Cash for Clunkers - Good or Bad Idea?

maryh3 · July 2009

Anybody selling a 2000 Oddy is ripping off the buyer LOL!!

But this isn't the place to address this -- it's about C4C, and I'm enjoying every dollar I'm going to get out of it. Jealous?

kdhspyder · July 2009

I understand perfectly where the money comes from...it's borrowed. IOW the Feds are using leverage ( the cost of the interest on the loan to stimulate the auto sector ) to generate more business.

However what you're missing because you're politically against it is the beneficial downstream effects which create significant gains all through the system including increased revenue streams at the local, state and federal tax levels. It's not a panacea it's only a 10% boost. But it's a 10% boost for a huge array of participants including local, state and federal tax revenues.

You can be against it on philosophical, ideological or political reasons but it's going to do its job at a small cost or even no cost.

andres3 · July 2009

To be honest, I may be just a tad bit jealous, but much moreso I am just disappointed our goverment and govermnent officials could have such terrible judgement, flawed logic, and ineptitude to inact such a horrific idea and program such as the C4C.

This is such a terrible use of taxpayer money, I will get my revenge by not voting for one single incumbant in the next election, and that includes Obama, and I'm a Democrat!

Mr_Shiftright · July 2009

But it hasn't even STARTED yet

kdhspyder · July 2009

That's one view. I'm of the opinion that every stimulus possible should be used across the entire economy to reverse the fall. If this boosts the entire segment at little or no cost then it's well worth it.

You might want to look deeper at what the actual cost will be.

Interest cost on the amount borrowed....$1 Billion x 1.0%
versus
Increased tax revenues at the local, state and federal levels from dealers and vehicle makers
plus
increased payrolls ( payroll taxes, etc ) in a huge array of employees from steel mills to suppliers to auto makers to truckers to railroads to dealerships

But that's only the cost vs the resulting tax revenue stream. The real benefit is getting buyers out of their houses and breaking the sense of malaise that descended on the country last fall and winter. That's the key benefit of the stimulus. The fact that it's almost revenue neutral is just good planning.

isellhondas · July 2009

I don't think I'm missing anything.

I can argue both sides and I hope you're correct.

More borrowed money...oh boy!

maryh3 · July 2009

As a republican I think the program is BS too. The government has no business inventing these types of programs. It's not the function of government. But as they take every darn dime of my money they can get their hands on to give to everybody but me, I'll return the favor. If I could opt out of paying taxes, I'd opt out of this program too. But alas, nothing is more certain than death and taxes.

gagrice · July 2009

Interest cost on the amount borrowed....$1 Billion x 1.0%

The only reason we are getting that interest rate is because China wants US to keep buying their crap. What happens when Treasury bills are 15% as they were in the Carter era? I would buy some myself. Your revenue neutral spin is hardly fact. It is your way of justifying a poor idea. Most of the vehicles sold will have been sitting on the lots for 6 months. That will only put salesmen to work and the salvage yards. Hardly a wide array of benefit.

I did drive by the Ford dealer this morning and it seemed busier than it has been for months. Did not see any cars that looked like clunkers.

Mr_Shiftright · July 2009

Americans have been long in the habit of borrowing ever since the 1970s, when real (inflation adjusted) wages stopped going up (first time in 150 years in US history?). First they started working longer hours to compensate for the standard of living they could no longer afford, and once fried from overwork, then started borrowing like maniacs. C4C is nothing new in that regard, it's just "business as usual", so I don't see what the fuss is about. This is American businesses' newest love child. It's amusing to see some politicos pointing at it as if they weren't the father. :P

kdhspyder · July 2009

As a republican you can now complain about the current situation because there is a democratic majority creating the laws. However I didn't see any hue and cry from republicans such as yourself over say, Mr Bush's Personal War or $350 Billion given to several favored banks last fall with no strings attached. But on topic I also never heard a peep from the legions of fiscal conservatives about the hybrid and clean fuel tax breaks created for the auto industry back in 2005 ( GOP Pres and GOP Congress ). You personally may be against such programs - as a republican - but the REPUBLICANS are not against such programs if such programs serve their purposes.

I think that the fiscal conservative minority have suddenly loosened their vocal cords because now it suits their purposes to be less profligate then when they were in power. When your former great leader was in office it was awfully silent from your quarters. Hello, this sounds like government as usual.

In fact your statement..

The government has no business inventing these types of programs. It's not the function of government

..is absolutely wrong!! Government and business are one in the same. There is no difference except one creates a state of stability for the other to grow and prosper while the other pays the bills. If you think otherwise then you're just naive.

