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Cash for Clunkers Ends With a Bang and a Whimper

And so Cash for Clunkers ends with both a bang and a whimper. The program, which stopped accepting new consumer applications on Monday, was undoubtedly a success. In the third quarter, the White House Council of Economic Advisors said the program would increase economic growth by as much as 0.3 to 0.4 percent, and create 21,000 jobs. Further, the program processed 625,000 applications worth $2.5 billion.

But the last days were troubled, and it's not really over yet. Dealers agonized over their inability to log in to the government's website. The National Automobile Dealer Association (NADA) said it was "getting reports from across the country that the dealer submission website is down." Unfiled applications piled up, and NADA successfully applied for the dealer application extension. "It is imperative that dealers not be penalized by loss of reimbursement for legitimate program sales for reasons outside their control, such as inability to access the Department of Transportation website," NADA Chairman John McEleney told BNET Autos. At presstime, the feds had granted a second, open-ended extension for dealers so that all the paperwork can be entered into the still-faltering government computers.

New car dealers loved Cash for Clunkers, says NADA spokesman Charles Cyrill. But used car salespeople aren't so sure. Used car dealers were doing well before the program started, according to a new IBISWorld survey, but the program accounted for approximately seven percent of the decline in used car sales in 2009. Another loser may have been donate-your-car-to-charity programs, though that's hard to quantify. Some classic car owners bemoaned the loss of parts vehicles.

"Of course, there are winners and losers," said George Van Horn, a senior analyst at IBISWorld. "Dealerships selling used cars will invariably get the short end of the stick, as the program has created a greater number of substitute consumers to purchase new rather than used vehicles."

For the year, new car sales are down too, but not down as much as they'd be without Cash for Clunkers. IBISWorld estimates a sales year of 10.5 million, down 20.5 percent, though it says it would be 9.8 million (and a 25.8 percent decline) without the program. Light trucks were the most popular trade-in under Cash for Clunkers, which means the program did its job of getting gas guzzlers off the street. Both Toyota (expected) and General Motors (not so expected) were among the top beneficiaries among new car sales.

Top-selling vehicles--showing a trend toward small, fuel-efficient cars--include the Toyota Corolla, the Honda Civic, Ford Focus, Ford Escape and the Jeep Patriot.

Photo: Flickr/Dave_7

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