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Cash for Clunkers - Good or Bad Idea?



  • stephen987stephen987 Posts: 1,994
    If it were that easy then Malcolm Bricklin, John Z. DeLorean, and Preston Tucker would've made huge fortunes off their innovative approaches to the automobile. Instead they went massively, spectacularly broke--in Bricklin's case, four or five times.

    And Elizabeth Carmichael (a/k/a Jerry Dean Michael) and her Twentieth Century Motor car Corporation would've sold half a million copies of the Dale.

  • british_roverbritish_rover Posts: 8,476
    No you couldn't.

    You wouldn't even get a single product off the ground with one billion dollars.

    Remember my story on Rover's T5 platform? 1.4-1.6 billion USD just to develop that one platform and refit an old factory to use in two vehicles to sell 100,000 cars world wide. That was with a company that already had an established distribution network and marketing network. Rover's network is truly worldwide they sell cars in more countries then any other brand on Earth AFIK. 190 countries last time I looked at the list.

    A billion dollars wouldn't even come close. You are very naive.
  • kdhspyderkdhspyder Posts: 7,160
    And then on top of that the buying public has to be willing to step up and plunk down $20000 or so for MR ANDRES' super-duper Naivete' Special midsized 4 banger that's never been driven on the roads, never been tested by any agency and has no history of reliability.

    And then MR ANDRES' company is expecting to sell a minimum of 100,000 of these every year just to recoup his $2 - $3 Billion investment....and begin to make a good profit after 5 years??? Rots of Ruck.
  • MrShift@EdmundsMrShift@Edmunds Posts: 43,660
    Looks like it's true. The Clunkers program might go CLUNK! (suspended, or amended, or re-funded?).

    In any event, this program was, to say the least, quite the smash hit with the buying public. 96,000 transactions already submitted to NHTSA and about 200,000 predicted.

    Not a bad week's work.

  • gagricegagrice San DiegoPosts: 28,680
    A friend brought his new Escape by from the C4C program. Traded his old 4Runner last Saturday. They had to get the Escape from a dealer in Orange county to get the color and options he wanted. He picked it up this morning. The Ford dealer may have to eat the $4500 if your link is correct.

    But dealers think the gauge is actually on empty. Dealers and dealer organizations are concerned they have far more transactions in the works for consumers to trade their clunkers for more fuel-efficient vehicles than the program has in funds, and dealers will be left holding the bag for the vouchers of up to $4,500 if the government funds run out.

    Of particular concern to dealers is fact that they must destroy the clunker and provide proof it has been destroyed before they can even apply for the government voucher. If the money runs out, the dealers must honor the deal and be out the reimbursement.

    So the dealer takes your clunker trashes the engine and finds out that Uncle Sam is out a cash for clunkers. I see the dealer eating the $4500 loss. Or putting a rebuilt engine into the customers clunker and taking back a slightly used new car. If those are the rules why would any dealer want in on the program?
  • mushi0mushi0 Posts: 1
    I want to know your estimate on when this program would run out of money and public support?
  • plektoplekto Posts: 3,707
    The dealers won't suffer a loss. What will happen is that the program will close in a few days and any pending transactions will be funded in excess of the amount so as to not cause a tsunami of bad press.

    So 1 billion turns into 1.something billion. And tens of thousands of mostly poor people go into debt. This is a bad, bad thing, as you might imagine. But after the prime and derivatives markets fall flat on their face this next winter, nobody will care about a few people with car loans they can't afford.
  • PFFlyer@EdmundsPFFlyer@Edmunds Pennsylvania Furnace, PAPosts: 5,808


    Moderator - Hatchbacks & Hybrid Vehicles

  • maryh3maryh3 Posts: 263
    Now if this occured then absolutely there would be a shortage of vehicles. A huge shortage. But it didn't.

    The bailouts have occurred less than a year ago well within the time frame of poor car sales. People are not buying GM's cars. There is no shortage of GM cars for the consumer. Even with CARS, there is no shortage of supply - there is a shortage of consumers of GM products.

