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The same idiot taxpayer who'll be left holding the snot bag at the end of the day.CFC's...
WOW!
Free market capitalism!!!! No such thing. please lay down the Kool-Aid everyone...you want a new car, come on down to Joe's car paradise with 20% down and we'll sell you a shinny new one. And btw, don't bother showing up with your worthless clunker!
theautochannel
This article also contains links that I deleted (because I'm too lazy to copy/paste each of them. Click on the link above for the deleted items.
Busy Covering Car Sales on Mars, Edmunds.com Gets It Wrong (Again) on Cash for Clunkers
Co-publishers Note: Who cares what know nothings say...The Auto Channel has supported and profited from Cash for Clunkers as has our country's and the world's economy. We have continually said that when the final total of costs and revenue for Cash for Clunkers are tallied we will see that this brilliant program did not cost taxpayers a cent but helped revive a really sick economy...no matter what naysayers have said. This latest position from Edmunds could/should be their last on this and on most other automotive subjects...no one will care what they have to say nor should they.
The White House Blog
Posted by Macon Phillips
October 29, 2009
On the same day that we found out that motor vehicle output added 1.7% to economic growth in the third quarter – the largest contribution to quarterly growth in over a decade – Edmunds.com has released a faulty analysis suggesting that the Cash for Clunkers program had no meaningful impact on our economy or on overall auto sales. This is the latest of several critical “analyses” of the Cash for Clunkers program from Edmunds.com, which appear designed to grab headlines and get coverage on cable TV. Like many of their previous attempts, this latest claim doesn’t withstand even basic scrutiny.
The Edmunds analysis is based on two implausible assumptions:
1. The Edmunds’ analysis rests on the assumption that the market for cars that didn’t qualify for Cash for Clunkers was completely unaffected by this program.
In other words, all the other cars were being sold on Mars, while the rest of the country was caught up in the excitement of the Cash for Clunkers program. This analysis ignores not only the price impacts that a program like Cash for Clunkers has on the rest of the vehicle market, but the reports from across the country that people were drawn into dealerships by the Cash for Clunkers program and ended up buying cars even though their old car was not eligible for the program.
This faulty assumption leads Edmunds to a conclusion that is at odds with many independent analyses: Edmunds assumption that more than 80% of the payback from Cash for Clunkers would occur in 2009 isn't how many mainstream analyses, including Moody's and IHS Global Insight approach the problem (see pages 5 and 15 of this CEA report [PDF]). In fact, Deutsche Bank recently concluded that “The important takeaway from recent sales trends is that it suggests that there has been minimal 'payback' for the U.S. government’s 'cash for clunkers' program.”
2. Edmunds also ignores the beneficial impact that the program will have on 4th Quarter GDP because automakers have ramped up their production to rebuild their depleted inventories.
Major automakers including GM, Ford, Honda and Chrysler all increased their production through the end of the year as a result of this program, which will help boost growth beyond the third quarter. The actions of private market participants, who would not increase production if they didn’t think demand for their product would be there through the end of the year, is a far better indicator of market dynamics – and one that Edmunds.com conveniently ignores.
Most importantly, this program is helping boost our economy and create jobs now when we need it most. In a comprehensive report, the Council of Economic Advisers estimated that the Cash for Clunkers will create 70,000 jobs in the second half of 2009. The strength of recent auto sales data suggest that, if anything, this projection underestimates the actual impact of the program. CEA’s analysis is transparent and comprehensive, laying out all of its assumptions for the public to understand. Edmunds.com, on the other hand, is promoting a bombastic press release without any public access to their underlying analysis.
So put on your space suit and compare the two approaches yourself:
Incidentally, a numbers crunching angle is the way to approach expending taxpayer money rather than talking about " juicy incentives to produce alternate energy vehicles, jobs and plants rescue, and stimulus for showroom traffic" and endless programs that ultimately return a fraction of hard earned taxpayer cash.
Regards, DQ
Maybe the Edmund's CEO was just trying to generate some interest in the website. It has been mighty quiet since C4C ended. It has worked by pulling more new posters out of cyber space.
Perhaps Mr. Obama should read a little history and see what happened to THAT president.
The white house has to be above name calling and enemies lists to be able to lead.
2019 Kia Soul+, 2015 Mustang GT, 2013 Ford F-150, 2000 Chrysler Sebring convertible
Addressing it any other way would be ignoring facts....
You have my answer! happy halloween.
Quote from General Custer? Intelligent and informed action is what we want. Action and boldness only work in the movies for Rambo and Bruce Willis.
