fall.
And the situation is so dire at a Chrysler, Dodge and Jeep dealership in Beaver Springs, Pa., that the owner, Michael Andretta, is essentially shutting down this weekend to repave his car lot.
“I’m out of cars,” Andretta said. “I do not have a single car in my dealership that qualifies for anything.”
Such a scenario amounts to a complete shift from earlier in the year, when hard-hit dealers saw cars pile up as consumers largely shunned big-ticket purchases.
It also reflects the rampant popularity of the incentive program, which gives car owners vouchers of up to $4,500 to trade in older, gas-guzzling vehicles for new, cleaner varieties.
On Friday, President Barack Obama approved another $2 billion to extend the program until Labor Day, putting consumers back in the car-buying mood. The program’s first $1 billion ran out in about a week.
As they say, timing is everything. For many years U. S. automakers have used the month of August for re-tooling and this August will be no different.
And so much for the argument that there are environmental benefits to the C4C program because the production of the cars that are being sold is already a sunk cost. C4C is subsidizing increased production of automobiles. Unless you believe that the auto industry is the growth industry for the future, that’s not only harmful to the environment, it’s a deadweight loss.
