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Cash for Clunkers - Good or Bad Idea?

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Comments

  • ateixeiraateixeira Member Posts: 72,587
    Don't hold back for our sake, Gary, tell us how you really feel. :D
  • gagricegagrice Member Posts: 31,450
    I think you got my drift on the subject. Even if the program was better than others they have tried. It was still run poorly. When you have to send the same paper work through 7 times before it is approved their is a flaw in the system. How many dealers kicked it back to the consumer after the first rejection. How many poor schmucks went ahead and gave the dealer $4500 to keep the car after they were rejected? Being in a trust should not have exempted the deal. We have all our vehicles in our trust. When we sell them we take it out of the trust. It is the only real way to protect your heirs from the leeches in our state and federal government.
  • srs_49srs_49 Member Posts: 1,394
    As government programs go, this one went rather smoothly, given the short time frame that was involved. What was it, 6 months total from conception, execution, and close out? That's just unheard of in the federal government. It usually takes 'em that long to figure out where they're going to buy the next batch of #2 pencils from.

    As far as the submitting-paperwork-7 times goes, how many deals did that happen to out of the three-quarter of a million that were done? Maybe the the dealerships and buyers just needed to take a bit more time and care filling out the paperwork before they received TAXPAYER MONEY!

    Heck Gary, if some of the C4C rebates were given to people who didn't meet the criteria, you'd be complaining about about the taxpayers being ripped off.
  • gagricegagrice Member Posts: 31,450
    take a bit more time and care filling out the paperwork

    According to the newspaper article I posted the dealer sent the exact same paperwork back 7 times as he knew it was correct. That kind of incompetence is our Federal government. A good reason for them to stay out of business entirely. We can already see they have done nothing to help GM and C. The dealerships are back to ghost towns around here. What was accomplished to really help the auto industry, longterm?

    Sept. 15 (Bloomberg) -- “Cash for clunkers” may have just as fleeting an effect on U.S. retail sales as automakers’ no- interest loans did in the last recession, according to Dan Greenhaus, chief economic strategist at Miller Tabak & Co.

    The CHART OF THE DAY shows sales figures for October 2001, when interest-free financing was initially offered, and the four months before and after the incentive took effect. Greenhaus had a similar chart, based on data from the Commerce Department, in a report today that drew the comparison.

    After surging 6.6 percent that October, retail sales fell 2.7 percent the next month. The drop was the biggest on record until last year’s fourth quarter, when there were two monthly declines of more than 3 percent. Sales fell again in December 2001, were unchanged in January, and finally rose in February.

    “Ultimately, this is the issue with one-time sales incentives,” Greenhaus wrote. “You pull sales forward.”


    http://www.bloomberg.com/apps/news?pid=20601109&sid=aIWWbPVC5XAY
  • dtownfbdtownfb Member Posts: 2,918

    According to the newspaper article I posted the dealer sent the exact same paperwork back 7 times as he knew it was correct. That kind of incompetence is our Federal government. A good reason for them to stay out of business entirely. We can already see they have done nothing to help GM and C. The dealerships are back to ghost towns around here. What was accomplished to really help the auto industry, longterm?


    You're assuming that this dealer is telling the truth? I always hesitate to judge when i only hear one side of the story without any visible evidence.

    I agree with srs. this program went very smooth. This program was more popular then any of us predicted (myself included). The initial money was suppose to last 3 months. Instead it went in 2 weeks? I think we can chalk this up to too much demand and not incompetence.

    Face it Gary, you would complain about this program no matter how it turned out :P
  • steverstever Guest Posts: 52,454
    "Edmunds.com has completed its final tally of the most popular vehicle purchases and most frequent trade-ins under the Cash for Clunkers. The Ford Focus held its No. 1 spot as the favorite buy; the Ford Explorer remained the No. 1 trade-in."

