The Cash for Clunkers program is finishing its final weekend. By all accounts, the program has been a tremendous success, driving traffic back into tumbleweed-strewn showrooms, helping to cool the planet and reanimating idled automobile factories. Well, not by ALL accounts. The Wall Street Journal leaves no word unminced in its evisceration of the C.A.R.S. program: “The idea that a temporary subsidy program will launch the auto industry onto some new, higher sales and production plane defies logic.” As we shall see—or not—come September. Meanwhile, the media’s fixation with the NHTSA’s inability to send dealers rebate checks within a few weeks defies logic. For one thing, dealer ineptitude. For another, the NHTSA had three weeks to set up [what turned out to be] a $3 billion program. And lastly, it’s the federal government. What did anyone expect? Prediction: the dealers will get their money, the industry will gloat over August’s sales figures, and then it’ll be back to non-business as usual, until the housing market recovers. Whenever that is.
The idea that a temporary subsidy program will launch the auto industry onto some new, higher sales and production plane defies logic
I agree. Why would anyone expect a temporary discount program to goose future sales after the program ends? That makes no sense. Of course sales will dwindle back down to previous levels. They may be healthier sales due to tighter supply and thus few discounts, but even that is not guaranteed. Consumers in the market for a would have been best served by buying a leftover 2009 back in May before this program kicked off when supplies were high. Now there are few 2009s left, so there won’t be a panic at the dealer level to blow them out, and the 2010s won’t have similar discounts for a while.
Most reports put the increase in August sales at 2%.
$3,000,000,000 and only a 2% increase…what a horrible return on investment.
I predict that auto sales will be dead the rest of the year…negating ANY boost seen in August. Creating an artificial boom to get the economy going is/was a terrible idea.
Has anyone run real #s to see if this actually helped or hurt the domestic manufactures? I say it hurt.
Here is my logic:
1) I’ve read that the majority of cars being traded in were old US makes. So that helps to dry up the profitable parts/service business for the domestics
2) I’ve read that the majority of cars being purchased were foreign brands so that would seem to line Toyota’s/Honda’s pockets with a fresh infusion of cash/profits.
3) We’ve seen for years (decades actually) that the domestics lose money on cars and make money on SUVs and Trucks. So unless GM and Chrysler magically figured out how to be profitable on small cars, wouldn’t every sale just be a cash drain?
So did we borrow $3B from the Chinese just push GM, Chrysler and Ford closer to more government fundulation?
@lw:
I’d venture to guess that the overwhelming majority of these trade-ins haven’t seen the dealer’s service or parts counter for a long time. Independent mechanics and Auto Zone/O’Reilly/etc. will be impacted more than the OEM’s.
Moving comment to the right thread. My bad.
Most of our clunker trades were being kept on life support by their owners. It is amazing what you can get used to.
The Ford dealer about 20 miles from me as of today had not a single F-150 on his lot, and only one fusion, no focus, and no rangers which surprised me since he adds on those sticker mark ups like paint sealant and fabric protection. He also owns the dodge/Honda,and Chevy/Cadillac dealerships too. And puts the same mark up on all of them. The cars on the lot had $995.00 for the mark ups. What a rip off and they got away with it because of the c4c where people just thought they were getting a great deal. And each car lot had lots of clunkers i wouldn’t mind owning. I wouldn’t at all be surprised to see it reinstated again once they see cars sells are virtually nil the rest of the fall and winter.
Here’s how I see it.
The complaint that domestics played second fiddle to foreign manufacturers is dubious and unsubstantiated at this point.
Given that all auto companies receive parts from a common cadre of suppliers is helpful regarding their financial security going forward.
The increase in Tax money collected by states due to increased in sales is helpful.
Many of these sold vehicles need to be replaced so dealers have something to sell.
Dealers have the opportunity to right size inventory to whatever they decide they need going forward.
I would concede that if the economic situation were different, C4C would be a waste of money, but given where we are at economically right now it looks to me that it was money well spent.
Prediction: the dealers will get their money, the industry will gloat over August’s sales figures, and then it’ll be back to non-business as usual, until the housing market recovers.
Good. We’re trying to buy a car without a clunker and it’s killing us.
Sales may well stink for the next 30-60 days because there is so little inventory on the ground. Our local Chrysler-Dodge-Jeep dealer has two Chryslers, twenty-four Dodges and eleven Jeeps left in stock. Six of those Dodges are very left over 2008 Sprinters. Meanwhile, they show ZERO minivans, ZERO Sebrings and exactly FIVE cars of any kind. Basically they have two Chrysler 300s, a few Chargers and a handful of large trucks left. The Chevrolet-Cadillac dealer across the street has a grand total of eight cars in stock, three Cadillacs and five Chevrolets. The Toyota dealer in that same auto mall area has twenty six new vehicles of any kind showing in stock. Six of those are Tundras, which almost nobody wants. Normally that Toyota dealer has around 100 new vehicles in stock.
Needless to say, the next month or two is not going to be a good time to drive a hard bargain on most new cars. The supply chain is nearly sold out.
im a salesman at a bpg store out here in southern cali. and we sold out of all our caynons, and acadias, and a few enclaves that were under the 45 grand c4c price limit. and we sold all oour g3’s and g5’s and g6’s. and most of our sierras. so all we have left are moslty yukons xls, and 4 denalis. and the rest is some used cars and extended cab sierras, which no one really wants. and like 3 hd’s. and the chevy store next door which is the same owner as my store sold all of their colorado’s aveos hhr’s… well all of the cars chevy makes. all they have left are a row of extended cab silverados and suburbans and some tahoes. we did pretty well i think. and the people that tried to do clunkers that didint qualify we still got theim in to a car because they used their car as a trade in
I think that the value of the C4C program is that it moved a lot of inventory that would have just aged to rust otherwise.
Production had stopped but until the lots were empty there wasn’t going to be any reason to start it up again.
Perhaps this was done at the cost of future sales, but at least new production can be set at an appropriate lower level, and newly-built product won’t be competing with these new-old-stock cars that were built pre-crash
Dave M:
I’m currently negotiating for a CPO car and find I have a ton of leverage. They weren’t eligible for C4C, and the flood gates for off-lease ’07’s are about to open.
You can name your price.
No point in arguing the unknown as the evidence will be in in the next couple of months. It will then also be interpreted a minimum of two entirely different ways for another few. Did they sell less than expected in Sept because of pulled up sales, or lack of inventory?
Me, I think the program helped a lot more than many want to give it credit for. Pull up sales? Well if you define a pull up as “from the day after hell freezes over” to now a pull up, it sure pulled me up. Wasn’t thinking about, and definitely did not need a new car. Getting me to open my normally locked tight wallet and put some money into circulation should have a positive affect on the over all economy.
Reports are inventory is low. So the factories will need to crank out more cars. That means employees and vendors get paid.
Sounds like it is working as intended.
The issue with this, as with all distortion-causing behavior, is why not more? If we all agree that the enviro aspects of this were negligible, then why limit the stimulus to clunkers? And why stop now? If $3 billion for a very limited pool of buyers was good, then $30 billion for everyone should be great, no? Hell, why not $300 billion split between the bank accounts of every voter? Surely that would get things going!