U.S. Government “Cash For Clunkers” program spews smoke
Ha! Just when you thought it was safe to go back in the water… Du-duh… du- duh.. du-duh-da-da-da-da…
I recently decided to put the U.S. Government and current administration to the test today by participating in the CARS or “Cash For Clunkers” program. This program released by the current administration that will remain unnamed was purportedly designed to “take lower fuel efficiency cars off the roads and replace them with newer, more fuel-efficient models by providing buyers of new cars with a cash discount incentive.” Fine, I’ll bite. Sounds logical, right?
Today was the final day the offer was valid and, needless to say, I did NOT drive home in a new car today but in my existing, gas-swallowing, emission-spewing, paid-for clunker. What I learned about the sincerity and legitimacy and actual viability of this government program didn’t surprise me in the least.
The bottom line is: the CARS program was an acronym for “Come And Receive Shit.” And I did just that.
First of all, my 1995 Nissan Pathfinder qualified with flying colors. The dealer explained to me in a little more detail about the process involved with them being able to offer the CARS incentive of up to $4500 USD off of the price of a new vehicle to customers. It is the stuff that only a government program could be made of, full of minute details that are sitting in discreet places like little landmines ready to derail the deal around every turn. In fact, a single character difference between several discreet copies of information contained within paperwork from registration and insurance documents to whether you’ve ever been a prominent pop singer in a third-world country can take the incentive right off the table.
Essentially, the dealership told me (I have a friend who works there who I was dealing with), that the government had promised them this incentive, then found 8 ways ’til Tuesday to get out of actually paying the incentives by creating a process that was so convoluted and constrained that I’d be SHOCKED if 1 in 1000 customers even could meet the qualifications. I, however, met every qualification standard to receive the incentive, yet the dealer was unable (unwilling rather) to provide it to me because of how it works.
The government offers the incentive as a credit to the dealer. The dealer takes the hit up front and the government promises to reimburse the dealer for cars that meet “the standards.” The particular dealer I was at today complained that they had an entire back lot of cars that met said incentive qualifications, yet they remained un-reimbursed for the vehicles. Because of this, the dealer was unwilling to take any more risk and thus was not honoring qualified buyers incentive discounts even when they clearly meet the requirements as I did. So basically, the man no pay, the dealer no deal. In short, what the government DID succeed to do was to get people back on to car lots for the first time in a long time. I, like many others, otherwise would never be seen sitting around for hours on end waiting to be lied to, shifted and frustrated into a less-than-good deal.
Incidentally, I am contemplating a new car but fled the dealership and left my mobile number they can call with their best deal. If not, I have a way home in the car I came in.
So how many shit-spewing cars were actually taken off the road? It’s dubious that a significant number were and I am salivating to read the reports. Like I said: at the very best, people are back on car lots now that the government uses a piece of them. But in the end the CARS program was no better than the old bait-and-switch tactic. Al Gore can count on choking down a lifetime of toxic emissions while polar bears drown in melting seas of ice.
FOLLOW G+S
I’ll sell you a BMW. We’ve only done one so far, and I’m sure we haven’t been paid. We’d be willing to do another, because we can stand to be owed 9K and have 2 P.O.S.’s taking up space on our massive lot.
What do you want?
Funny that they’re stopping the program because it’s been SOOOO popular then – I’m sure the dealerships are waiting on payments, because the govt was not prepared for this to be as huge as it was. I’m interested to see if it all gets taken care of or if the story 6 months from now is that dealers are still waiting to get paid.
I have heard that the mpg exchange between what’s been turned in and what’s been sold is pretty significant, but obviously it’s just a drop in the bucket since the program didn’t last very long.
In addition quite a few manufacturers have rehired or extended hours to existing employees due to the increase – GM, Ford, etc.
I also heard that the Ford Explorer was the most turned in car and the Toyota Prius the most sold . . . .
I would find it hard to believe that any govt could pull a program off like this where it’s so easy you just walk in, sign up and walk out – but it probably would’ve helped had you not gone at the 11th hour . . .
Was this really a well-conceived incentive?