    Edmunds.com Final Tally: Cash for Clunkers Buys, Trades; Ford Focus No. 1 Buy (AutoObserver)
  • plektoplekto Member Posts: 3,738
    Maybe the the dealerships and buyers just needed to take a bit more time and care filling out the paperwork before they received TAXPAYER MONEY!

    Silly person, there was no taxpayer money. The Government just prints the billions it needs out of thin air when it wants to. Or haven't you noticed how everything is creeping up in price about a dime a month lately?
  • gagricegagrice Member Posts: 31,450
    Car showrooms quiet after clunkers clamor ends

    It has been nearly a month since the car-buying frenzy of the Cash for Clunkers program ended, and many area auto dealers are longing for the good old days of July and August.

    But once the federal money dried up, so did the sales rally. Now, customers at dealerships like Silko Honda in Raynham are few and far between, and inventory is once again accumulating.

    Manager Adam Silverleib said business was “pretty intense’’ as a result of the federal stimulus program, with the dealership hustling to accommodate customers and handle the piles of paperwork required for them to receive reimbursement on vouchers. “Now we’re kind of back to where we were in the spring,’’ he said.

    Nationwide, customers snatched up 700,000 new cars, most of them foreign-made, and the government ended up paying out nearly $3 billion toward the purchases. But from the start, analysts predicted that Cash for Clunkers would not boost sales for the year. September’s sales swoon seems to be making their case. Car sales are usually slow after Labor Day, but because of the recession consumers this year are especially reluctant to say yes to major purchases. To make matters worse for dealers, most are still waiting for voucher reimbursements.

    “It was probably, in the end, a complete waste of taxpayer money,’’ said John Wolkonowicz, a senior auto analyst at IHS Global Insight, Lexington forecasting firm. “The dealers, who were supposed to be the primary beneficiaries, many were forced into cash flow problems because the government didn’t pay them in a timely fashion.’’

    From the outset, there were problems with the Car Allowance Rebate System. It was supposed to start July 1 but was delayed until July 24. The rules were complicated, and the list of qualifying vehicles and other requirements changed repeatedly. And in addition to the formidable paperwork, the government website set up to process the deals kept crashing, creating a backlog.

    Ray Ciccolo, president of Village Automotive Group, which operates eight Boston-area dealerships, said he has received $400,000 from the government, but that is only half of what he is owed. Ciccolo was in Washington last week to hear Transportation Secretary Ray LaHood address the National Automobile Dealers Association. Ciccolo said LaHood pledged to have all claims paid by the end of this month.

    “There isn’t much you can do except wait,’’ Ciccolo said.


    http://www.boston.com/business/articles/2009/09/19/car_showrooms_quiet_after_clu- nkers_clamor_ends/
  • plektoplekto Member Posts: 3,738
    Once again, it doesn't matter WHAT you make if the customer doesn't want to buy it.

    It's like wanting a good can of soup and all that's in the stores is generic condensed soup. 40 flavors of it! What do you do? Right - you buy what you need to get you from point A to point B or just wait.

    That's the entire problem with GM and Ford(and apparently Honda, Toyota, and others now). They make the cars *they* want to sell us. The cars they think we should be driving.

    Not what we want. I seriously doubt if they even listen to the public or take polls any more. "This will be cool! The public will love it!" Yeah - maybe they should have asked what we wanted first. Because there's nothing in any of those makes that I just mentioned that impresses me or makes me actually want their cars.

    So of *course* C4C failed. The 2010 models came out and virtually nothing at all had changed. "Next year" is what we heard last year and the year before and even ten years before. Europe still has better cars. We still get second-rate engines and options. They promise to change it but another year rolls around and nothing is actually done about it.

    Seriously - this is about the least exciting new model roll-out that I can ever remember.
  • vinnynyvinnyny Member Posts: 764
    This argument that the program was bad for car dealers because it resulted in cash flow problems is absurd. When the money flows, the dealers will have sold hundreds of thousands of cars they wouldn't have sold (at least not right now). They'll pay for it when showrooms are empty for a few months, but the bottom line is that a dollar earned today is worth more than a dollar earned tomorrow.