If C4C worked then there's no reason the government couldn't simply do a similar program for every industry, and we'd all have jobs, the stock market would rise 20% per year every year, and the budget deficit would be gone. The economy doesn't work like that, or we'd never have a recession and no one would want for any material good.
A few hundred thousand people got some benefit, while hundreds of millions chipped in, for their benefit. And since that $4B was borrowed $, we're going to be paying a lot of interest on that to foreign investors.
1. The percentage of C4C transactions conducted without borrowing is far greater than the percentage of non-C4C transactions conducted without borrowing. In other words, more C4C buyers paid CASH.
2. The average household income of C4C buyers was higher than the average household income of car buyers in general. Not "scum of the earth"--unless you equate hardworking, financially cautious buyers with that category!
3. C4C came along at a time when lenders were extremely cautious--more so than they had been in over a decade--because so many of them were also heavily exposed in the failing mortgage market.
Put these three pieces together, and you should expect to see a dramatically lower repo rate among C4C customers than among the general population of car owners.
Prosperity arises from:
1. Hard Work
2. Thrift - frugality
3. Entrepreneurship
Socialism or any form of collectivism leads to financial collapse and tyranny.
In 1905 the US accounted for 50 percent of production for the world with 5 percent of the population.
Argentina was the 4th wealthiest country in the world in 1900 and then they fell in love with socialism. How has that worked out for them?
For collectivism is nothing more than the political manifestation of envy.
The solutions are in the book : " The 5000 Year Leap" by Skousen.
Tell me, is the autochannel owned ny GE or George Soros?
2019 Kia Soul+, 2015 Mustang GT, 2013 Ford F-150, 2000 Chrysler Sebring convertible
I think we do; you can find government subsidies for everything to promoting sales of Campbell's Soup overseas to free rent for Yankee Stadium.
You could argue that every single car sold under C4C would have eventually been sold anyway, so why not peg the taxpayer price per car at infinity? Why stop at $24,000?
625,000 cars sold that each generated $2000 of sales tax and excise tax immediately for state and local gov'ts. That is a whopping 1.25 billion dollars put back into local economies immediately. All the jobs not eliminated at the Big 3 or D3 or state gov's? How much unemployment comp. not paid out as a result?
Fed gov needs to feed the growth of the private sector. Saving the D3 was wise as long as they eventually pull themselves back up. The jury is still out on that. It does not make me happy to read the headline this week that Honda profits just TRIPLED!!!!!
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They stopped at $24,000 because they were referring to sales that would have been made in 2009 with or without C4C.
Look at the Oct/Nov/Dec 2009 sales numbers in Jan10. You'll understand.
here is my guess, without C4C, those people who responded 'yes' they would have bought another vehicle anyway, didn't necessarily mean a brand new one just another one.
there was a large 'stop loss' component to the program.
The analysis is flawed and faulty. For the CEO to publish it under his own name diminishes the entire site and I frankly think he looks like a fool. He should have let that idiot The Mechanic go on and on ranting about it. Being a clown is the job of a clown, not the CEO.
Four questions to test your knowledge of the subject herein.
What was the cost on paper?
How much did it cost in reality?
Where did the money come from?
Where did the money go?
Hint: None went to any auto maker.
....even if Cash for Clunkers reaches its budgeted cap, the program will only help drive about 50,000 incremental new car sales, so each one will cost taxpayers a whopping $20,000. "The incremental sales will be limited and at a considerable cost. In effect, we are paying consumers to do something most would do anyway," said Jeremy Anwyl, CEO of Edmunds.com. "So as a stimulus, the program fails. One could make a slightly stronger argument about the environmental benefits, but even there, the program could have been better designed."
The Inconvenient Truth about "Cash for Clunkers": Each Car Sale to Cost Taxpayers $20k Apiece, Reports Edmunds.com (Press release dated July 27, 2009 ).
You may be right about the intent of the article tho.
Yes some of these might be 'pull aheads' but not the volume that he estimates. It's also too early to guess what the volume of 'pull aheads' was. Next Tuesday will give us our first hint.... Here's the key number: -34%
csmonitor reports on the 'study'
Edmunds’ used a team of statisticians, who examined sales trends for luxury vehicles and others not included in the clunker program. They used those trends to gauge where sales would have been for the industry, absent any stimulus program. These “informed estimates” were independently verified, Edmunds says, by examining transaction data.
Next in line?
But the point you miss is that this program was never intended to solve the problems of the recession for the auto industry. It was only intended to give the auto industry a 10% boost in this their darkest year. It did that...but it did it too well and too fast so it was ended.
