Cash For Clunkers boosting used car sales as well

August 10, 4:19 PMBirmingham Autos ExaminerJonathan Alexander

Previous

2 comments Print Email RSS Subscribe

Subscribe

Get alerts when there is a new article from the Birmingham Autos Examiner. Read Examiner.com's terms of use.

Email Address   Include other special offers from Examiner.com Terms of Use

The government-funded Car Allowance Rebate Systems (CARS), or "Cash For Clunkers" as it is better known as, helped raise July's new car sales numbers by more than one million units, but the program is also having a positive effect with used car sales.

Dealers are reporting that customers who come in to take advantage of Cash For Clunkers but find that their vehicles do not qualify for the program are instead opting to trade in their vehicles towards late model used cars. 

This is due to the fact that, with the progrram having such strict regulations on trade-ins (they must average 18 MPG or less), many people are not qualifying for Cash For Clunkers and are determined to not go home empty handed so are deciding on low mileage low model vehicles as an alternative.

“Two out of three people don’t qualify for the program,” Bill Wallace, owner of Wallace Automotive Group, told Automotive News. “You might as well show them what they can get for their money.”

Due to the increased demand used vehicle prices have been on the rise as dealerships attempt to capitalise on the Cash For Clunkers craze. July’s Used Vehicle Value Index checked in at 115.4, representing a 5.5 point increase from July 2008. As a result of the higher prices, dealers are pocketing a greater profit on pre-owned sales. The average margin on a used car sale during the second quarter was 10.8 percent, up from 10 percent in Q2 2008.

Although the used car market is thriving at the moment, sales are expected to drop significantly once the Cash For Clunkers program expires.

You can follow Jonathan on Twitter and recieve instant updates on news and articles concerning the automotive industry at www.twitter.com/examinerjon. You can also check out Jonathan's past work at www.examiner.com/x-16611-Birmingham-Autos-Examiner.

Sponsored link: Drive a brand new car for free or get paid to drive your current vehicle by applying advertisements.