As Cash for Clunkers Starts, Dealers Hope to Clear Lots
After many months of agonizingly slow sales, automakers and dealers are anxiously counting on the cash-for-clunkers program, getting under way officially on July 27, to help clear their lots.
They've got good reason to be nervous. With sales running at less than 10 million units annually — the lowest level in more than three decades — there is still a mountain of inventory sitting with dealers around the U.S. despite deep cuts in production, not only by the bankrupt General Motors Corp. and Chrysler Group LLC, but also by companies such as Toyota, Ford and Nissan.
With production reduced, dealers have been working off their swollen supply in recent months and many have offered substantial deals. But the inventory problem has been complicated by widespread dealer shutdowns — no change in inventory but fewer dealers to sell it — so the correction process is far from complete. Carmakers had nearly 3 million units on hand at the end of 2008 and could have any many as 2 million units in stock by the end of 2009, according to an estimate by the consulting firm PricewaterhouseCoopers.
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