Has the 'Cash for Clunkers' hangover started already?

Yesterday we reported that the 'Cash for Clunkers' scheme had, on the whole, been a success but stated that industry experts had predicted a 'hangover' for the auto-industry following the 'party' of increased car sales.

Well, it appears the headaches have already begun, as Toyota announces that, for the first time ever, it will be abandoning a factory - an American production plant that it jointly owns with General Motors. Not only that, but Nissan and Chrysler have abandoned plans to supply vehicles to each other for sale on global markets.

Toyota's decision to abandon production at the Fremont, California-based New United Motor Manufacturing plant is not completely unexpected, as GM announced earlier this year that it was to withdraw from the venture, but many expected the 'world's largest carmaker' to be able to go it alone.

However in a statement, Toyota said, "Over the mid to long-term, it just would not be economically viable to continue production."

"This is most unfortunate and we deeply regret having to take this action."

Californian Governor Arnold Schwarzenegger expressed his regret at the decision saying, "Today is a sad day in the history of Fremont as California joins the ranks of states adversely affected by the worldwide collapse in demand for automobiles."

Despite the large numbers of Japanese cars sold during the Cash for Clunkers schemes, the Japanese car making firm has seen losses over the past three quarters.

Likewise, Japanese firm Nissan cited the auto-industry downturn as the reason for their scheme with Chrysler falling through. The deal would have seen Nissan supply compact cars for Chrylser to sell, whilst Chrysler would have supplied a pick up truck to Nissan.

However since the deal was signed, Chrysler has filed for bankruptcy due to the massive downturn.

Both companies cited "significant changes in business conditions since the projects were announced" for the deal's collapse.

Despite the new lease of life the Cash for Clunkers scheme gave the US auto-industry, things appear to be quickly returning to how they were earlier in the year.

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