Cash for clunkers: The hangover

The party’s over and dealers have been reaching for the Tylenol en mass. It was no surprise that sales plummeted after the CARS program was up; the question in everyone’s mind was: for how long?

We’re finally getting at least some partial answers. Auction prices have eased for two strait weeks. That’s the first time this year, according to Tom Webb, Manheim’s chief economist. Before that, prices had been the highest on record since Manheim, the world’s largest car auction company, began tracking them in 1995.

CNW Marketing research said used vehicle sales by dealers dropped 14 percent year-on-year, the steepest decline yet in 2009. The experienced people I talk to on both the wholesale and retail sides of the business see no patterns in what’s actually selling, which perhaps explains the drop in auction prices: caution on the part of wholesale buyers.

On new vehicles, the manufacturers have been cautiously ramping up production to make up for the lowest levels of dealer inventories since 1992, according to industry trade bible Automotive News. Though only something in the low six-figures has actually reached lots, the slowdown in sales has increased the available supply from under 30 days to 53. The trick for manufacturers will be to keep from having to offer massive rebates and incentives to move the metal—again.

JD Powers is forecasting that October’s sales will be down about 6% compared to last year, which is actually pretty good compared to the rest of 2009. The other brokers I know say things are slower than the prior two months, but not bad overall, which I find to be accurate for me as well. Some stability would be nice for everyone.