If you look at Big Business you see Government. When you look at the Government you see Big Business.

kdhspyder · July 2009

I know, I know..... there's a huge boogeyman around every corner and behind every tree. Watch out ! Watch out !! In any rate right now the cost of borrowing is 1% p.a. for 5 yr notes. That's $10 million in interest annually.

As to the wide array of benefits you only have to widen your eyes. I was part of the line of the transaction for 25 yrs as a steel supplier. Whatever happens at the sales level is reflected all the way back to the steel mills and plastic producer and aluminum mill. Because you can't see that far back doesn't mean that it doesn't exist. Did you think that vehicles sprouted out of the cracks in dealers' lots?

selden · July 2009

I'm amazed at the number of people calling CARS a failure before it has even started. I'm willing to make a few predictions:

1. Next Wednesday I'm getting rid of a 1996 Nissan Quest that is in its death throes (but still drivable) for a Honda Fit.

2. Automobile showroom traffic is going to go through the roof this weekend, which will be the busiest to date this year. People who didn't plan ahead are going to have to get in line.

3. CARS will mark the turn-around point in the economic recovery. If it's as successful as I think it will be, CARS will likely be extended with additional funding. Whether increased economic activity will offset additional national debt remains to be seen, but the multiplier effect suggests that it will.

stephen987 · July 2009

Selden, I'll stand by your first two statements. But I think it may be expecting too much to call CARS the "turn-around point in the economic recovery."

Will it help? Sure. The auto business reaches deep into our economy--credit, retail, steel, rubber, glass, electronics, the list goes on--they are all affected by auto sales. So stimulating auto sales is a good way to stimulate other economic sectors.

But I remain skeptical about the debt issues. Not so much the national debt--that's almost a given--but consumer debt load is still too high. It is in the process of correcting itself, but there will be a lot of casualties before a saner equilibrium is reached in two or three years. We didn't get into this in a few months--the loose credit policies go all the way back to at least the Clinton years--and it will take a while to sort out.

Meanwhile, I am in a more fortunate position than many. I have the money to buy a car, and I probably will do so using the C4C program. Perhaps a US-built Honda, Mazda, or Hyundai. You're welcome!

maryh3 · July 2009

As a Democrat you can now keep silent and support the personal war that still is costing US lives and money over in Iraq and Afghanistan (4 were blown up yesterday) except you now will say these wars are to protect the US whereas when Bush was in office they were personal in nature. Why the sudden silence?

Sorry I object to all TARP money and bailouts.

As for hybrid tax breaks -- keeping money out of the hands of the government and back in the hands of those that earned it -- I will never object to. I never object to any tax breaks given to tax payers. I object wholeheartedly to all taxes.

"Government and business are one in the same."

That is SELECTED business. The ones that contribute to your politcal party only, not Haliburton for example -- right?

Well certainly at the core of Socialism the government and business are one and the same. Government Motors leading the way.

so·cial·ism (sō'shə-lĭz'əm)

Any of various theories or systems of social organization in which the means of producing and distributing goods is owned collectively or by a centralized government that often plans and controls the economy.

But this country was founded on the Laissez Faire concept where the private and public sectors did not interfere with eachother.

http://en.wikipedia.org/wiki/Laissez-faire

kdhspyder · July 2009

I am absolutely against any war in Iraq and the President is correct to exit that massive mistake. OTOH the person that designed the attack on our country is still at large presumably still aided by the Taliban so he, his group and the Taliban are fair game for the full power of the US to crush their souls and send them to hell. IMO this will be Bush's darkest mortal sin. He never got OBL. For 6 yrs Bush let OBL spit in his face even after he helped OBL's family leave the US.

It's convenient that now the fiscal conservatives suddenly speak up against TARP, sort of barring the door after the horse is out, aye? It's easy to offer lip service against the socialist actions of Bush/Paulson now that they're gone. Did you know that until the day he left office Paulson refused to tell anyone what he did with the first $350 Billion in TARP funds.

Hybrid vehicle tax breaks are no different than these price reductions for clunkers...except that the hybrid tax breaks were instutited by the republicans ( therefore they're good ) and the clunker price reductions were instituted by the democrats ( therefore they're bad ). Where do you think that the money for the hybrid vehicle tax breaks came from? Bush/Paulson borrowed it. You're so transparent.....