    This program didn't only pull sales forward--it also brought some new customers into dealerships who wouldn't have thought of buying a new car otherwise. There are lots of people with that "used car" religion--some cheated a little because of this program. When all the numbers come out, I guarantee that the profit margin on these sales will be significantly higher than on non-C4C deals. After all, infomercials have proven that the best way to charge a sucker too much for something is to give him something "free" along with it. In this case it was "free" money for his junker. The customer pays more than he should have because he gets his free set of ginsu knives. The dealer makes out because he can charge more for the Sham Wows. The government provides the "free" knives. The only losers in the scenario are the taxpayers who pay for the swag...
  • nippononlynippononly Member Posts: 12,555
    is that as of 9/18, 90% of all claims had been approved. The money will soon be in dealers' pockets if it isn't already, but that won't help them as sales dry up to zero for the next 3 months or more.

    Apparently fully 1/3 of all C4C sales were to people who weren't in the market, so that's several hundred thousand sales that were pulled forward......

    2014 Mini Cooper (stick shift of course), 2016 Camry hybrid, 2009 Outback Sport 5-spd (keeping the stick alive)

  • ateixeiraateixeira Member Posts: 72,587
    This argument that the program was bad for car dealers because it resulted in cash flow problems is absurd

    CarMax' announcement that they earned record profits last month confirms what you just said.

    They sell new cars as well, Toyotas locally.
  • fintailfintail Member Posts: 58,415
    Claims of exotic machinery "clunked"...I am not sure I believe some of these claims at face value, but fun to read anyway
  • stephen987stephen987 Member Posts: 1,994
    Yeah, fun reading, but I don't buy it for a minute.
  • hpmctorquehpmctorque Member Posts: 4,600
    I read that article yesterday, and the thought that came to mind was that these exotics were clunked due to maintenance expenses required to keep them on the road. Unless these examples are, for whatever reason, simply untrue, I can't think of another reason that makes sense.
  • plektoplekto Member Posts: 3,738
    The list appears to be a hoax(as expected). But there are a lot of surprising cars are out there that are junk. I can't imagine, for instance, how many Porsche 928s aren't worth even $2000 due to rust or maintainence issues.
  • hpmctorquehpmctorque Member Posts: 4,600
    I'm thinking the same thing. Their once high market value has declined dramatically largely because their extremely high repair and maintenance costs can't be justified. Wealthy people don't want them because these cars are too old, and in some cases, they have too many needs. Meanwhile, collectors of average means can't afford to repair and maintain them. Restoring one would be totally out of the question, given the economics of such an effort.
  • fintailfintail Member Posts: 58,415
    I think the list is based somewhat on some kind of fraud or misrepresentation. Soem of the listed vehicles just make no sense - and unless they are salvaged from the bottom of a lake or something, they'd be worth more than the C4C value.
  • ateixeiraateixeira Member Posts: 72,587
    This is the worst photochop attempt I think I've ever seen:

    image

    I love how the Aston is brightly lit and everything around it is shadowed.

    Hoax, folks, and not even a good one.
  • fintailfintail Member Posts: 58,415
    I was hoping that image was done in jest.

    Unless the AM they claimed was clunked was a victim or a fire or something, I don't believe that one at all.
  • ateixeiraateixeira Member Posts: 72,587
    Didn't C4C require that the trade-ins be running?

    Any Aston Martin that would run would be worth a heck of a lot more than $4500.
  • fintailfintail Member Posts: 58,415
    Well, the back half could have been squashed by a wrecking ball with the engine running off a bucket of fuel :shades:

    But even then, someone would probably be willing to pay $4500 for a good engine. I don't buy it.
  • ateixeiraateixeira Member Posts: 72,587
    Hey, it could happen! :D

    I think the grille and hood alone of that Aston would still be worth over $4500. It would make a cool coffee table. ;)
  • nippononlynippononly Member Posts: 12,555
    So, anybody here believe that a '97 Bentley Continental GT was clunked??!! :-P

    "yeah, they traded it in on a Corolla!"