And it did that at no cost to society. In fact in time it will be shown to have had a positive effect on our nation. This sticks in the craw of the negativista's so it's ignored. In addition most people are threatened by numbers so the actual data is ignored because it's all in numerical form.
But then the Feds and the States get to collect increased withholding taxes individuals and increased income taxes from businesses that benefitted from the boost in sales. This is a BIG number. Now the cost is well under $1.5 Billion, maybe even as low as $1 Billion!!!
Then there's all the money that won't be spent on fuel on these dead clunks over the next 3 to 7 years. That's money that stays here in the US, in the pockets of the smart folks that are now driving 690,000 new more fuel efficient vehicles. It doesn't go to ExxonMobil and eventually to help support Saudi and it's extremists nor does it help support Iran and its delegates trying to kill our soldiers.
Do you like the idea of helping to support the nuclear dreams of Iran by helping to support the international price of oil?
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The money D.C. is spending so recklessly will be coming due very soon. Much of it is short term debt. The piper must be paid and the economy must stand on it's own two feet very, very soon. In 2010, few new C4C type programs will be offered - we simply cannot afford it.
The chart below sets forth actual SAAR (Seasonally Adjusted Annual Rate) compared to Edmunds.com's forecasted rate if the program had never been implemented.
Actual (or Forecast) If no Cash for Clunkers Difference Sales Volume
Jan '09 ................. 9.59 .. 9.59 .. n/a .... 654,922
Feb '09 ................ 9.14 .. 9.14 .. n/a .... 687,182
Mar '09 ................ 9.69 .. 9.69 .. n/a .... 855,146
April '09 ............... 9.20 .. 9.20 .. n/a .... 817,096
May '09 ............... 9.85 .. 9.85 .. n/a .... 923,141
Jun '09 ................ 9.67 .. 9.80 ..-0.13 ... 857,447
Auto sales thru June were already determined before C4C began; they were down 34% Y/Y
Jul '09 ............... 11.22 ..10.11 ..1.11 ....995,216
Aug '09 ............. 14.06 ..10.45 ..3.61 .. 1,258,747
Sep '09 ...............9.19 .. 10.63 ..-1.44 .. 744,367
As of the end of 3rd Qtr the auto market was down only 27% Y/Y
Oct '09 ..............10.40 .. 10.89 ..-0.49 ......n/a ( unknown )
Nov '09 ............. 10.40 .. 10.82 ..-0.42 ......n/a ( unknown )
Dec '09 ............ 10.61 .. 10.85 ..-0.24 ......n/a ( unknown )
The Edmunds 'guesses' of the SAAR for the latter 6 months of the year are simply that guesses. Based on the first half of the year ( -34% ) it would be wildly optimistic to guess that by the end of the year the auto market would recover to be down only 18% vs 2008, ( 10.85 MM vs 13.20 MM units ).
The expectation all during the first half of the year when C4C was being created was that this horrible year would end up at 9.5 to 10.0 million units. Note the SAAR's for the period Jan to Jun in Edmunds own table.
What did change as of July 1st was the initiation of the C4C program. This absolutely did kickstart sales during 3rd Qtr such that as of Sept annual LV sales were off by only 27%. This data is incontrovertible. It's clearly shown in Edmunds own stats above.
Edmunds whole theory is based on some nebulous magical effect taking place ( coincidentally on July 1 ) that suddenly boosts SAAR from 9.8 MM units to 10.85 MM units by the end of the year. I call BS.
The $3 Billion taken from the $787 Billion Stimulus package costs the Treasury about 3% pa. However at least half of that $3 Billion went from one government pocket to another government pocket. It actually never got 'spent'. The rest, maybe as much as $2 Billion or more will come back to the IRS and the state taxing authorities by the end of the year by means of higher withholdings and higher corporate tax payments. This isn't just in the auto industry. It's throughout the entire economy. Vendors to the auto dealer, truckers, steel suppliers to the auto makers, increased withholdings at the auto plants, and last but not least BANKS.
The lending that did happen during the program was to premium buyers with impeccable credit. These are the prime clients for any lender. These loans are solidly profitable ( DING !! ) meaning that the banks and lenders will end up paying taxes on the profits from these loans in the coming years. These taxes over the next several years go to the IRS and state taxing agencies.
Then ... there are the drivers of these 690,000 vehicles - which are no longer on the road - thus they are NOT going to be spending the extra money on fuel that they would have since they're now driving vehicles significantly more fuel efficient.
