Its distorted and artifical supply and demand via the heavy hand of government intervention. It also led to higher sales prices (dealer margins) during its implementation period. C4C was mostly a car dealer subsidy using taxpayer monies and now shafting consumers that can't wait to buy. I also think longer term will show it just moved up demand and didn't really increase sales volume on an annual basis.
>> dollars to trade in your old "Clunker" (interesting choice of words)? >> Well, >> let's see who got the best of that "deal"..... >> >> If you traded in a clunker worth $3500, you got >> $4500 off for an apparent "savings" of $1000. You could have gotten >> $3,500 >> if you had just traded the car in. So you really are $1,000 ahead >> (depending on your clunker's value) at this point. Not too bad... >> >> However, you WILL have to pay taxes on the $4500 >> come April 15th(something that no auto dealer will tell you). If you are >> in >> the 30% tax bracket, you will pay $1350 on that $4500. >> >> So, rather than save $1000, you will actually pay an >> extra $350. to the feds. In addition, you traded in a car that was most >> likely paid for. Now you have 4 or 5 years of payments on a car that you >> did >> not need, trading in a "clunker" that was costing you less to run than >> the >> payments that you will now be making. Even if you save $1,000. dollars a >> year in gas due to better mileage, you're still gonna be in the red for >> five >> years....hello? >> >> But wait, it gets even better: you also got ripped >> off by the dealer. For example, the month before the "cash for clunkers" >> program started, every dealer in LA was selling the Ford Focus with >> all >> the goodies including A/C, auto transmission, power windows, etc for >> $12,500. because competition was stiff due to poor sales from the stalled >> economy. >> >> When "cash for clunkers" came along, they stopped >> discounting them and instead sold them at the list price of $15,500. So, >> you paid $3000 more than you would have the month before. Honda, Toyota >> , >> and Kia played the same list price game that Ford and Chevy did. Now >> let's >> do the math... >> >> You traded in a car worth: $3500 >> >> You got a discount of: $4500 >> --------- >> >> Net so far +$1000 >> >> But you have to pay: $1350 in taxes on >> the $4500 >> >> -------- >> Net so far: -$350 (that's >> minus....in the red) >> >> And you paid: $3000 more than >> the car was selling for the month before >> ---------- >> >> Net Loss: -$3350 >> >> We could also add in the additional taxes (sales >> tax, state tax, dealer prep, etc.) on the extra $3000 that you paid for >> the >> car, along with the Five years of interest on the car loan; but let's >> just >> stop here while you kick yourself. Suffice it to say that those costs >> will >> be much higher than any savings you get from "better mileage". >> >> So who actually made out on the deal? FEDZILLA >> collected taxes on the car along with taxes on the $4500 they "gave" you. >> The car dealers made an extra $3000 or more on every car they sold along >> with the kickbacks from the manufacturers and the loan companies. >> Manufacturers got to dump lots of cars they could not give away the month >> before. Lots of good or repairable used cars got taken off the market, >> crushed and sold as scrap metal to (ready for this?) CHINA! (Look it >> up...)And the poor consumer got saddled with even more debt that they >> cannot >> afford. >> >> FEDZILLA'S merry men (who promised that people >> making less than $250,000. would pay "not one red cent more in taxes") >> will >> make millions in new tax revenues after convincing Joe Consumer that he >> was >> getting $4500 in "free" money from the "government" In fact, Joe was >> giving >> away his $3500 car and paying an additional $3350 for the privilege. >> Chicago politics gone global...with an agenda. >> >> If you find errors in this math, please let me >> know..., I'm always willing to learn new things; and if >> you took "advantage" of the Clunkers deal, I have some swamp land down in >> Florida that's for sale... >> >> >> >>
That must be the new nut job email being spread around the internet now. I have seen similar versions of that posted on another thread here.
The problem is that the clunker rebate is not considered income by the feds and probably won't be considered income for any states either. So with the first part of that email being false how can we hope to trust all the rest?
You really should learn to google or read the actual rules on the cars.gov site before you post things that are blatantly false.
Is the credit subject to being taxed as income to the consumers that participate in the program?