People are buying cars now…what will that do to demand for vehicles after the incentive is gone? American automakers ramped up production and paid out overtime to keep up with demand…but this demand is completely artificial. Potentially these people could be out of work now that the program is finished. What happens when we have excess inventory sitting on the lots for the next several years because people bought cars now?
Retail spending has tanked since this program was enacted. So people that would have probably spent their money otherwise funneled it into the car industry (buying mostly imports mind you) instead of buying other goods/services.
What will this do for the auto mechanics? Certainly this will take a lot of business away from them as there will not be as many older cars on the road for them to service.
What about the poor? Our government just sucked about 3/4 of a million cars off the road, many of them in perfectly good working order. This will dramatically affect the used car market. Also, many of these cars could have been donated to the poor. Instead, the put a glass solution in the engine to seize it up and ruin it forever and junked the cars.
Speaking of junking the cars, what will this do to to the auto parts market? They aren’t even cannibalizing these “clunkers” for parts. What about people with older cars that need replacement parts? We’ve greatly reduced their ability to obtain them, as well as killed the demand in general for used parts as new cars typically don’t need them.
What I’ve discussed is just the tip of the iceberg. This was a completely ILL-conceived and poorly thought out plan. But that’s the government’s m.o., right? They helped their buddies in the auto unions out short-term…and the dealers and the rest of us (i.e. taxpayers that funded this) are going to be left holding the bag. Not to mention that tons of people bought new cars that they probably didn’t need and took on loans that they might not be able to afford…unnecessary debt is what got us into this whole mess in the first place.
Hooray government intervention!
@FreddyV
You’re comparing apples and oranges – you’re talking long term planning, etc. This program was intended for a quick jolt to the economy, which is necessary in the complete downward spiral we found ourselves in.
This was not intended to be a national ‘volkswagon’ plan for car purchasing for ever more.
Now, point by point:
American automakers ramped up production and paid out overtime to keep up with demand…but this demand is completely artificial. Potentially these people could be out of work now that the program is finished
– the program is already over – the car makers know this. If they start pumping out hundreds of thousands of cars despite the program being over, their stupid. As for the people who could be out of a job – this program got people more hours/more work and brought some back to their jobs – so they got more than they would’ve without. So you’re argument is don’t give them anything, because they won’t have it forever? If anything, this is an argument for keeping the program going. The same applies to your statement : what will that do to demand for vehicles after the incentive is gone?. That’s the way of the world isn’t it? So you should sell nothing because the demand may one day decrease?
Retail spending has tanked since this program was enacted. So people that would have probably spent their money otherwise funneled it into the car industry (buying mostly imports mind you) instead of buying other goods/services.
– Retail spending tanked LONG before this program was enacted. If you look at past recessions, it’s usually the car industry that helps lead the country back. In addition, it’s heartwarming that you’re so concerned about other peoples prioritization of expenses, however it’s not really our concern, nor is it likely that someone who can’t scrounge up the cash to pay rent is buying a new Toyota. Regardless, you could say this about just about anything – online porn, movies, etc. It’s a straw man argument. As far as imports, I agree, most are going into imports, which is too bad. But if the government restricted it from imports, then you’d have people in states where they build BMWs, Toyotas, etc. complaining because import or not, we’ve got jobs and suppliers etc. all reliant on those makers also.
What will this do for the auto mechanics? Certainly this will take a lot of business away from them as there will not be as many older cars on the road for them to service.
- another straw man. First off, the program hasn’t gone long enough to even begin to worry about this, but regardless – how many shops are currently flooded with 1994 or earlier cars? I haven’t looked up the stats, but my guess is that most places are busy servicing cars that are 10 years old or less.
What about the poor? Our government just sucked about 3/4 of a million cars off the road, many of them in perfectly good working order. This will dramatically affect the used car market. Also, many of these cars could have been donated to the poor. Instead, the put a glass solution in the engine to seize it up and ruin it forever and junked the cars.
