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Cash for Clunkers - Good or Bad Idea?



  • british_roverbritish_rover Posts: 8,458
    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:
  • maryh3maryh3 Posts: 263
    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_ShiftrightMr_Shiftright Sonoma, CaliforniaPosts: 64,490
    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.
  • maryh3maryh3 Posts: 263
    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_ShiftrightMr_Shiftright Sonoma, CaliforniaPosts: 64,490
    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.
  • andre1969andre1969 Posts: 23,496
    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_ShiftrightMr_Shiftright Sonoma, CaliforniaPosts: 64,490
    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.
  • maryh3maryh3 Posts: 263
    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.
  • kdhspyderkdhspyder Posts: 7,160
    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.
  • stephen987stephen987 Posts: 1,994
    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.
  • seldenselden Posts: 22
    " Why just pick the irresponsbile people who made poor choices in vehicles in the past to get rewarded?"

    13 years ago I had a teenager in the house, and needed a minivan. I don't view that as a poor choice by an irresponsible person. The teenager has flown the coop, and I'm looking for a smaller car.

    The CARS law is what it is, and like most pieces of legislation, involved a lot of lobbying and compromising. Some people (me) will benefit from it, and some (those with cars getting more than 18 mpg) won't.
  • Mr_ShiftrightMr_Shiftright Sonoma, CaliforniaPosts: 64,490
    That's a good point.

    Once the American auto industry caves in, that's it, it's not coming back---not for the rest of eternity----any more than our consumer electronics industry. For a good example of what will happen to us, look to the UK. Aside from a few minor players, they don't make cars anymore except for foreign owners.

    A U.S. president would have to be a bonehead to stand by and allow the American auto industry to evaporate without at least attempting every possible remedy to save it.

    I'm not sure where the idea got planted that if a person loses a job in one industry he finds one in another in the 21st century America. Yeah, he does in a sense, from machinist to Burger King.
  • steverstever Posts: 52,462
    "DETROIT (Dow Jones)--The U.S. government will launch a $10 million ad campaign to promote the "Cash For Clunkers" program, which kicks off Monday with a launch event in Washington, D.C., according to a person familiar with the plan.

    The ad campaign, funded by the National Highway Traffic Safety Administration and slated to run August through October, features an old vehicle that goes into a compactor and emerges as a new car as a spokesman explains the benefits of the program." (no link, sorry).

    The automakers are already doing ads and they'll ramp the ads up shortly. Meanwhile the feds are waiting until August to start their ad campaign? I guess the NHTSA thinks the money isn't going to run out anytime soon.
  • gasmizrgasmizr Posts: 40
    It will be interesting to see how the automakers try to increase the transaction price with this program as they have already started to do. I am betting there will not be near as much discounting as there has been in the past 8-9 months. You may do a little better as an individual but maybe not near as well as you may think. I just purchased a car at $1200 under dealer invoice for a Honda. Finance rates are good, not great, but there is no customer rebate from the manufacturer. Negotiated the deal before the C4C program was really laid out. I paid cash, no trade, no vehicle in my household met the C4C requirements. I am wondering how many dealers are going to "deal" at those types of discounts now that this plan is available. Chrysler in a heartbeat, GM probably, Ford and the Japanese very little, Korean yes. I wish you all luck but I will be interested to see what the top level transaction prices are verses the early part on 2009. Something to think about. :sick:
  • steverstever Posts: 52,462
    Yep, the local Hyundai dealer sure didn't start off with a competitive number, but I'm still not quite ready to buy so I didn't dicker with them on the numbers at all. The Scion we've shopped is at a one price store, so that would solve some of that ADM problem. Priuses aren't marked up here, but they are going for close to MSRP.

    After driving an '89 for ten years and now driving a '99, I really would like to break that cycle and get a 2010 model. The Prius is a 2010, but the Hyundai we liked won't be here asa 2010 until August or September (hopefully; it's already available in Canada I think). Ditto the xD on the Scion lots - their 2010 will be $150 higher but will include ESC standard (it's like a $650 option now).

    So ... if the clunker vouchers run out fast and the program isn't re-upped, we aren't going to be too upset. The van could still bring $2,000 on trade (maybe more, since if all the clunkers are crushed, dealers will be fighting for used inventory, lol. I laugh, but that's been an issue in Germany with their clunker program). A $1,500 or $2,500 "loss" won't bug me near as much as rushing into a purchase that I'm going to be stuck with for a few years.

    I think you're right about the discounting, and I'm curious to see if the automakers cut out the incentives next week. Chrysler's aggressive incentive just announced this week may temper some of that.
  • erniesdaderniesdad Posts: 37
    Once the American auto industry caves in, that's it, it's not coming back---not for the rest of eternity----any more than our consumer electronics industry. For a good example of what will happen to us, look to the UK. Aside from a few minor players, they don't make cars anymore except for foreign owners.

