Auto Industry set to be taken off Life Support

With the wildly popular Cash for Clunkers program coming to an end, what will happen next for the automakers? Dealer incentives. combined with the clunker rebates, drew in loads of fence sitters, but the outlook going forward is not pretty. Dealers will likely have to increase incentives for an extended period of time, as they wean the American public off of the clunkers program. The short run of high margin sales will give a temporary reprieve to the devastated industry, but salesmen will soon return to their Maytag repairman postures. Firms that have ramped up production in response to the program’s success will soon be faced with excess inventory and the need for additional layoffs.

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