- I don’t know you or your politics, but I’m wondering if the question ‘what about the poor’ is often the first question you ask yourself when confronted with legislation choices. If so, bravo. Again, I don’t believe there’s been nearly enough of this program for you to stop seeing people selling their used cars. Dramatically affect? Come on . . . I agree, donating to the poor would be great. But how much legal bs would be involved for that to be done? And as if there’s not enough paperwork involved, add to it title transfers, plates, insurance, etc. Let’s not forget that most of the poor can’t afford to run and upkeep a car, insurance, registration, etc. let alone buy one.
Speaking of junking the cars, what will this do to to the auto parts market? They aren’t even cannibalizing these “clunkers” for parts. What about people with older cars that need replacement parts? We’ve greatly reduced their ability to obtain them, as well as killed the demand in general for used parts as new cars typically don’t need them.
– this is incorrect. The yards that these cars get sent to are stripped of anything that can be reused, resold, etc. ‘We’ve GREATLY’ reduced? Seriously? With your ‘greatly’s’ and ‘dramatically’s’ you’d think that 2 out of 3 Americans just took advantage of this program in the short time it existed.
Bottom line – it gave a much needed injection into the car industry, the dealerships, suppliers, etc. It gave a lot of people a new, more efficient car. They’re probably saving a lot of money at the pump since most were going from a truck/suv to a car. The program was intended to be a quick jolt to the stagnated economy and to get a lot of high polluting/gas guzzling cars of the road. It met those intentions and made a lot of people happy, as seen by the use of the plan (of course there will always be folks like Jay who weren’t please, but as his father loves to say – ‘life’s a bell curve’)
Is any plan fool proof? Does it have it’s issues? Sure, but it’s being closed down before they can really iron out the kinks, etc.
If only the war in Iraq was handled the same way . . . .
@socialist_bob
Your argument would be more compelling if it were based on economic reality instead of political ideology. Long-term, this program is disasterous. This is problem with Washington…their horizon is typically only 2 years…the next election.
http://www.nytimes.com/2009/08/14/business/14ford.html
“Ford said on Thursday that it would add 10,000 vehicles to its production schedule in the third quarter and significantly increase its fourth-quarter output as well. The company now plans to make 570,000 vehicles in its North American plants during the last three months of the year.”
Clearly you overestimate the intelligence of American automakers. Did you not notice them, hat in hand, asking to be bailed out a few months back?
http://money.cnn.com/2009/08/13/news/economy/retail_sales_July/
“Retail sales fell in July after two straight months of gains, the government reported Thursday, a drop that surprised economists. Without car sales from the “Cash for Clunkers,” the numbers would have been even worse.”
The second half of this statement is ridiculous…these people now have $500/month car payments to deal with. But note the first half…my point exactly.
http://autos.yahoo.com/articles/autos_content_landing_pages/1036/top-cash-for-clunkers-trade-ins-and-new-cars/
“The number one vehicle destroyed under the Cash for Clunkers program, the Transportation Department says, was the Ford Explorer (1998 edition). Number two, the Ford Explorer (1997). Number Three…you guessed it. The ‘96 model.
The top eight, Jalopnik reports, were all SUVs. In fact, they were all various editions of the Ford Explorer and Jeep Grand Cherokee. A pair of late ‘90s minivans, the ‘97 Ford Windstar and ‘99 Dodge Grand Caravan, round out the top ten. All ten were domestic vehicles.”
These aren’t exactly 1994 or earlier cars. New cars don’t require as much work typically. As cars age, you typically have to spend several hundred dollars to $1000 or so each year to keep them running. As someone with a 7 year old car, I can attest to this.
http://www.reuters.com/article/newsOne/idUSTRE57F12O20090816
“Volunteers of America and other charities that receive tens of thousands of cars each year said such donations have quickly fallen up to 12 percent — and fear a 25 percent drop eventually, or over $100 million — as owners rush to trade gas guzzlers for new fuel-efficient models while federal rebates last.”
http://www.baltimoresun.com/business/bal-clunkers-0728,0,3093927.story
“Not all auto recyclers are relishing the government’s new cash for clunkers program, which requires car dealers to destroy the gas-guzzlers they get as trade-ins from new car buyers.