You worry about how we're going to pay for this. How about worrying about how many of these guzzlers are still being driven on our highways at the rate of 10-15 mpg. There are still tens of millions of these clunkers sucking up extra fuel every day at pumps all over the country and sucking the life out of our economy. If even 10 million of these suckers could be retired and replaced by a newer more efficient whatever then we as a nation wouldn NOT be spending $10-$15 Billion per year on extra fuel. That $10-$15 Billion would stay here in our pockets to self-stimulate our economy. That $10-$15 Billion also would NOT end up supporting Iran, Saudi, Venezuela and others that would do us harm.
Wanna bet that gas isn't $3.00 soon?
Getting these 700,000 vehicle off the roads is just the first step. Just getting this first step moving will save us $1-2 Billion every year now in $$$ for fuel not used over the next 3 or 5 or 7 years.
Another issue you have no clue about. The Feds do not want US to use less fuel. That costs them money. If they did they would not put roadblocks in the law to block fuel efficient vehicles from being sold. That little blip from C4C will not make a nickels difference in our trade deficit.
Hellooo, yes you're absolutely right. It worked exactly as it was planned to work., i.e. stimulate the auto industry and whatever we in the larger auto industry touch downstream as well. You agree with my argument. Thank you.
But the extra benefits are even more far-reaching.
These 'interests' got their wish when Congress passed the bill in Dec 2007.
You might want to take your blinders off to see the wider picture.
I understand what you're saying about fuel efficient vehicles generating less gasoline taxes since they use less gallonage....you know what that solution soon will be...increased fuel taxes to make up for the shortfall. But nevertheless we as a nation will end up spending less to support the international price of oil. We keep that money here, yes it may go to higher taxes but it doesn't support enemies.
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Here's one place we agree completely. It's not far off now and by next summer it is almost certain unless our entire economy collapses.
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I was in favor of C4C but was surprised by the turnout. I expected the 2nd $2 billion to last through Sept. Americans can't pass up a perceived bargain and that part of it worked perfectly. That said, I still agree in principle with edmunds.com stance that most of these sales would have occurred in the 3rd & 4th qtr of '09 without C4C.
Next year we have to turn off some of the spending and let nature take it's course. It won't be pretty for a while but our long term future is still bright.
Please advise; Where did the money come from which went to the automakers to replenish dealers' inventories whose lots were emptied by the CFC program?
Please supply the answers to your four questions as I am unable to accurately obtain those exact figures.
Regards, DQ
You're gonna have to explain that one a bit more. What increased withholding taxes from individuals - car salesmen?
Most/all of the benefit went to the auto makers. The D3 anyway are stlill operating at a loss or with losses on the books carried over from previous years. So they are paying no income taxes anyway.
Just for the record, I agree with the "all the money that won't be spent on fuel on these dead clunks over the next 3 to 7 years" comment.
But, that's bad from a tax revenue standpoint, isn't it? Better fuel economy means less gas purchased means less tax revenues. Maybe those lower tax revenues over 10 years or so balances out or even exceeds the ~$1 billion you claim goes from the feds to the states, a one-time transfer.
Income skyrocketed as business overwhelmed the reduced number of staff, employees and sales people. When income skyrockets guess who's there first with it's hand out.....the IRS - then the state taxing authorities. Before the drivers of these new vehicles had 1000 miles on the vehicles Uncle Sam was already receiving a good part of the $3 Billion back into the Treasury.
Then on Oct 15th businesses had to file their 3rd Qtr tax returns - with payments - which generated another boost to tax revenues.
Actually none of the $3 Billion went to the auto makers. The way the system works is that the dealers are required to pay the vehicle maker when the vehicle is shipped from the factory. Now the dealer can floorplan the shipments but once the vehicles left the factories and ports of entry in April, May and June the vehicle makers got paid. The vehicles that were sold in July and August were paid for already in the first 6 months of the year. The vehicle makers got nothing directly from C4C.
Now what the vehicle makers did get was empty lots all over the country which allowed them to boost production ( stimulus ) for 4th Qtr. As a result of this boost in production for 4th Qtr additional shifts had to be added and new workers needed to be hired. DING!!! More withholdings going to the US Treasury. But in fact none of the vehicle makers directly received one dime of the C4C program.
..giving the economy a boost now; this has happened
..not sending $3 per gallon ( or more ) to Big Oil and its producing partners over the next 3 or 5 or 7 yrs.
The quiet unelected segments of our government that direct much of our actions and those of the lawmakers achieved their goal. $1 to $2 Billion every year now thru 2015 will not be spent on fuel due to these 690,000 clunks being killed off. Since this program worked so well I'm expecting it to be repeated, maybe several times.
If they had to use $1+ Billion of C4C stimulus money in order to save the country $5 to $10 Billion in payments for fuel and oil, then that's a profitable 'investment'. Since these segments are unelected and under the radar but have the direct ear of the ones making the laws ( such as CAFE and C4C ) they get what they want.
