The Cash for Clunkers program is fading fast in the rear view mirror and it’s quickly becoming apparent it was all for not. Just as many suspected, the government created a small, unsustainable, bubble in the automotive sales numbers in hopes of providing what some might call a “silent bailout”.

Take a look at this quote:

Manager Adam Silverleib said business was “pretty intense’’ as a result of the federal stimulus program, with the dealership hustling to accommodate customers and handle the piles of paperwork required for them to receive reimbursement on vouchers. “Now we’re kind of back to where we were in the spring,’’ he said.

Interesting to see that the sales are back to where they were now that there isn’t an artificial demand in place. Just to stimulate your memory, here is what the industry was looking at (in terms of sales) this past spring:

“I’ve seen everything except that a Martian is going to run General Motors,” the automaker’s sales chief, Mark LaNeve, said on a conference call. “We’ve been fighting every one of these rumors, and I can tell you they don’t help sales.”

GM beat the average estimate for a 37 percent sales decline, based on a survey of 5 analysts. Purchases by fleet customers buoyed results, while sales to individual consumers fell 45 percent, Detroit-based GM said. Honda was projected to drop 27 percent, based on 4 estimates.

Ford’s slide exceeded the 30 percent average estimate among 5 analysts surveyed by Bloomberg, and Chrysler outstripped projections for a 37 percent drop. Toyota’s decline was greater than the 37 percent average of 4 estimates, while Tokyo-based Nissan’s slump exceeded a projected decrease of 28 percent. April had 26 selling days, the same as a year earlier.

If this dealer is representative of the rest of the nations, automakers are back to sales of 30% to 50% off on a year over year perspective. So, the bailouts and government assistance given to the automakers (the 1st direct loans, second direct loans, and the bailout) was simply to give a lifeline to the industry as they limp along looking for the end of the recession.

There was another interesting comment that should have a huge impact on industry watchers:

Nationwide, customers snatched up 700,000 new cars, most of them foreign-made, and the government ended up paying out nearly $3 billion toward the purchases.

Sorry GM, sorry Chrysler… sounds like you didn’t get your part of pie, though I would be interested to know what constitutes “most.” What percentage was domestic, and what was the brand breakdown of that percentage.

I believe the Cash for Clunkers program is a micro example of our current economic situation. Once the housing tax credit vanishes, so will the buyers. Once the government spending stops, so will the “growth” many say they are witnessing.

The consumer represents roughly 2/3rd of economic spending in the United States and it’s quite clear that the consumer isn’t spending, and if that continues, it would make sense that the economic conditions within the next six months would begin to once again move downward.

As for the car companies, the end of the recession is not yet within sight. If sales do reflect the beginning of 2009, it is a matter of time before they ask for more assistance.

Related posts:

1. Sept. US auto sales fall amid clunkers letdown
2. December Auto sales are miserable, and we knew this, but the surprise of the pack was Chrysler
3. IT vendors to offer 0% financing… Could IT be next in the economic hit parade?
4. Talk about a mixed message on the economy…
5. Since we are talking about the fall of retail REITs, look at the hotel industry.