scott9050

Just announced on the news that this program will finally be over on Monday. Was it a success, or will sales go in the tank again next month?

Plague

Success depends on who you ask. It did accomplish its goals. I do see sales going down next month, but I don't think its goal was to keep sales higher.

scott9050

Will incentives make a comeback to keep things going?

Z28x

It was a huge success as far as stimulus programs go. Now lets see if the industry can stand on its own after it is over.

Cash for Clunkers targeted a group that probably wouldn't have bought a brand new vehicle, so the people that buy a new car every 2-3 years should still be buying. Equinox and Camaro have shown that if you have an exciting well priced product with fuel efficient engine choices then people will buy them up even if the economy is in the crapper.

The next important vehicle from GM is the Cruze. It needs to be out ASAP.

Threxx

Sales will obviously drop from when C4C was in effect, however I think part of the reason they chose to destroy perfectly viable used cars rather than put them back out on the used market is to keep supply on the used market from increasing, thus they avoided hurting new car sales as badly once the program is discontinued.

rlchv70

I think we'll see a comeback in a few months.

guionM

I agree. It certainly did give a huge jolt to the automobile industry, and it seems it also bottomed out the economic freefall.

I think momemtum will hold, and the industry will be fine for the rest of the year.


Intresting point. But when you look at it more, I doubt that is the case.

At $3500-$4500, you're likely talking about cars being traded in that people that weren't worth nearly that much. If the car wasn't worth that much to begin with, then there probably wasn't any demand for it to begin with (the vehicle being traded in had to be newer than 1984, and had to get 18 mpg or less). Then with more than 300 million cars on the road, Cash for clunkers barely nicked the number of older cars around (C4C covered roughly 300,000 new vehicles).

The real adverse impact from C4C isn't the vehicles scrapped, it's the ability to get drivetrain components from the junkyard from these scrapped vehicles for repairs. Not so much from an enthusiasts standpoint (most all performance cars have averaged over 18mpg since the early 80s, including even the 90s era Impala SS), but from the standpoint of someone who drives an old beater where it isn't worthwhile to buy new expensive parts or rebuilt engines or transmissions.

But even then, a program that ran for only a month and a half isn't going to even come close to erasing the millions of vehicles already in junkyards over many years before the program and the millions more afterwards, so I wouldn't worry too much over the whole thing.

Z28Wilson

Before we declare the program an unmitigated success, let's focus on actually getting the dealers paid back and make sure that half these vehicles haven't been repossessed within the next year shall we?

There are stories out there that some dealers have had to take out loans to cover their losses on the cars sold under C4C while they wait to be reimbursed. That's ridiculous.

Z284ever

I think it was a waste of $3 Billion of OUR money and a waste of many thousands of useable vehicles.

RussStang

Yeah, well all it takes 2 incidences to make it "stories". That doesn't actually indicate how well the program did or not as a whole.


Regardless, if it helps pick up the slump in auto sales, it will have been a success. Time will tell how sales trickle off. If it helps restore some order to the economy, 3 billion dollars is several orders of magnitude less than what the government has thrown out there so far (on both sides), much of it being construed as totally wasteful.

Z28Wilson

Uhh, well when manufacturers have to step up to the plate to create quick loan programs to cover unpaid C4C reimbursements, I'd say the problem is a little more widespread than "2 instances". To top it off, Toyota is apparently charging their dealers interest for this.

http://www.autonews.com/article/2009...908219996/1142

jkipp84

http://www.cardealerreviews.org/?p=116533

In an Automotive News survey of nearly 800 dealers,

* 97% of dealers who responded, say the government is not reimbursing fast enough
* 13% of dealers have dropped out the program because the government is not reimbursing fast enough
* 87% percent of dealers are concerned the money will be exhausted
* 3% of CARS program deals have been reimbursed
* 66% of dealers have not received one payment from the government
* 25% of dealers are experiencing severe cash flow problems that require short-term loans to alleviate
* 11% of submitted applications have been approved (though dealers still are waiting for the money)
* 16% of submitted applications have been rejected
* 55% of dealers are not confident they will get reimbursed for every deal
* 40% do not want the program to continue, even if changes are made to the CARS program

Z284ever

No wealth is created when cash is expended to destroy useful assets.

Is see this program analogous to using afew billion in taxpayer money to raze a couple of blocks of downtown Chicago's financial district - in order the rebuild it again. Sure you'll "stimulate" certain aspects of the economy, ( not for free mind you, taxpayer financed) - but doing that would be REALLY stupid.

So stupid in fact, I hope no one from the government is reading this.

Z28Wilson

If these applications have been outright rejected, does that mean that the dealer simply takes a $3500/$4500 loss on each transaction?

mdenz3

Or if they worded the sales contract right the car buyers may take the hit.

EDIT: Why would demand stay high?

I still don't see why anyone thinks creating artificial demand to prop up an industry that has far to much capacity from an extended period of artificial demand was a good idea.