(August 2009) The Cash for Clunkers party is over, and now the auto industry is likely to experience a painful hangover. Edmunds.com anticipates a steep decline in sales in the coming weeks based upon a significant drop in "purchase intent" behavior of its Web site visitors.

"Current purchase intent is down 50 percent from the Cash for Clunkers peak, and down 11 percent from the June average," noted Edmunds.com Senior Analyst David Tompkins. "Day by day, intent is slipping: Sunday activity was down 21 percent from Saturday, then Tuesday activity was down 16 percent from Monday."

"Cash for Clunkers distorted the market in a way that benefited the industry for four weeks. Now the payback begins." observed Edmunds.com CEO Jeremy Anwyl. "Sales were stimulated at the start of the year's prime buying season, just when they were building on their own. People rushed into purchases that many would otherwise have made later this year. The result will be lower sales in the weeks to come."

"The sales surge depleted inventories and pushed up prices. Additionally, with inventories at low levels, many manufactures have little reason to be generous with incentives. Limited selection and higher prices will create further downward pressures on sales," noted Edmunds.com Senior Analyst Jessica Caldwell.