SANTA MONICA, Calif. - (Business Wire) As the auto industry recovers from perhaps the biggest aberration in its sales history, Edmunds.com analysts are watching closely. “The best month of the year for car sales is being quickly followed by what could be the worst month of the year,” noted Edmunds.com CEO Jeremy Anwyl. “Cash for Clunkers was supposed to prime the pump, but that is a physics concept, and economics is quite different. Demand has dropped off significantly since the program ended.”
“Based on the current rate of sales, we anticipate that September’s SAAR will be 8.8 million units,” stated Edmunds.com Senior Statistician Zhenwei Zhou. “Last year when the bottom was falling out of the economy, September SAAR was 12.5 million, and prior to that it had been over 16 million for years. Many people regard February as the darkest month of the recession, but even then the SAAR was higher, at 9.1 million units.”
| | | SAAR | | Clunker Sales as % of Total Sales |
| August 25-31 | | 8.3 million | | 6.4% |
| September 1-5 | | 8.9 million | | 3.6% |
| September 6-12 | | 8.7 million | | 3.3% |
With the drop-off in demand for new car sales, transaction prices are falling, and so are dealer profit margins.
In early August, Edmunds.com analysts reported that Cash for Clunkers shoppers were paying higher prices for their cars, perhaps neglecting to negotiate distracted by the government rebate. And, limited supply and high demand drove prices up for everyone else as well. Now that the program is over and demand has slowed, consumer discounts are getting greater even as the average vehicle purchased is more expensive.
| Timeframe | | MSRP | | Price | | Dealer Profit |
| before Cash for Clunkers | | $ | 30,998 | | $ | 28,723 | | $ | 981 |
| week 1 Cash for Clunkers | | $ | 27,533 | | $ | 25,916 | | $ | 1,147 |
| week 2 Cash for Clunkers | | $ | 27,193 | | $ | 25,738 | | $ | 1,288 |
| week 3 Cash for Clunkers | | $ | 27,762 | | $ | 26,262 | | $ | 1,375 |
| week 4 Cash for Clunkers | | $ | 28,196 | | $ | 26,704 | | $ | 1,460 |
| week 5 Cash for Clunkers | | $ | 27,595 | | $ | 26,352 | | $ | 1,494 |
| week 1 after Cash for Clunkers | | $ | 32,345 | | $ | 30,289 | | $ | 1,444 |
| week 2 after Cash for Clunkers | | $ | 31,641 | | $ | 29,890 | | $ | 1,434 |
| week 3 after Cash for Clunkers | | $ | 32,478 | | $ | 30,142 | | $ | 1,303 |
This week the U.S. Labor Department released a report suggesting that Cash for Clunkers triggered a 1.3-percent decline in the new vehicle price index, but analysis on AutoObserver.com explains that it can largely be attributed to “forced downsizing.” As a result of the program’s fuel economy requirements and luxury car price cap, participants were drawn to less expensive vehicles.
“The program also brought into the market people who are highly price sensitive and normally might have bought used cars,” noted Edmunds.com CEO Jeremy Anwyl.
“The average transaction price on new vehicles purchased in August fell to its lowest level since May 2008, when it was skyrocketing gas prices – not a government incentive – that pushed buyers toward smaller, fuel-efficient, less expensive vehicles,” reported Edmunds.com Senior Analyst Michelle Krebs.
Consider the following points determined by Edmunds.com’s analysts:
- Share of the U.S. car market for compact and subcompact vehicles soared 40 percent in August compared with August 2008.
- In August, the average monthly payment on a new car was $409, the average down payment was $2,780 and amount financed was $21,897 – the lowest levels of the year.
- Because so many “clunker” trade-ins were already paid off, the average negative equity of a vehicle trade-in fell to $3,858 in August from the $4,737 high seen in January.
More analysis of the effect of Cash for Clunkers can be found at http://www.autoobserver.com/2009/09/cash-for-clunkers-boosted-economy-prompted-lower-car-prices.html.
About Edmunds Inc. (http://www.edmunds.com/help/about/)
Edmunds Inc. publishes four Web sites that empower, engage and educate automotive consumers, enthusiasts and insiders. Edmunds.com, the premier online resource for automotive consumer information, launched in 1995 as the first automotive information Web site. Its most popular feature, the Edmunds.com True Market Value®, is relied upon by millions of people seeking current transaction prices for new and used vehicles. Edmunds.com was named "Best Car Research Site" by Forbes ASAP, has been selected by consumers as the "Most Useful Web Site" according to every J.D. Power and Associates New Autoshopper.com Study(SM), was ranked first in the Survey of Car-Shopping Web Sites by The Wall Street Journal and was rated "#1" in Keynote's study of third-party automotive Web sites. Inside Line launched in 2005 and is the most-read automotive enthusiast Web site. CarSpace launched in 2006 and is an automotive social networking Web site and home to the oldest and most established automotive community. AutoObserver.com launched in 2007 and provides insightful automotive industry commentary and analysis. Edmunds Inc. is headquartered in Santa Monica, California, and maintains a satellite office in suburban Detroit.
Edmunds.com Corporate Communications
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