PrintSeptember 22, 2009
Surprsise! Auto sales crash in September (Updated)
Some not so random fundamental laws of life:
a] what goes up must come down;
b] for every action there is an equal and opposite reaction;
c] there is no such thing as a free lunch;
...all of which leads to this not so surprising news from Edmunds.com
"The best month of the year for car sales is being quickly followed by what could be the worst month of the year," noted Edmunds.com CEO Jeremy Anwyl. "Cash for Clunkers was supposed to prime the pump, but that is a physics concept, and economics is quite different. Demand has dropped off significantly since the program ended."
Yeah, I know. I was surprised too.
And now that people traded in their so called clunkers, many of which were probably (almost) paid for, they now have a new (usually higher) monthly auto payment, not to mention a future higher income tax bill thanks to that "bonus." Oh, you didn't know that cash back was taxable? It is.
More economic fall out from cash for clunkers is sure to follow. Positive or negative? Will new car owners with higher auto payments have the extra cash for those Christmas presents? Will those lower income workers, who traditionally have relied on lower cost used (uh, pre owned) vehicles for their transportation needs have trouble finding a car they can afford because those cars, officially designated as clunkers, were allegedly crushed as the law demands? Or will auto workers and auto sales personnel have enough extra cash to pull the country out of recession?
We shall see in the coming months how this artificial cash for clunkers stimulus affects overall auto--and other--sales.
Update: I've noticed in the comments section that some commenters strongly disagree with my assertion that the $4500 clunker rebate is taxable. My very conservative, very reliable CPA said it is taxable (and no I didn't participate.) But the government site says no, it isn't taxable.
So....what is the story? Or will we have to wait until April 15 to find out?
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