Our country was not founded on laissez-faire environment between government and business. You're wholly incorrect. The reason that we have a Constitution is because the original loose Articles of Confederation did not create a strong central Federal government. Business disputes between the states almost tore us apart. Because of these business disputes the Constitutional Convention was formed in order to create an overriding body ( the Federal Govt ) to ajudicate business and legal disputes.

IOW the business community needed a stable environment overseen by a strong central government so that business could prosper. There were no ExxonMobil, Halliburton or GM at that time. All business were small businesses. These business wanted the protection of a strong stable government. The business interests created the Federal Govt. The Federal Govt oversees the welfare of businesses. Businesses pay the bills of the Gov't.

sportfit · July 2009

Sorry to hear you are buying a fit. I own a 07 manual sport, and I would not buy this car again. It has problems to numerous to list them all, but may I urge you to drive the new Prius, which my Dad just got. It will get 50 mpg, and the rebate gives you a chance to make a difference. Go drive one and notice the power, the finish, and the quiet inside. The bigger wheels and longer wheelbase makes it safer on the road, The Fit is cute enough, but it will not last long. Everything about it is cheap,

rik4 · July 2009

now that makes sense. you use us federal money to trade in a nissan quest for a new honda fit. now that will really help create jobs in japan. but should it not help stimulate the economy and job market in the usa. oh well such is politics.

gagrice · July 2009

As for hybrid tax breaks -- keeping money out of the hands of the government and back in the hands of those that earned it -- I will never object to. I never object to any tax breaks given to tax payers. I object wholeheartedly to all taxes.

You have made a very good point. C4C is corporate welfare. The alternative vehicle tax credit is only given to those that paid taxes to start with. This is just another program to hand out money to the undeserving in many cases.

rik4 · July 2009

if you want to save and chrysler is going to double the money why not also look at a patriot or dodge caliber they are the same engine same tranny and same underpinnings. the caliber should be the better deal if money is an issue.

selden · July 2009

The two most disappointing test drives I have ever had have been a Mini Cooper and a Prius. For each, I couldn't wait for the test drive to be over. Looking at reliability stats, the second generation Fit has among the fewest problems of any car on the road.

selden · July 2009

The Quest was built in a Ford factory in the USA (same car as Mercury Villager). If I could find an American car that is built in this country, that fills my requirements for size, efficiency, and most importantly, reliability, I would buy it. I've been researching a replacement car for over a year, and an American car that meets my requirements simply does not exist at this point. I considered the Ford Focus, but reliability is execrable. The Chevy Aveo is a Korean import (as well as being a crappy car). Here's a first-person (as opposed to anecdotal) perspective from a former Focus owner:

My wife and I just traded in a 2000 Focus like two weeks ago for a Cube. The biggest factor in not buying another Ford was at 107,000 miles the A/C was busted, the Heater was busted, the whole car vibrated because according to my mechanic, Ford built the engine wrong so after about 40,000 miles that's what they all do. (I've driven 3 other 2004 Focuses and they all did the same thing). The power mirrors stopped working. The alternator had to be replaced twice.

My family has owned a '94 Nissan Pickup and a '98 Honda Civic and each gave us over 250,000 miles on the same engine/transmission, The A/C and Heater never failed. The car never vibrated do [sic] to over paid/under skilled union workers. And they both held their value better than the Ford.

Although the Fit is built in Japan, Honda builds a lot of cars in this country. A lot of GM and Ford cars are built in Canada and Mexico, or are imported from Korea. At this point, [i]any[/i] improvement in car sales is going to help the economy, regardless of where the car is actually built.

selden · July 2009

Point taken; the economic impact of CARS is pretty much unpredictable at this point. One argument that I haven't seen raised is that the CARS program has probably made new car sales worse than they would have otherwise been for the past three months, because many people (like me) are holding off on purchasing. Why buy a car in June if you can get the same car for $4500 less in July?

stephen987 · July 2009

Selden,

The Focus had a well-deserved lousy reputation for reliability in its first few years. But now it's roughly comparable to mid-range Japanese brands (Nissan, Mazda) and near the top for vehicles from the D3. At least, that's what CR says.

maryh3 · July 2009

You have displayed quite well how things done by your party equal good but if the same thing is done by a different party equals bad. LOL. I can't support bailouts whether they be commanded from rep/Bush or dem/Obama. I do support wars for protection whether commanded by either also.