    You're also naive to think that if the former plants of the B2 went on the auction block that suddenly out of nowhere some upstart would spring up, buy all the equipment and begin to make Silverado's, Corvettes, Rams, Cobalts, etc. Just who do you have in mind that has the expertise, organization and to build a 3 or 4 million unit auto producer out of thin air in less than 5 years? There is no one. You're just making stuff up here just to continue the argument.

    Why would a new company make those vehicles? GM failed with those vehicles. They would make their own vehicles - having some overlap with GM but differing too. I'm not sure who has the expertise to produce out of thin air, but the alleged shortage of vehicles already has been filled by Hyundai, Honda and Toyota who are increasing market share while GM declined over the last decades. Any new company bids on GM assets they deem valuable and passes on others. The new company has to offer vehicles that consumers want - not GM products. This does not mean the former GM factories and technology are all totally worthless. Adapting already standing assets is often cheaper than building from the ground up, same with technology. Who has the money - that is the entire basis for corporations and the selling of stock to generate capital. New companies form everyday funded through private investors, venture capitalists, bank loans, IPO's, other corporations - I'd buy some stock in a new US auto company that I think has potential - but I wouldn't buy GM's LOL. As for the expertise needed to build a new company -- Obama seems to think the US government has this expertise. The old company failed remember? The government now owns GM. Private investors were denied that chance and the very existence of should-be bankrupt GM is a barrier in itself to any new upstart company.

    And why would any company want to buy the old broken down plants of GM or Chrysler in Michigan, Indiana and Ohio? All the new plants are going up in the mid-South and South. Sure a few GM plants are very capable like Oshawa and Fairfax and Spring Hill so GM kept these in the 363 sale and left the garbage to be auctioned off and shutdown.

    In bankruptcy ALL assets are auctioned off. They just fetch differing amounts of money. Upstart companies bid high for the assets they believe they can profit from the most. IYO those are southern plants. The upstart company could buy those and skip those in Ohio. Why should the government get to do this but not the private sector?

    You also have to disabuse yourself about the concept of 'government intervention in the public sector'. This never happened. It's the creation of Faux News and the Party of Negativity.

    Just to remind you of the facts the two private companies threw themselves on the administration of GW Bush and said "We give up, we can't make it on our own." There was no intervention in the affairs of a private company. The two private companies asked to be taken over. Those are the real facts.

    The facts don't negate the wrongness and overall detrimental effects this will have upon the rest of us. The national debt went up, we continue to drain the Treasury to support entities like the UAW that caused the inability to compete effectively in the first place, we negated fair trade and equal competiton that are healthy to the economy, we created a barrier to innovation and technology. You are correct though in saying this ghastly move was bipartisan. A company throwing itself at the government for help gets bankruptcy -- time to start over.

    You keep coming up with some miracle producing upstart with clever management, skilled laborers and good technicians? Name this miracle company.

    In the last two decades I'd call WalMart, Microsoft, Apple, Hyundai, AirBus, Honda quite successsful. Some entered into mature fields too. Where are giants IBM, Unisys, McDonnel Douglas and K-Mart? With unemployment high I see no lack of workers, there is still plenty of money in the hands of private potential investors, and lots of clever managers are out there who would not touch GM but might manage a private, newly founded automobile company. I wouldn't mind that chance myself.

    This is time for new ideas, new technology, new companies - going forward not clinging to the past stagnating and draining the treasury. Bankruptcy serves a very necessary purpose. Evolution goes forward, trying to prevent it is foolish. Throwing your hands up in the air and saying "it can't be done" - THAT is negativity. I consider myself as the postive thinker - and so do all successful people.
  • jipsterjipster Posts: 5,345
    I think the C4C program could have had twice the effect, more clunkers off the road, if they would have scaled back on the money given out per clunker. That they are almost out of money after only a week, shows this wasn't very well thought out.

