Clunkers program cut supply of used cars

The Cash for Clunkers program has decreased the supply of used cars and raised their prices, Virginia dealers and buyers said.

"It's taken the threeand fourand five-thousand-dollar cars off the market," said Tim Higginbotham, president and owner of New Millennium Auto Sales in Hanover County. "The people that can't afford a car payment, that's the car that they buy."

"Please explain to my [two] kids, each of whom will soon be in the market for a used car, why the prices are up because supply is down, a result of all those viable 'clunkers' rendered scrap by decree," said Robert H. Brick Jr., a communications technician from Chester.

Auto dealers reported 690,114 sales under the federal government's $3 billion Cash for Clunkers rebate program, according to final data that the U.S. Department of Transportation released yesterday.

Dealers have claimed rebates totaling $2.88 billion, the agency said.

In Virginia, auto dealers have applied for $98.5 million in rebates.

The federal auto-sales promotion gave rebates of up to $4,500 to owners trading in older gas-guzzling cars and trucks for new, more fuel-efficient vehicles.

"We're looking at close to 25,000 [sales of new] vehicles in Virginia alone," said Michael Allen, director of public affairs for the Virginia Automobile Dealers Association.

The new-car sales also promoted more used-car deals.

"McGeorge is also experiencing record used-car sales during this period, with 124 deals during the past 30 days," said Nick Scola, general manager with the local McGeorge Car Co. Inc. "Activity breeds activity."

The nation's used-car inventory has been contracting during the recession as individual owners, as well as rental-car and car-leasing companies, held on to vehicles rather than trade them for new ones.

Wholesale used-vehicle prices rose for the seventh consecutive month in July, up 17.8 percent since December, according to Manheim Consulting's monthly used-vehicle-value report.

"It's driven the price of used cars way up," said Charles Devegnee with Bavarian Auto Sales, a wholesale used-car company in Henrico County. "Where we were paying 10,000 [dollars], you're now paying 12 or 13 thousand" for the same sort of vehicle.

Goochland County-based CarMax Inc., the nation's largest retailer of used cars, would not discuss the impact of the Cash for Clunkers program on its business. CarMax sold more than half a million cars last year.

Sales under the program ended Monday. Cars made in the U.S. topped the most-purchased list, from the Ford Focus to the Toyota Corolla to the Honda Civic.

"American consumers and workers were the clear winners thanks to the Cash for Clunkers program," said U.S. Transportation Secretary Ray LaHood.

"Manufacturing plants have added shifts and recalled workers," LaHood said. "Moribund showrooms were brought back to life and consumers bought fuel-efficient cars that will save them money and improve the environment."

For the first six months of 2009, U.S. sales were running at the rate of 10 million new vehicles a year. Last year, dealers sold slightly more than 13 million new autos.