Automotive News [sub] reports that the Senate has passed a $2 billion extension to the Cash for Clunkers program, extending the deal through Labor Day. President Obama has already said he would sign the bill. But will it help the taxpayer-owned auto firms that desperately need a boost? Will sales levels continue at their current surging rates? Will fraud stories start popping up as they have in Germany? Who cares. America loves a deal.
The good news, despite the Automotive News [sub] “Cash For Clunker Chaos” subhead, is that none of the automakers are completely out of cars. Regardless, clunkermania clearly took almost all of the OEMs by surprise. In July, Chrysler’s inventory reportedly plummeted from 71 days supply to 30, a huge reversal from the not-so-long-ago days of sales banks and channel-stuffing. But perhaps the biggest surprise is that Toyota was caught napping as badly as GM. Last month Toyota and GM both saw their inventories reduced by 18 days’ supply. But because Toyota started the month at a near-ideal 47 days’ supply, it now finds itself scrambling for vehicles with only a 29-day supply. Thanks to months of weak sales (and despite a long summer shutdown), GM started July with 82 days of supply. That number now sits at 64. Is GM saddled with inventory that doesn’t qualify for the CARS rebate? Possibly, but the only GM model cracking the top ten clunker models is the Cobalt. At number 10. Mind the perception gap!
The Toyota Corolla has overtaken the Ford Focus as the first choice for American consumers trading their government-approved clunker for a federally subsidized new whip. According to Department of Transportation stats, ToMoCo has now captured three of the top five slots on the Cash for Clunkers (a.k.a. C.A.R.S.) hit list (previous version here) : Toyota Corolla, Ford Focus, Honda Civic, Toyota Prius, and Toyota Camry. Or as, the official release puts it, “Four of the top ten selling vehicles are manufactured by the Big Three. Of non-Big Three purchases, preliminary analysis suggests that well over half of these new vehicles were manufactured in the United States.” Did they mention that the “foreign nameplates” are produced in the U.S.? They did not. Nor did they offer a similar analysis of the country of origin for the trade-ins. Guess what percentage of the Cash for Clunkers trade-ins are American brands?
Official Department of Transportation stats as of 4:00 p.m. on Monday, August 3, 2009.
Dealer Registrations:
Number Submitted – 24,238
Number Approved – 20,495
Dealer Transactions:
Number Submitted – 133,767
Dollars Submitted – $563.8 million
Analysts (this armchair pundit included) are busy re-calibrating their expectations of the U.S. new car market post-Cash for Clunkers (a.k.a. C.A.R.S.). The big question hanging over the proceedings: has Uncle Sam [re]created a new car bubble? And, if so, what happens when it bursts (as bubbles are wont to do)? And if so, when? Meanwhile, we’re getting answers to some of the other ponderables, such as who benefits most from taxpayer largess? In a nutshell, not the domestics. Credit Suisse First Boston weighs-in with their take on the C4C tsunami.
The Alliance of Automotive Manufacturers has declared the $1 billion-and-counting Cash for Clunkers (a.k.a. C.A.R.S.) program a success. The org doesn’t want any prospect of limited government (the “where do you draw the line” argument) to derail the four-wheeled gravy train. In fact, the Alliance wants the feds to re-up like a coke addict wants that third line. No surprise there. Still, there’s some interesting new info in their latest press release:
Automakers and automobile dealers have seen a significant increase in vehicle sales and dealership foot traffic since the launch of the CARS or “Cash for Clunkers” program. This increase in vehicle sales is generating important tax revenue for communities where in some cases roughly one-quarter of sales tax revenue is dependent on receipts from auto sales. And while the program has provided much need economic stimulus to the auto industry, it has also yielded significant energy security and environmental benefits.
Amongst Alliance members Ford reports a 9 MPG increase from trade-in vehicle to new vehicle purchase; GM reports a 54 percent increase in small car sales since the CARS program was launched; 57 percent of Mazdas sold so far under the program were highly fuel-efficient Mazda 3’s; 78 percent of Toyota’s CARS sales volume consists of the following vehicles — Corolla, Prius, Camry, RAV 4 and Tacoma, which average a combined 30 MPG; and Volkswagen reports over 60 percent of its CARS sales are clean diesel Jetta TDI’s which get an EPA combined 34 MPGs.
The Wall Street Journal confirms TTAC’s report that Chrysler killed its “Double Ca$h” for clunkers ad campaign because they ran out of popular, qualifying vehicles. “The marketing change comes as Chrysler is struggling with low inventory of its most popular products because of prolonged factory shut-downs and after the success of the government program further depleted stocks at dealerships.” How’s this for a quote? “Unfortunately the problem that we face with Chrysler is the lack of inventory,” ChryCo dealer Bill Rosado told the WSJ. “I can’t believe I’m saying this, I need more Chrysler inventory. My goodness, I’ve got to rehearse that line a couple times.” This gives credibility to Ken Elias’ contention—as yet unreported by the MSM—that Uncle Sam’s entire Cash for Clunkers (a.k.a. C.A.R.S.) program fell afoul of low inventories, rather than limited funds. In other words, the program did not run out of cash. It ran out of cars. Which makes me wonder . . .