NO. The CARS Act expressly provides that the credit is not income for the consumer.
back to top
I can tell you that we sure didn't make an extra 3,000 dollars on every clunker we did. I doubt hardly any dealers did. Lastly why would somone clunk a car worth 3,000 real money to get 4,500? You could sell it on your own and get more then 4,500. Most of the clunkers I saw were dollar cars. Real junkers who weren't worth any where near 1,000 dollars let alone 3,000. There were a couple of trucks that I thought would be worth more as trades initially but on closer inspection they were rusty or had serious mechanical problems. Some of them had bad accidents in the past or were salvage titles.
So who forwarded that email to you and where did it come from originally? Would love to see what organization generated it in the first place to see who's agenda they are trying to push by lying.
Fun copied and pasted email rant, but as most clunked cars I have seen wouldn't be worth nearly 3500 on the open market or in trade, the entire foundation of the whine is wrong.
The same people who were so silent over the past 8 years cry like babies now. Wonderful :sick: :lemon:
Because demand went up, and supply went down. Supply and demand always applies
C'mon ateixeira, that's simplistc thinking and I think you know it. Obviously supply and demand equilibrium is affected by the economic model involved and as competition decreases the equilibrium coefficient is less effective in response. It is also affected by outside factors such as technology changes, product innovation and government restrictions or intervention.
What the government did was help dealers reduce their inventory at taxpayers expense. This allowed the dealers to reduce supply and screw customers on price, particularly galling because we paid for it! C4C was not thought out and was a waste of tax money for most everyone except the dealers and a relatively few people with clunkers. It didn't really help Detroit. Dealers are now keeping their inventories lower so there hasn't been a lot of rebound Detroit car production in response to the effort, and I believe Japan was the biggest winner in sales attributed to to C4C as well. Its one thing to use tax monies as loans to GM in order to give them time to get through BK and keep people employed, it is quite another to use our tax monies to artiifically distort supply and demand and transaction prices. Nixon tried fiddling with supply, demand and pricing. The result that Ford and Carter inherited was a disaster.
IMO all C4C really accomplished was further increasing our deficit for nothing significant in return. Same goes for first time home buyer rebates and all this other nonsense. Down the road all of this easy spending deficit stuff is going to weaken the dollar, increase inflation and ultimately hurt the American economy and citizens. If you're going to spend tax dollars to supplement the economy, at least do like Roosevelt and Eisenhower and spend it on something constructive like roads and infrastructure.
I'll counter simply by saying the credit market collapse had the opposite effect, so C4C was to stabilize the market, not to sway it in automakers' favor.
The crisis came first.
Wall Street got 100x as much money and we don't hear 1/10th of the whining about that. I guess automobiles are just more visible.
I'll agree with the suggestion to improve the infrastructure, though.
I am up visiting my cousin in MN. He has a new Chevy HHR panel. He used a 1987 Ford van with over 200k miles. The transmission had no reverse. Dealer said no problem if you can drive it into the dealership. With all the incentives on the HHR he paid $12,500 cash OTD and really likes the little beast.
Instead of funding 'New Car' Purchases only, the offer should have focused on getting rid of clunkers first. A trade in for a used car better than the clunker you were driving should have been first. Deleting the worst cars from the road first by upgrading to a better 'used' car. THEN the program for new car sales would have had a better market resupplying depleted Used cars on the lot, While acheiving better New car sales with a better trade-in price for the still viable used car. More sales, more clunkers off the road, more options for all including those who cant afford NEW but could afford used ,'better than what they got' cars from the dealership. Dealerships would have sold more new, more used and gotten more REAL clunkers off the road. The NEW car ONLY deals did not help rid the real clunkers off the road, it only helped those who were going to buy new anyway, not those looking to 'trade-up to a passable used car (re-certified even) A win-win the govt ignored leaving the real clunkers still on the road while still passable cars were destroyed rather than replaceing. No help for us all by ignoring the 'little guy'. carl
The NEW car ONLY deals did not help rid the real clunkers off the road ...
Are you saying that all those clunkers traded in are still on the road? I don't think so.
A win-win ...