    Some I could believe - an '85 Quattroporte? What a nightmare to keep running and to look at. Good riddance.

    2014 Mini Cooper (stick shift of course), 2016 Camry hybrid, 2009 Outback Sport 5-spd (keeping the stick alive)

  • fintailfintail Member Posts: 58,415
    I'd welcome video evidence of any of those listed cars being clunked.
  • lemkolemko Member Posts: 15,261
    ...but I actually did see a rather nice-looking blue W126 S-Class Mercedes clunked at the local Chrysler dealer. Wonder if they traded it for a Caliber?
  • fintailfintail Member Posts: 58,415
    I saw a very nice looking blue W126 on a Youtube C4C video. Luckily they didn't show it being clunked, just sitting on the lot.

    The sad reality is if the car has any significant mechanical fault, the market value is going to be below $4500 even if the car is immaculate. I can't imagine trading something like that for a rental grade box and feeling happy when I drive, anyway.
  • lemkolemko Member Posts: 15,261
    I couldn't either! Too bad they had to bow to the eco-weenies and have those fuel economy limits. If C4C was for ANY car you wanted, I bet dealers would've sold a lot more cars and a lot more profitable cars. Mini cars, mini profits.
  • fintailfintail Member Posts: 58,415
    The mpg stuff was both to appease the eco-weenies and to give justification when the self-titled libertarians complain about the expense.

    The trade-in rules were maybe too restrictive too. What's so special about 18 vs 19mpg?
  • ateixeiraateixeira Member Posts: 72,587
    I thought they had to gain 4-10 mpg? Was that just for cars?
  • hpmctorquehpmctorque Member Posts: 4,600
    " I can't imagine trading something like that for a rental grade box and feeling happy when I drive, anyway."

    I can't either, but wouldn't you agree that many, perhaps most, of the people who buy rental grade boxes couldn't afford the maintenance and repair on a Mercedes? Similarly, those few individual that traded their Mercedes for an econobox probably concluded that, going forward, the cost of ownership on their new car, after the rebate, would make more financial sense than repairing and servicing their old luxury car. Also, the purchase of an old Mercedes can't be financed.
  • gagricegagrice Member Posts: 31,450
    How many of those older Mercedes were handed down to kids and grandkids that do not really care about their intrinsic value? Grandpa dies and leaves the 1990 Mercedes to his daughter. It does not have bluetooth and she can get $4500 on a new Fit with bluethooth. She's in hog heaven. Could care less about the $1000s grandpa spent to keep the car in near mint condition. The Honda dealer offered her $500 in trade on the old 420SEL so what can you expect from today's iPhone mentality? Out of 700,000 clunkers I am sure there were a few jewels.
  • mickeyrommickeyrom Member Posts: 936
    I so agree with you Gagrice.That is a nice fable you came up with.
    That is also the reason why I still have my 12 year old Town and Country LXi. I find something somehow wrong in destroying something that is still very useful.
  • gagricegagrice Member Posts: 31,450
    We keep our 20 year old Lexus because it runs good and does not cost much for upkeep, insurance & gas. We drive it a couple times a week to keep the battery charged. Almost has 99k miles on it already. We would probably give it to a relative in need. It has no trade in value. So why waste a perfectly good running car?
  • fintailfintail Member Posts: 58,415
    I suspect most of the clunked highline cars were third or fourth cars bought on a whim or inherited as gagrice says. These cars had probably seen neglect and had problems exceeding their value. An old S-class could look very good - these cars were built and painted to standards not seen today...but have mechanical issues. A 20 year old S-class with a slipping transmission or massive oil leak/valvetrain problem etc will be worth less than that $4500 even if the rest of it is mint. Then they get clunked. Repairs are even less likely to be financed than an old car itself.
  • fintailfintail Member Posts: 58,415
    The car probably had or will have problems she could not afford to fix anyway. Giving a finicky high maintenance car to an uninterested young person is a mistake. A $300/month payment is doable...a $3000 repair is not. If the car was worth more than $4500, the dealer would not clunk it anyway. Surely a few nice cars were ruined...but I believe they'd be ruined anyway if they had ownership who would do that.
  • steverstever Guest Posts: 52,454
    finicky high maintenance car to an uninterested young person