Too political for this board. Constitution was written to limit the power and scope of government, a keep it out of the private sector. Articles of Confederation had nothing to do with the private sector, they were about States verses Central power. There was no income tax for the Feds to "distribute" as corporate or social welfare. The men throwing tea into the harbor protesting taxes hated a strong powerful government and limited it through the Articles and Constitution. But some just keep wanting more government and dependency. Count me out.

maryh3 · July 2009

To be honest, I may be just a tad bit jealous

I have encountered a few who are angry about this. A waiter told me yesterday that he wishes he had waited to buy his car. He thought it was unfair for him to have larger car payments than those the government will help out now will have. Kind of like the government paying the survivors of 9/11 and not paying those from the Oklahoma bombing. Seems a little unfair from a government whose function, as defined in the Constituion, is to "establish justice".

andre1969 · July 2009

I have a friend who's in a similar situation. He had a 1997 or so Ford Explorer, with about 120,000 miles on it. Earlier in the year, it got totaled. He went car-less for awhile, but then a few months ago bought an '09 Civic. Had that Explorer not been wrecked, it would've been a perfect candidate as a C4C turn-in.

He was lamenting the fact that he missed out on it, until a few important facts came up in our conversation. First, if he just went to trade something like that in, I doubt if he would've gotten more than $1000-1500 in trade. Anything more, and I'm sure the dealer would've made up for it on the other end, with fees or financing or something else that would make it disappear. Second, he got something like $4800 for it, as a total. So even though he missed out on the C4C thing, he still came out ahead by $300 by getting it totaled, rather than doing the C4C thing.

And to that waiter who thought it was unfair that those who held offf are getting a better deal, yeah, it's unfair. But, here's a newsbreak...life is rarely fair. Just look around, and it's not hard to find someone getting an advantage that another is not.

lemko · July 2009

...does a Chrysler 300 with a 3.5 V-6 get at least 22 MPG? Would a 2005 Mercury Grand Marquis LS qualify as a guzzler? It would be weird to crush a 4 year-old car.

Nah, I don't want another car payment though $9K off a 300 sounds tempting. Besides, if I were to get a Mopar, I'd wanna go all the way and get a 300-C SRT8 with the 6.1 Hemi and all.

stephen987 · July 2009

The '05 Grand Marquis is worth more than you'd get from the Clunker rebate.

andre1969 · July 2009

The '05 Grand Marquis is worth more than you'd get from the Clunker rebate.

That, and the 300 with the 3.5 doesn't qualify, as it only gets 20 mpg combined (17 city, 25 highway).

And sorry, Lemko, but the only way you'd get the full $9000 (double the $4500) would be to find a car that gets 28 mpg combined (10 mpg more than your Grand Marquis). Chrysler doesn't make anything that does that. In fact, the only vehicles that get 22 mpg combined or better (qualifies for the $3500 rebate) are the 4-cyl Sebring/Stratus, Compass, Patriot, and Calibre. And I couldn't see you being happy with any of those cars. :P

Mr_Shiftright · July 2009

I can understand the Prius road test being a disappointment but why the MINI? Too harsh a ride? Did you get stuck with the automatic?

Calling C4C "corporate welfare" is like calling an elephant "a large land mammal". It's pretty clear that this is the purpose of it, and no one has been hiding the fact that I can see.

andres3 · July 2009

If this boosts the entire segment at little or no cost then it's well worth it.

But why make it a trade-in rebate??? Why just pick the irresponsbile people who made poor choices in vehicles in the past to get rewarded?

Why not just give a tax credit of $4,500 on all new vehicle purchases for vehicles getting more than say... 22 MPG combined? Why tie it into what people already own and trade-in? That is the stupid part of the plan, and it's just as stupid as police officer's in Cambridge who arrested Professor Gates.

Obama was stupid for enacting and supporting C4C.

Obama is a hero again to me for being just as brilliant in calling it like it is and saying the Police acted "stupidly." I've found cops act stupidly on the streets all the time, regardless of race, and I'm very light/white skinned.

Now in weighing all of this "stupidity," I must admit that the C4C plan seems like less of an issue now when I consider how much money is wasted on incompetent police and traffic enforcement services. I say in an era of budget cuts we should eliminate the Highway Patrol's entirely. What a useless division!

andre1969 · July 2009

Why not just give a tax credit of $4,500 on all new vehicle purchases for vehicles getting more than say... 22 MPG combined? Why tie it into what people already own and trade-in? That is the stupid part of the plan, and it's just as stupid as police officer's in Cambridge who arrested Professor Gates.

