
2009 was a tough year for the auto industry to say the least. Not only did we witness massive government bailouts, epic bankruptcies and a precipitous plummet in sales, but over 1,500 dealerships shuttered their doors. When I was back in my hometown of Cleveland, OH over the holidays, I notice at least 6 large dealerships throughout the city that had closed up shop, with all of the remaining ones seemingly relegated to the ubiquitous "Auto Mile" of car lots mostly owned by large conglomerates. A sad state indeed.
Current estimates peg the total number of new cars purchased last year at just around 10.5 million, which is about 7 million shy of the high reached in 2000 and 2 million below sales in China (yes, we're no longer numero uno). The Cars Allowance Rebate System (CARS) program, aka Cash for Clunkers, dolled out $2.8 billion in $3,500 - $4,500 rebates and supposedly resulted in 700,000 new car sales. According to several leading analysts, this was just enough to keep the industry on life support while everyone scrambled to figure out how to infuse more cash into daily operations. Even though many hailed the program as a success, it had its detractors as well, and for good reason. Edmunds concluded that really only an additional 125,000 cars were sold that wouldn't have sold otherwise, resulting in a taxpayer burden of $24,000 per vehicle.