    I'd rather have the Fit too (make mine a MT Sport).
  • nippononlynippononly Member Posts: 12,555
    Ditto. Well maybe make mine a Civic SI. Just no room in my life for cars that don't run without extensive ongoing repairs. Give me a car like that for free and it is gone.

    2014 Mini Cooper (stick shift of course), 2016 Camry hybrid, 2009 Outback Sport 5-spd (keeping the stick alive)

  • hpmctorquehpmctorque Member Posts: 4,600
    Unfortunately, I'm sure you're right.
  • plektoplekto Member Posts: 3,738
    A $300/month payment is doable...a $3000 repair is not.

    Most sane people do(or should) set aside roughly a monthly payment aside for repairs. Then that $3000 repair would be a $1300 plus their savings if, say, they'd been saving for a year. Since automatics last at least 2-4 years, IME, between rebuilds, that's a lot of leeway for only $150 a month.

    But yes, I can see a lot of people not doing that and tossing a perfectly good car because of a major repair.
  • fintailfintail Member Posts: 58,415
    For the old cars I have had...I keep a couple grand stashed away for tragic malfunctions. Of course, the cars I lean towards do have higher repair bills than most.

    But yeah, people should keep a reserve for repairs - but most people don't seem to save anything, nor actually do the maintenance that would prevent so many repairs from being necessary :shades:
  • mickeyrommickeyrom Member Posts: 936
    Automatics last 2-4 years between rebuilds? Do I understand that right? I guess I must just be lucky,because my tranny is 12 years old and has 156,000 miles on it without repairs.
  • steverstever Guest Posts: 52,454
    The paradox of expensive extended warranty products is that the closer someone gets to living paycheck to paycheck the more you can justify needing one of those, even if you have to roll the price of it into your payment for 60 or 72 months.
  • ponderpointponderpoint Member Posts: 277
    Somebody barbed back at one of my posts that Germany's Cash for Clunkers had been "Going on for quite a while and it looks like it's been working fine", basically giving a tone that the program was fine and in a continuing operation for a long time and would work great for America too.

    So-called "cash-for-clunkers" programs surged in popularity across Europe after France introduced the idea in December 2008. Germany, Italy, Britain, Romania, Austria, the Netherlands, Spain and Serbia have had their own versions aimed at shoring up local auto makers

    I wouldn't call a program that has only existed for months a long and semi-permanent fixture in the German automotive marketplace and indeed, it is now ending and Germany is looking forward with trepidation that sales will fall dramatically of new vehicles.

    Please respond if you happen to see this post.... I'm not being snarky - I would just like to know what your basis was to remark that Germany has had a long history of doing "Cash for Clunkers", are you getting it confused with better trade in practices in that country that are not similarly enjoyed by the U.S.?
  • kernickkernick Member Posts: 4,072
    The near-term-future is not looking so bright. Even with some of the last C4C deliveries, the numbers are going to be bad, just like prior to the give-away.

    http://www.marketwatch.com/story/car-makers-to-assess-damage-from-clunker-afterm- ath-2009-09-29
  • ateixeiraateixeira Member Posts: 72,587
    What they have to encourage people to drive fuel-efficient cars is very simple - expensive fuels.

    The US has been too afraid to try this.

    I'd happily pay more for gas if it meant reducing traffic significantly.
  • plektoplekto Member Posts: 3,738
    Automatics last 2-4 years between rebuilds? Do I understand that right?

