The days are numbered for your bucket of bolts.
The government's "Cash for Clunkers" program is ending on Monday, as the $3 billion allocated to the auto-industry bailout rapidly runs out.
There have been more knocks on the program than knocks in some of the rickety engines being traded in:
- Dealers are fuming over the government's slow processing of the claims. They have given car buyers as much as $4,500 in instant rebates, yet many of those rebates still await reimbursement. AutoNation (NYSE: AN ) says it's still waiting for $45 million for its roughly 10,000 qualified trade-ins to date.
- In a shot to the jingoistic gut, the most popular car being disposed of is Ford's (NYSE: F ) Explorer. The hottest purchases are for autos made by foreign manufacturers, with Toyota Corollas leading the way.
- Cynics argue that since many of the old cars were owned free and clear, "Cash for Clunkers" is burdening buyers with a new set of payments.
The program is certainly working on other fronts. Sirius XM Radio (Nasdaq: SIRI ) shares have soared since the program started, because many old cars heading to the shredder are being replaced by new cars with factory-installed Sirius or XM receivers.
Even General Motors has shifted out of reverse, with a recent announcement that it will ramp up production to meet demand for the program. Even if GM cars haven't been popular buys under the plan, things have to be working out better under "Cash for Clunkers" than GM's test drive on eBay (Nasdaq: EBAY ) did. The dedicated GM listings received a whopping 632,000 visits in the first week, but they resulted in just 2,400 offers being sent to dealers. There's no data on how many of those offers ultimately materialized into sales.
Life after "Cash for Clunkers" will be interesting for dealers. Prices may have to soften, as buyers no longer count on the $4,500 rebates. Prospective buyers will also once again have the upper hand in the negotiations.
It will also be interesting to see how the auto-parts retailers fare. Advance Auto Parts (NYSE: AAP ) , AutoZone (NYSE: AZO ) , and O'Reilly Automotive (Nasdaq: ORLY ) have been relishing an environment where drivers have to maintain their older cars. Now that some of the more stubborn vehicles are being scrapped, will comps suffer?
Finally, what about gasoline dealers? Gas prices have been inching higher, even as this program's popularity replaces fuel guzzlers with more efficient vehicles. Obviously, crude oil prices are a global matter -- and the improving economies abroad will trigger demand -- but stateside pumpers are likely to get pinched.
What do you think about the "Cash for Clunkers" program? Was it a success or a waste? Let us know in the poll below.
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Nearly $3 billion later, was "Cash for Clunkers" a success?