Cash for Clunkers' program provides windfall for some, high prices for all

(August 2009) warns consumers that car prices are climbing as the "Cash for Clunkers" frenzy is influencing the marketplace.

"Since the program launched, we've seen that shoppers are getting less of a discount off sticker price for new cars," notes Senior Analyst Michelle Krebs in her report on Edmunds' "In some cases, they are choosing less expensive trim levels and option packages than had been typical in recent months, but paying more for them."

The below chart sets forth comparisons of pricing and discount percentages for each of the five most popular vehicles in recent "Cash for Clunkers" transactions. (Data on other models is available upon request.)

Purchased Before Clunkers Program
Purchased During Clunkers Program
Average MSRP
Average Sales Price *
Average MSRP
Average Sales Price *
Ford Escape
Ford Focus
Jeep Patriot
Dodge Caliber
Ford F-150

*Does not include customer cash incentives.

"In truth, this program launched at the worst possible time of the year," opined CEO Jeremy Anwyl. "The annual summer sell-down typically creates a rush of activity for the industry, and this year that rush came right after automakers cut production in response to the floundering economy. It's a simple case of supply and demand, bolstered by a reduced level of negotiation on the part of excited clunker traders. Add to this the automakers' unseasonable reduction in incentives and the message is clear: if you buy a car this summer, you should expect to pay higher prices."