16 August, 2009

'Clunker' sales borrow from 2010 market

Detroit News
The unexpected success of the government's "cash for clunkers" program is boosting sales dramatically -- but is probably pulling forward some purchases that would have taken place next year.

Forecasting firm IHS Global Insight has increased its U.S. auto sales estimate for this year because of the robust response to the government-funded plan. But it is paring its 2010 forecast.

George Magliano, director of North American auto industry research at IHS, said the annualized selling rate this month has spiked above 12 million cars and light trucks, after languishing below 10 million for most of the year.

Although Magliano expects the selling pace to fall back after the funds for the incentives run out, IHS has raised its full-year sales forecast to 10.3 million light vehicles from 9.8 million previously.

But IHS is shaving its 2010 sales forecast to 11.1 million from 11.3 million, reflecting the anticipated "payback" from the incentives-fueled boom.
Read more.

Surely this can come as no surprise to anyone that hasn't smoked crack. Our government routinely mortgages current entitlement programs on the backs of future victims. Why wouldn't they fashion a device intended to trick the American people into believing one of their "economic recovery" programs actually worked? Listen to the early reports prior to extending the program and dumping more money into this giveaway.
Looks as though they can't claim total victory however. The union and the American auto industry wasn't the greatest benefactor of the new car incentive. What's the politically correct phrase? Oh yeah, unintended consequences.

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