    You are correct. The british car industry was killed by the British government in an attempt to "save" it.
  • stephen987stephen987 Posts: 1,994

    You are correct. The british car industry was killed by the British government in an attempt to "save" it.

    No, the British mass-produced auto industry was killed by poor quality, poor labor relations, stupid management decisions based on a lack of product awareness, and too many small companies competing for a small market.

    By the time the government forced the merger of BMC and Leyland, the handwriting was already on the wall. The resulting British Leyland conglomerate had too many incompatible brands fighting with each other for internal political advantage, and little-to-no economies of scale because of a lack of shared engineering. Government "help" certainly didn't help--but the industry was already in the tank.
  • 100chuck100chuck Posts: 145
    Well here's my deal
    2009 Ford Escape XLT FWD MSRP: $24,975 Sun and Sync package(4 cylinder)
    Taxes Fees and plate transfer 1459.00
    Rebate on 2009 Escape -$1000.00
    Ford Rebate and special financing -$1500.00 0% Financing for 36months
    Z-plan discount -$2364.00
    Trade-in Value 96 Taurus SHO -$4500.00
    Total out the door $17,070.00 or $474.17 per month.
  • philliplcphilliplc Posts: 136 site changed to say "starting on the 27th" instead of 24th
  • steverstever Posts: 52,462
    The final rules are out today. One section says that people who purchased after July 1 can talk to their dealer about getting the voucher.

    The rules define some more stuff, like "drivable condition" (you can't tow your clunker to the dealer for example).

    Another new wrinkle is that engine blocks now have to be destroyed. Too much chance for fraud otherwise.

    Here's the link, in a pdf file.
  • philliplcphilliplc Posts: 136
    dealers must disable the trade-in vehicle's engine prior to transfer to a disposal station.

    sounds like a hassle
  • steverstever Posts: 52,462
    "The agency has determined that a quick, inexpensive, and environmentally safe process exists to disable the engine of the trade-in vehicle while in the dealer’s possession. Removing the engine oil from the crankcase, replacing it with a 40 percent solution of sodium silicate (a substance used in similar concentrations in many common vehicle applications, including patching mufflers and radiators), and running the engine for a short period of time at low speeds renders the engine inoperable."

    I guess they read Snopes about sugar in the gas tank not being that big of a deal.

    The NHTSA estimates the cost of killing the engine will be $30 or less and the dealer will have to pay that. So the $50 payment the dealers get from the feds is going to be eaten up fast.
  • It's a great stimulator to the economy, but the idea that it is somehow helping the environment is a farce. Generating a brand new car takes natural resource sand creates emissions, so just because we are getting rid of an '87 Suburban doesn't mean we are really helping the environment. So few cars qualify for the program -- they should loosen up the requirements ( Cash For Clunkers Calculator )
  • jipsterjipster Louisville, KentuckyPosts: 5,686
    Sounds like a lot of waste ($$$). Destroying perfectly good engines and automobiles, that could be used to get people in automobiles that can't afford one.

    My mother in law will be trading in her 1998 Mercury Villager for something new. It's a nice van, low miles... very good condition. And they are going to crunch it? Stupid... bad idea.
  • steverstever Posts: 52,462
    Here's the blurb from the final rules about the purpose of the program.

    "The CARS program assists consumers who trade in their older, less fuel efficient vehicles for new, more fuel efficient vehicles. The program is designed to remove these older, less fuel efficient vehicles from the road, by requiring the trade-in vehicle to be crushed or shredded."

    I haven't read all 136 pages of the final rules, but I didn't see anything about stimulating the economy, and that's what I think the real purpose of the current law is.
  • philliplcphilliplc Posts: 136
    customers will be required to complete a survey to be included with the application for reimbursment?

    hopefully it's short : )
  • Mr_ShiftrightMr_Shiftright Sonoma, CaliforniaPosts: 64,490
    The British auto industry was killed by inept management, surly labor, and incredibly lousy product IMO. There's no saving THAT bad an industry, and I think the British government realized early on that they were trying to resuscitate a corpse.

    The American auto industry has far more vitality that the moribund British did in the 1960s, and far better product.
  • maryh3maryh3 Posts: 263
    I can save about $1500 if I take a Jeep Patriot over the Mazda Tribute. Is it worth it? Is the Patriot as safe as the Mazda Tribute?
  • stephen987stephen987 Posts: 1,994
    I can't speak to the safety issue overall, but I think the Mazda is a much nicer vehicle to drive and will hold its value better.
  • kdhspyderkdhspyder Posts: 7,160
    The fact that it's being cloaked in a greenie wrap is simply a bone thrown to the enviromentalists to bring them on board with this legislation. The real goal of the US Gov't is to get a significant number of buyers to use less fuel. This is being driven by the US Intelligence agencies and the Pentagon. Funny how they hide in the shadows and allow all the discussions to roil around about 'bailouts', 'stimulus', 'greenie issues' and yet they get what they want in the end - the US driving public using less fuel.

    Slick, very slick.
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