Because part of the reason for doing this is to get the guzzlers off the road. Sure, it's benefiting people who made poor choices in the past, but to a degree it's benefiting all of us, in reducing this country's fuel consumption.

Besides, if they just gave out a $4500 tax credit, regardless of whether you trade or not, I'm sure the money for that program would get exhausted in no time flat!

I say in an era of budget cuts we should eliminate the Highway Patrol's entirely. What a useless division!

Yeah, good luck with that. In fact, with so many local and state governments in the red, I wouldn't be surprised if they don't start setting up MORE speed traps, to help bring in more revenue!

andres3 · July 2009

Sure, life is unfair, but that does not mean the government should purposely and deliberately engage in unfair behavior and policies.

The goal should be fairness, not unfairness.

andres3 · July 2009

Besides, if they just gave out a $4500 tax credit, regardless of whether you trade or not, I'm sure the money for that program would get exhausted in no time flat!

Then make the requirment that the new vehicle has to get 25 MPG combined, that'll reduce the amount of cost in claims taking advantage of it. Or you could reduce the credit to $2,250 so it isn't as attractive.

I don't like the rules of the game changing every 3 minutes or 3 days to benefit one particular group that happens to be the most corrupt and politically influentual the week before.

andre1969 · July 2009

I don't like the rules of the game changing every 3 minutes or 3 days to benefit one particular group that happens to be the most corrupt and politically influentual the week before.

Oh I'm with you there, but what can you do? That's just part of the American Way, it seems? Only thing you can do is throw all the crooks out of office. But all that'll do is get you a new set of crooks. :sick:

maryh3 · July 2009

You can limit the power government has. Less power less corruption. Besides, who wants government intrusion and dependency in their lives?

kdhspyder · July 2009

But why make it a trade-in rebate??? Why just pick the irresponsbile people who made poor choices in vehicles in the past to get rewarded?

Your perspective is far far too limited. You're assuming that all the participants are the unworthy "..irresponsible people who made poor choices in vehicles in the past..". Now broaden your perspective and consider those that purchased SUVs and trucks in the 90s when gas was $.90 a gallon and they used these vehicles for their intended purposes. Now the vehicles are 12-15 yrs old, have little or no value and have served their owners well. It's simply that the owners have no further use for them and simply don't want the vehicles any longer.

Why not just give a tax credit of $4,500 on all new vehicle purchases for vehicles getting more than say... 22 MPG combined? Why tie it into what people already own and trade-in? That is the stupid part of the plan, and it's just as stupid as police officer's in Cambridge who arrested Professor Gates.

It was the auto industry that wrote this legislation. It's their bill. They wrote it to spur their sales in the way that they want it to. Nothing else can be said. Business and Government are one-in-the-same.

Obama was stupid for enacting and supporting C4C.

It's the voice of the auto industry speaking. No politician is going to stand up and be a target for all the parties that will benefit from this. The first and foremost beneficiaries will be the thousands of small businesses called auto dealers. These are located in every voting district in the US, savvy politico's from neither party are going to step forward and stomp on legislation to benefit these small businesses in their districts. Add to the fact that the buying public gets the opportunity to take a $3500 or $4500 discount and only the rigid idealogue with no sense of reality will fight this.

This is bill is 'auto-approve'. Welcome to the United States of Business.

kdhspyder · July 2009

There is nothing 'unfair' here. It's open to anyone who has a vehicle that the government wants off the road. If you're whining about not getting some of the largess, well then bad luck.

kdhspyder · July 2009

Then make the requirment that the new vehicle has to get 25 MPG combined, that'll reduce the amount of cost in claims taking advantage of it. Or you could reduce the credit to $2,250 so it isn't as attractive.

I don't like the rules of the game changing every 3 minutes or 3 days to benefit one particular group that happens to be the most corrupt and politically influentual the week before.

More whining and exageration. What rules are changing 'every 3 minutes or 3 days'? What 'particular group that happens to be the most corrupt and politically influential the week before' are you railing against? Drug gang members? Mafiosa? Chinese tong members? Bankers?

It sounds to me like you missed out on this program like many millions of the rest of us ( my entire family for example ) and now you're angry that someone else is able to take advantage of it ( corrupt and politically influential :surprise: ). Here's a towel for your tears.

Mr_Shiftright · July 2009

Seems like most Americans want government intrusion and dependency in their lives. They've been voting for it like crazed weasels for the last 30 years and they got it in spades from 1980--2004.