AdAge reports that Chrysler is deep-sixing it’s “Double Ca$h” for clunkers ad campaign, some thirty days before the ads were due to expire. “We saw the spike in the interest and decided to change our direction,” a Chrysler spokeswoman told Ad Age. Chrysler is now switching to a “summer clearance” ad campaign. Huh? AdAge doesn’t explore the rationale behind the move, but here’s a couple of theories . . .
TTAC Editor Jeff Puthuff warns:
“Before you play the video of Glenn Beck’s latest loony-tunes conspiracy theory, keep in mind that it’s totally nuts. Here’s the key information debunking it:
1. If you are a consumer visiting cars.gov (the “cash for clunkers” website) the Federal government cannot take control over your computer, nor will it ask permission to do so.
2. The “Terms of Use” statement to which Beck refers in this clip is not from cars.gov. Rather it is a login page for dealer transactions located at esc.gov.
3. The only people who can get login credentials for the esc.gov site are dealers who have been screened and registered for the “cash for clunkers” program.
4. To summarize: the page in question isn’t on cars.gov and can only be used by dealers who have already registered. Consumers won’t be impacted by any of this.”
When it comes to federal teat suckling, Mark Tapscott’s got the inside line. I don’t mean Edmunds and I don’t mean he does it personally; Mark knows a lot about how the beltway boys reach into the taxpayer’s trousers to play pocket pool. So, while Tapscott joins the MSM (and TTAC) in announcing the bogus Cash for Clunkers program’s pre-mature hiatus, he’s out in front re: the C.A.R.S. program’s long term fate. Mark says the bill was secretly written with permanent marker. In other words, the billion dollar (for starters) Cash for Clunker boondoggle’s a keeper. The writer gives five—count ’em five!— reasons for car dealers to be perpetually cheerful about automotive euthanasia . . .
The Alliance of Automobile Manufacturers’ Senior Director of Communications has informed TTAC via email that the CARS (AKA “Cash for Clunkers”) program has NOT been suspended. “All deals concluded before a suspension is announced (if that happens) will be honored,” promises Charles Territo. We’ve also heard that the President is urging Americans NOT to not buy a new car (i.e., go ahead and buy a car) under the program over the weekend.
The federal government has put the Cash for Clunkers (a.k.a. C.A.R.S. program) on hold. Supposedly, they’ve run out of money. The MSM is all abuzz with talk of extending the program, allocating more funds and the bummer of a congressional recess (no action ’til after Labor Day). But there’s talk that the number of clunkers hitting car dealers’ lots or the logjam on getting paid isn’t the real reason for putting Cash for Clunkers on hold. Do the math. The program is good for about 200k to 250k rigs, depending on the average rebate qualification. No way there were that many clunkers traded in over the six days since the program went live (official D.O.T. stats after the jump). The real story is that C.A.R.S. over-stimulated the market for new cars (even without a clunker trade); dealers are running out of new vehicles to sell. Or, more to the point, cars that consumers want to buy.
UK magazine Which? Car reports that automakers in the Land of Hope and Glory have hiked prices, effectively killing the advantages of the country’s cash-for-clunkers (a.k.a. scrappage) scheme. The mag cites three examples: “The price of a mid-range Ford Fiesta has jumped from £11,570 in October 2008 when the car was launched to £13,195 in July 2009—a massive 14% increase.” And “Vauxhall’s new Insignia looked affordable in January 2009, priced at £17,981 but it has now broken the £20K barrier with a list price of £20,430 in July 2009, also a 14% jump.” And “Another chart-topping supermini, the Nissan Micra, was priced 11% higher in July 2009 (£12,395) than in September 2008 (£11,200), although its equipment has been improved.” Said the actress to the Bishop. Yes, well, the conclusion is inescapable. Ish.
Well, possibly more compelling. But first the sale. “I think that we’re past midfield with GM. There are always issues that you have to deal with, but I think we’re progressing well,” Roger Penske tells Automotive News [sub]. The bad news is Saturn’s rebirth isn’t going to be as simple as loading a boat with fun, quirky, never-before-seen-on-these-shores foreign cars and slinging Saturn badges on them. And while the details are being worked out (just how foreign and how quirky are we talking?) Saturn will be doing business as uninspired, uh, usual. “Under the terms of the tentative deal between GM and Penske, the automaker would supply Saturn with Aura sedans, Vue SUVs and Outlook crossover vehicles until at least 2011,” reveals AN. Epsilon, Theta, Lambda, oh my! Saturn hasn’t so much been saved as it’s been frozen in time. And Roger Penske won’t even discuss Saturn’s post-GM future. It looks like Saturn’s dealers are going to have to curb their enthusiasm just a little bit longer.
Our good friends at The Department of Transportation report the latest C.A.R.S. (Cars Allowance Rebate System) or Cash-for-Clunkers clunker stats as of right . . . now.
Total Vehicles Sold: 16,351
Funded to Date: $68,923,000
Passenger Cars Due for Euthanization: 10,114
Trucks Headed for the Crusher: 6237
Meanwhile, we intercepted this communication from a dealer: “I wish you would let us opt out of the cash for clunkers deal. Three dealers on the conference call stated that they were not fucking with this bullshit. You wouldn’t believe the bullshit involved in this. I don’t see this costing us any significant sales. We will waste more time fucking with this than it will ever be worth. The rebates are in place to subsidize the deal. Collecting our money will be a full time job.”
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