    I thought it was obvious that I was talking about a worst-case scenario. ie - "They last at least 2-4 years".

    If you set aside even $150 a month for car repairs, you'll have a huge nest egg to fix and keep almost any car running. Even a car like a Mercedes. Since you can't possibly get even a Yaris for $150 a month, this is a very good thing to learn how to do.

    Note - they say that the average person will spend nearly 500K in car payments in their lifetime if they buy a new car every 5-6 years. That's just a lot of wasted money as far as I'm concerned.(I don't think I've spent 25K in the last 25 years cause I'm stingy and buy used vehicles)
  • vinnynyvinnyny Member Posts: 764
    I hope you don't really like fruit, meat, clothes, toys, tools, bicycles, or any other consumer items because it won't just be gas prices that go up when the Euro-style taxes kick in. Virtually everything you sleep in/on, eat, or wear, is either made from, or delivered, using petroleum products.

    High fuel taxes suck in Europe, but they'd be even worse here because of the increased distances.
  • nippononlynippononly Member Posts: 12,555
    that were clunked, I think the perhaps more surprising cars that were clunked were recent models that should have been worth way more than the $4500 clunker payoff:

    Cash-for-clunkers gems: Corvettes, Camaros, Mustangs and one infamous Bentley meet the end of the road

    Ford’s sales were boosted considerably by the clunkers incentive, and the Focus was the fourth best-seller among new cars bought under the program. But many of its favorite cars of yesteryear were scrapped--most notably, the stable of Mustangs on the nation’s roads is considerably smaller. A total of 1,611 pony cars from 1984 to 2008 were turned in, including--surprisingly--one ’08 model.

    The Blue Oval also saw the end of 107 Taurus SHOs from 1993 to 1999, and a whopping 3,061 Thunderbirds from 1984 to 1995. Stunningly, a 2005 T-Bird, one of the 1950s-styled coupes Ford brought back on a limited basis, also was slated for scrapping.

    Luxury cars were not immune to the crusher, either. A 1999 Mercedes C43 AMG, a 2000 Jaguar XK8 convertible and a 1998 BMW Z3 Roadster will not be buffed or polished again. Additionally, two 1991 BMWs, a M3 and a M5 never again will be ultimate driving machines, and a slew of 7-series, including 100 from 1988, are done.

    The Cadillac of clunkers was the Escalade, as 72 copies of the hulking, fuel-hungry luxury ute are toast, with 68 of those from the 1999 to 2000 model years. More than a little surprising: a 2006 STS sedan also received a death sentence.

    The third Detroit-based automaker, Chrysler, was the victim of four of the newest clunker trade-ins. One 300 all-wheel-drive model from 2008, two from 2007 and a Hemi-powered ’05 all won’t live to see what plans Fiat has in store for their maker.

    One owner of a 2006 Nissan 350Z also turned over the keys, as did those of two 2006 Roush Stage 3 F-150s. Two 2008 Foose F-150s also were among the customs that had a date with the crusher


    http://www.autoweek.com/article/20090929/CARNEWS/909299995

    Just look at that list. How could an '06 STS be worth less than $4500? Or an '06 350Z? These are both worth in excess of $30K new, and are only 3-4 years old. And the assumption is that they were insured and registered for the road, so they were not totalled. And they had to be driven in. Four Chrysler 300s that were all less than 5 years old, including one Hemi, ANOTHER model that would have been more than $30K new?

    I find it very puzzling.

    The article, BTW, is confirming the report of the multiple 80s Maseratis being clunked, and the '97 Bentley Continental. I say good riddance to the Escalades; I only wish more of them had been clunked.

    2014 Mini Cooper (stick shift of course), 2016 Camry hybrid, 2009 Outback Sport 5-spd (keeping the stick alive)

  • stephen987stephen987 Member Posts: 1,994
    Sounds like unscrupulous dealers--or absurdly uninformed customers--or inaccurate reporting.
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