In June, President Obama signed the Cars Act. It makes $1 billion available for Americans that trade their fuel inefficient vehicles for brand new, greener ones.
Some dealerships have accepted cars in the program since July 1. However, most dealers were waiting for Friday in order to closely examine the program's final guidelines released by the National Highway Traffic Safety Administration. Dealership interest was so great on Friday and Saturday that the fed's computer certification system crashed several times. Over the weekend, other federal sites that distribute consumer information about the program were also reportedly sluggish due to the overwhelming demand by new car buyers.
The program provides for up to a $4,500 consumer credit on an inefficient used car and applies that rebate to the purchase of a brand new fuel efficient vehicle. The motivation is to get more environmentally friendly cars on the road and at the same time boost new car sales. Judging from spot market reports on Saturday, the program may have hit it's mark -- initially at least.
Spokane, WA, Ford dealer Wend le Ford said that their car lot was the busiest it has been all year. "This is the biggest thing to hit the new car side of the business in a long time," said Andy Keys their General Sales Manager. "We had probably 70 to 80 people in the store on the program yesterday."
Clunkermania was also reported in the Los Angeles area. "We've clearly had traffic coming in that's being driven by 'cash for clunkers,' " said Marc Cannon, spokesman for AutoNation Inc., which owns 77 dealerships in California, "We started doing deals early this morning."
At Koons Ford of Baltimore, Russell Martin reports that customer traffic at their dealership has picked up by 30 percent to 40 percent since the program was signed into law last month.
Additionally manufacturers are now stacking additional rebates atop the "clunker money" to create some of the best new car deals that drivers have ever seen. Chrysler, for instance, says it will match the government's money for consumers who turn in a clunker and buy a 2009 model.
In St. Louis, MO, Steve Cancila, of Cancila Chrysler, exclaimed, "I never imagined that something the government came up with would be so successful... and I haven't seen [manufacturers] rebates like this in 10 years. It's insane the amount of money they're offering right now."
The new car sales kick-start followed
surprise after surprise this past week. Early in the week conference board indicators gave more proof that
recovery has started in the US Economy. Throughout the week, the vast a majority of stocks posted
better than expected earnings, including a multi-billion dollar profitable quarter from Ford. US taxpayers got a 23% return on a
huge TARP payback from Goldman Sachs. Existing home sales increased for the third straight month while starts of single-family homes have risen four straight months through June.
Unlike other consumer and investor confidence surveys, the State Street Index measures institutional investor confidence by looking at actual levels of risk in their portfolios. This is not a subjective attitude survey. It measures confidence directly by assessing the changes in investor holdings of equities.
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