Much like a Junkie looking for his next hit of Heroin. Sad way to see US die. Our grandchildren will pay for the auto industries addiction to tax payer bailouts.
You also ignored, missed or did not understand why these types of programs will likely be repeated. It has little or nothing to do with 'bailouts'.
You are in the minority of people thinking these bailouts are working.
2014 Malibu 2LT, 2015 Cruze 2LT,
Typical unfounded fears you come out with are 'our grandchildren are going to have to pay for this forever'. What are these poor babes going to have to pay for if there's little or no debt coming from this program?
Another typical unfounded fear is 'OMG they're going to crush a classic'. Puleeze.
Another goofy and false one was that 'OMG you're going to have to pay taxes on the $4500 rebate'. Fed by Faux News of course.
It's like you people live in a cartoon world fed fears of hobgoblins by Faux News. I have data and facts that none of you seem to want to discuss or refute in any way. Why is that? Show me data to substantiate your fears. Keep it focused on C4C.
I asked 4 questions of one poster above and he said he had no idea what the answers were and he asked me to give him the answers. How can you be afraid if you don't have any facts? This is typical. Heck none of you are even involved in the industry. Everything you get is 2nd or 3rd hand.
Look if it will put things in perspective. I agree fully with your last sentence. We killed more clunkers than all but one store in the state of VA. It was a shortterm bonanza not only for new car sales but also for used car sales. At the end of the program where we should have had 250 - 350 new cars and 100+ used cars on the lot we had SIX new vehicles and 15 used vehicles left over. Everybody involved got a boost from the deluge of buyers that suddenly appeared at our doors. Our Chevy store was nearly wiped clean.
As for C4C, you need to be careful of the statistics. The increase in sales isn't just from additional units, but also from higher prices the dealers were able to gouge from the government market intervention and distortion. The market for vehicles is rather finite and few people buy cars every year or two, so ultimately most C4C sales units were just moved up rather than new incremental volume. The impact from the removed clunkers is marginal at best. Not high enough to really affect global oil demand, and as someone already pointed out the resulting tax consequnces probably wash between less gasoline tax versus higher insurance, car license and sales tax.
I resent using public monies to subsidize cars and houses. As I've stated before, if the economy needs a jump I'd rather see public works jobs and let the newly employed spend the money as they see fit. I don't watch Fox news and am not a registered Republican. But I think I'm probably pretty representative of middle class America.
So we should make our economic decisions based on what a car salesman tells us rather than Fox news?
Are you gunning for the position of "Car Sales Czar"? Remember, in order to qualify you have to owe a lot of back taxes, and have a rather unsavory background, etc.
If nothing else, this thread is entertaining.
2013 LX 570 2016 LS 460
I could get behind programs modeled after the WPA. I doubt they would be possible with the Union influencing the WH. The whole bailout including C4C was paybacks to the auto industry Unions. It is obvious guys like Wagoner did not kick in enough to save his job. All the babbling about getting the $3 billion back in taxes is just that ramblings of a fertile imagination. That money is gone and we are right back where we were in June. Only the cars are mostly 2010 models. I would be real surprised if C4C added 125k sales to the total for the year. Of course there is no way to prove it one way or the other. So both sides spin it to fit their fantasies. Same as the crap about jobs saved by the stimulus.
No program is perfect, state funded or corporate. Cash for Clunkers had a limited scope and focus and seems to have met or exceeded the goals that wound up in the legislation.
Amen on that. The prices on new and used cars went up. It was just like Nixon's price freeze: Krogers had the stockers in changing prices on the shelf before they opened so that would be the new higher price limit at which they could sell.
The car companies took advantage of the people buying in a similar manner.
2014 Malibu 2LT, 2015 Cruze 2LT,
Over the first 6 mo's of the year LV sales were
Jan... 655K
Feb.. 687K
Mar.. 855K
Apr.. 817K
May..923K
Jun.. 857K ==> Avg 801K
Jul.. 995K ====> +194K over the 1st 6 mo's average
Aug 1,259K ===> +458K over the 1st 6 mo's average
Sept 774K ==> returned to near the 1st 6 mo's Avg monthly sales
In our case very few of the buyers had ever set foot in our store before. I don't doubt that there were some 'pull forwards'. There had to be. But those pull forwards were needed this year, not next year. Newxt year will take care of itself. The market is beginning to improve if we are to believe Edmunds forecast today on Oct sales due out on Tues. The C4C may just have been the impetus to get buyers out of their homes and into the market again.