Is Cash For Clunkers cannibalizing future sales?

Brennan
Brennan

When car manufacturers fell in love with rebates, some car dealers found that these programs didn't increase sales very much; they simply drew the shoppers who intended to buy in the near future. I wondered if Cash For Clunkers might be doing the same thing, leading to a sharp decline in sales after the program ends. I had the opportunity to pose this question and others to an expert in the field, AOL Auto's Editor in Chief Reilly Brennan.

Do you think Congress will renew the program?
Yes, Brennan replied. He said that, after the incredible losses dealers suffered recently, the Cash For Clunkers program has affected them like a market Oxycontin, and it will be painful to wean them off the drug. He also expects a Cash For Clunkers Version 2 proposal, perhaps with less funding, in the fall.

What about the notion that this program is cannibalizing future sales?
"The sales vacuum is a concern," according to Brennan, "but many believe the opposite has happened- that there was a pent-up demand over the past six months -- so instead of pulling late '09 sales early, this could be pulling early '09 sales later on." He believes that plenty of customers are still out there ready to take advantage of the program when it is refunded.