Used engines and drivetrains are a big part of recyclers’ income from each scrapped car, and under the federal program those engines must be destroyed. The idea is to promote fuel efficiency and help automakers, but it comes at a time when more than a dozen U.S. auto parts suppliers have filed for bankruptcy this year.”
http://www.cbsnews.com/blogs/2009/08/05/business/econwatch/entry5217824.shtml
“Sadly, the cash-for-clunkers program requires that vehicles traded in have their engines destroyed. This will raise the costs of used vehicles for poorer Americans. It will also raise the cost of used U.S. vehicles around the world: Cambodians are less likely to upgrade to newer, safer, less polluting, and more fuel-efficient used Corollas.
Perhaps the need to bail out a struggling U.S. automobile industry is enough to justify renewing the program, even though four out of the five top sellers are Japanese. But it’s a bit silly for politicians to claim that cash-for-clunkers can be justified by environmental or economic concerns, and even sillier for Americans to pretend to believe them.”
http://www.ehow.com/how_2325207_donate-car-salvation-army.html
“Keep in mind that the process is a simple one that only takes a few minutes to activate.”
Donating to the salvation army is not as difficult as you’d think.
I notice that you keyed in on a few points to support your argument and disregarded the rest of the information. My point is that the government is not omnipotent and does not and can not predict the fallout from their intervention in the market place. A few billion dollars of taxpayer money was dumped into a program that by any objective standard has been a failure. This money could’ve been better spent by the people that earned it. Instead, we redistribute it around to those that are more politically favored.
And again…what got us into this mess is too much borrowing and too much spending. You cannot fix a problem caused by too much borrowing and too much spending by doing more borrowing and more spending.
And for the record, I am not some neo-con mark, and I am not in favor of the status quo. Just because I don’t agree with the current administration’s vision of change does not mean that I do not myself desire change.
Yes I do have my own system of beliefs; what I have done is support them with objective facts, not just feelings or notions.
No worries, everyone is entitled to their opinion. I often get called a “racist” or “supporter of the status quo” when I disagree with Obama, so I know how you feel.
@PAJudgmentDay A few billion dollars of taxpayer money was dumped into a program that by any objective standard has been a failure. This money could’ve been better spent by the people that earned it. Instead, we redistribute it around to those that are more politically favored.
— this is clearly why these discussions are pointless. It all goes back to taxes, and you’re entitled to see everything through that lens. Obviously nothing I say will change that. I’m just glad you’re able to be on the internet, drive on a paved road to work and drink water that won’t kill you.
@PAJudgmentDay
maybe Jay missed some copy and pasting while he was out on the ledge but I didn’t see anyone call you a racist or a supporter of the status quo. Sorry if I missed that -
@acroopnc1
I fail to see the connection between taxing people to provide clean drinking water and taxing people to subsidize the purchase of a new car for someone else. I mean, obviously the person being taxed couldn’t possibly have any idea how to spend their own money…maybe pay for a good or service that they personally find useful…thus sending clear signals to the marketplace which goods and services are desired and which aren’t. Maybe you can enlighten me.
p.s. you stopped copying a bit too soon and missed my point entirely, so I will quote myself “My point is that the government is not omnipotent and does not and can not predict the fallout from their intervention in the market place.”
http://cbs2chicago.com/local/Cash.for.clunkers.2.1155470.html
“Out of 142 deals they owe us for, we’ve gotten paid on seven,” Lou Tornabeni of Ettleson Hyundai said.
“We had 102 cash for clunkers,” Carm Scarpace of Westfield Ford said. “We’ve been paid for one.”
With each Cash for Clunkers deal worth between $3,500 and $4,500, many dealerships are anxiously awaiting their government payday.
Some, like Advantage Chevrolet, which sold cars up until the last minute, have more than half a million dollars on the line.
“It was chaotic towards the end,” Jason Roberts said.
Roberts says his dealership sold 142 cars under the program — for a total of about $568,000 in government rebates. So far, the dealership has only been paid about $68,000 for about 17 of the deals, which means Uncle Sam still owes them roughly $500,000.