    I think starting out at $2,000-$3,000 (tops) per clunker would have been more than enough to have the desired effect of people trading in their clunkers. Paying $3,500 and $4,500 per vehicle is waaaaay to much... throwing good taxpayer money down the drain. C4C....baaaaad idea. :sick:
  • gagricegagrice San DiegoPosts: 28,680
    That was well stated in just a few words. I like it.
  • ingvaringvar Posts: 205
    And tens of thousands of mostly poor people go into debt. This is a bad, bad thing, as you might imagine.
    I do agree. Lot's of people who can't afford a new car, new insurance payments are buying new cars because of 4.5K "discount". But it is free country, so people free to make choices.
  • Karen@EdmundsKaren@Edmunds Posts: 5,024

    Karen-Edmunds Community Manager

  • isellhondasisellhondas Issaquah WashingtonPosts: 17,356
    As I head to work I can only imagine the phone calls that await me.

    It's off! It's on!

  • nippononlynippononly SF Bay AreaPosts: 12,669
    Guzzler program still operating; White House searches for funds

    UPDATED: 7/31/2009 9:27 a.m. ET

    WASHINGTON -- The federal cash-for-guzzlers program continues to operate this morning despite dealer reports that it was to be suspended at midnight last night because it was approaching its $1 billion limit.

    "It is not suspended," a White House spokeswoman, who asked not to be named, said in an interview today. "We continue to assess the program and its budget."

    They announced this morning that they will honor all deals completed today. After that, I guess they want to see some results that assess how successful the program was (why? They had 250,000 sales in six days, I would say that is success with a capital 'S'!!) and thy want to try to get additional Congressional funding before the congressional break.

    But some keys folks in congress want different conditions on C4C II:

    U.S. Sens. Dianne Feinstein of California and Susan Collins of Maine said any extension of the incentive must require greater fuel efficiency and higher reductions of auto emissions.

    That makes me think they won't approve an extension of funding until after they return from their break. I am prepared to be proven wrong though.

    I agree with their assertion that the next piece of the C4C should insist on higher fuel economy improvements than the current one, particularly with respect to trading a truck/SUV for another truck.
    (registration link)

    2013 Civic SI, 2009 Outback Sport 5-spd (stick)

  • gagricegagrice San DiegoPosts: 28,680
    So do dealers keep on selling under the C4C program, hoping that Congress kicks in more money. It is a gamble unless they hold the new car until they have the cash in hand.

    My guess would be when Congress gets done with the extension, only a hybrid or VW TDI will qualify for purchase. The cut from $4 billion to $1 billion was a big compromise by the greenies. Now they have the floor.
  • MrShift@EdmundsMrShift@Edmunds Posts: 43,660
    I'd like to see C4C actually turn "green" than just "pretend green", so I agree with you---give the juiciest vouchers to the extremely high MPG cars.

    RE: "going into debt". Well, now, at least you know how the "miracle of capitalism" has been running since the mid 1970s. Work more hours for the same hourly wage, borrow off home equity, borrow off new car collateral, borrow with no collateral (credit cards).

    If everyone in America stopped borrowing money, we'd be in enormous difficulties.

    At least if a family traded in a vehicle getting 15 mpg @ 15,000 miles a year for one getting 45 mpg @15,000 miles a year, one might justify debt in the sense of "saving" $2000 a year in gas. If you put a healthy down payment on a new Prius, you might even pay for your annual car payments by the gas savings. (more or less).
  • maryh3maryh3 Posts: 263
    But aren't they already punished or rewarded at the gas pump? If gas prices go high enough, it will be more effective than any C4C program.

    Being they forced us to bail out GM, they should have waited for the Chevy Volt to be read before starting this program.
  • stephen987stephen987 Posts: 1,994
    they should have waited for the Chevy Volt to be read before starting this program.

    They should've called that one the Chevy Godot.

    But I would've liked to see the Ford Fiesta available in time for C4C.
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