C4C should be likened to a bandage on a bad wound. If that's "interference" in the natural processes of dying, well, okay, I can't argue that point.

british_rover · July 2009

C4C should be likened to a bandage on a bad wound. If that's "interference" in the natural processes of dying, well, okay, I can't argue that point.

Like those nut jobs who won't go to a doctor if they get sick. Yes that is an excellent idea. :surprise: :confuse: :sick:

maryh3 · July 2009

Or perhaps like keeping the brain dead alive under total life support? Or giving a heart transplant to an old cancer riddled patient instead of a healthy youngster? Letting something die should bring new life to a dying, corrupt, incompetent, unprofitable, industry. Bankruptcy cleans out the dead weight, shouldn't merely let it continue. I see "Going out of Business" signs everyday. Change is Good.

Change is needed -- didn't so many just vote for that? Selective change I guess.

Aid to Exxon = BAD!!

Aid to GM = GOOD!!

Aid to Dillards Department Stores = BAD!!

Aid to AIG = GOOD!!

Mr_Shiftright · July 2009

The US auto industry is worth about $350 billion dollars, employs over 1 million people and represents roughly 4% of the total US economy.

Do you understand what the effects of the eradication of 4% of a country's economy and one million jobs does to that country?

We are not talking Starbuck's here.

maryh3 · July 2009

By the same token giving money to an industry of that size guzzles more $$ than the small ones would. The bigger they are the harder they fall, and the more debt they produce to the tax payers.

New jobs will be created when a new company forms. People will always need cars. Shouldn't stifle entrepreneurship and discriminate against upstarts. Necessity is the mother of invention.

Mr_Shiftright · July 2009

I think you may be longing for a Lost World, circa 1955. :P

Necessity is also the mother of some very ugly events. Americans have used up all their options to sustain their standard of living "on their own". (working more hours, borrowing all they can). If the government does not intervene, it's a potentially highly unstable social situation. (see, Hoover ,Herbert).

Social Darwinism is great if you are the eater and not the eat-ee.

andre1969 · July 2009

If the government does not intervene, it's a potentially highly unstable social situation. (see, Hoover ,Herbert).

Well, Archie and Edith liked him enough to sing about needing a man like him again. And Grandma Walton sure had some pretty strong opinions about that Roosevelt commie blindly spending our country into more and more trouble. :P

Mr_Shiftright · July 2009

We could all be Herbert Hoover. Just go to your office, close the door and take a nap.

My two cents is that, as a rule, looking at all of history, that in an EXTERNAL crisis it is sometimes better to do nothing and in an INTERNAL crisis it is usually worse do to nothing.

The trick is to look at the Big Picture. The assumption that spending NOW increases debt beyond which what it would have been by spending NOTHING, is totally groundless. It could cost more for inaction than for action, in other words. The spending of wealth could easily be outstripped by its evaporation.

maryh3 · July 2009

That doesn't make sense. The government gets its money from it's people (or China!!). Getting people to work to produce cars that really aren't needed - how can this help? We take government money to give to people to buy cars so that we can keep Detroit working to produce more cars by crushing their old ones? Sounds like busy work. They when they earn the government sponsored wages we tax them away back to the government. More busy work. Good bees working in the hive I guess.

Perhaps the standard of living needs to decline because it is no longer sustainable. :surprise: And they complain about the dwindling of natural resources.

kdhspyder · July 2009

What you're proposing is far too simplistic. You simply don't understand the structure of this industry. The barriers to entry are so huge that no new company can just come in and suddenly put a full lineup of new vehicle in the market.

Every vehicle requires at least $1 - $2 Billion each for development costs. Each new plant requires another $Billion to build it and tool it. Developing a network of dealers over the entire continent requires years and years. Marketing, distribution and sales all require additional $Billions.

That's before the first vehicle is sold.

That's why there are no upstarts and new faces. Only a niche maker like Tesla selling $100.000 hand-made low volume vehicles might try to buck this trend. To produce a whole lineup of 10 to 20 vehicles would require an initial investment of $20 Billion. And there's no assurance that the new company would be anything other than a rookie in the field. Would you put the safety of your family in the hands of a rookie first-time car builder at 80 mph on the Interstate system? Not likely.

Look up 'Barriers to Entry'. It's a basic economic principle.

stephen987 · July 2009

That's why, despite all the hype, no one in the US is driving around in a Chery or a Brilliance BS6. Even a relative giant like Hyundai--a huge steel, shipping and electronics conglomerate--had a very difficult time getting started in the US market, and that was with (originally) just one model.

Cash for Clunkers - Good or Bad Idea?

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