The buyer won. The government won. The dealers won. But somehow the taxpayer was left out of the equation and stuck with a bill of about $25,000 for each transaction. So it's more like win-win-win-LOSE!
The real clunkers are still on the road. Most of the real clunkers were either ineligible, or driven by those who aren't close to being able to afford a new car even if a 10K incentive was donated by our precious government.
I'd rather give 3BN to such a project than 3BN in aid to hostile ungrateful nations.
Yes, and no matter the definition, there are plenty of clunkers still on the road. The context of the original statement had nothing to do with that the Feds think of as clunkers or about the cars traded in as clunkers.
A red herring maybe, but the government is going to subsidize things no matter what you or me want - people have no real say in this system...some evils are lesser than others. I'd rather not subsidize a lot of things.
Of course that analysis assumes that their projections for new car sales were accurate. That people told the truth that they were going to be buying a NEW car anyway and not a use car.
It also ignores that lots of people who came in ended up buying a car and not trading a clunker in even though they came in because of the clunker program to being with.
Some people had a car they thought was a clunker but really wasn't or was worth much more then the $4,500. Those new sales cost the gov't nothing but did move the SAAR up. Those people came in because of C4C but didn't use any money from it.
Then there are the people who bought used cars instead of new cars for one reason or another. That didn't help the SAAR but it did help the local economy and the dealer selling that car.
Putting all that in the article or actually doing some real random sampling or interviews would of course wreck the shock value of $24,000 dollars per deal though.
If the purpose of the program was to take "clunkers" off the road, then the $24,000 figure is perfectly valid. I do agree, however, that if the intent was to stimulate the automotive economy then measuring its effectiveness requires additional factors to be taken into account.
The nature of this economic is not just a temporary slowdown. And the solution is not just let's get spending back to where it was, so that we can get the economy back to where it was.
C4C was bad for people in that it put the government deeper into debt, and it put more debt on the consumer, or withdrew savings and investments (for those who paid cash). It put both sections deeper into debt. Normally this would not be bad, and being in debt is not necessarily bad. But this is not normal-times, because we have been going deeper and deeper into debt year-after-year. The cure can not be the same thing that created the problem!
The 17M annual car sales of 2 years ago and the decade of increasing home values was only possible because of our government and the consumer going deeper and deeper into debt, which we can't afford; there is not sufficient welath behind it. Our country is like a person making $50K/year who spends $55K/year on goods. That can occur for a while, as a person can draw on savings, and then borrow from banks and friends and family. But it can't continue forever.
You can argue that many of the individuals who bought on C4C could afford it. But you still come back to the point that the government could have spent the $3B in other ways, and the consumer could have spent their $ on other things as well.
So NO, further overconsumption and debt is not good. We need to get back to a point where we consumption $ = production $
And I thought that for the most part we had agreed that the program was primarily their to stimulate new car auto sales and clear the decks to make room for new production?
Removing clunkers from the road was more of a secondary benefit and was there more to appease the greenies.
I still wouldn't accept the $24,000 dollar figure as perfectly valid as how do you know for sure the person was going to buy a car the month before or the next month anyway.
You don't. You know how often someone tells me they are a serious buyer? Tells me they are going to buy today, this week this month? I hear that at least once a day and it is probably true less then half the time. Plenty of those people do buy eventually, and I keep up on my customers so I typically know if they bought something somewhere else, but they often times buy a month or more down the road. I have people I have chased for a year or more with every conversation ending with the, "I am going to buy this time," line. Short answer is you can always trust what people say when asked a question like that. I think you can trust it even less when it is something politically charged like this program
Edmunds argument is that the majority of those sales would have happened eventually anyway but eventually doesn't do us very much good right now. It helped to have all those sales then and clear the decks for dealerships. There were tons of dealerships just drowning in excess floorplan costs and C4C helped them wipe that out.
C4C was the best promotion I have seen in the car biz in 16 years.
Sure it is easy to say that they could have spent the $$ on something else but with our goverments track record for spending does it really matter? At least with this program it put the money back in the hands of Joe and Jill Consumer and not in the hands of some Corporate Fat Cat.
The trickle down effect was great on it to. Not only did it jump start our business big time but it also generated business for allot of our vendors and put big bucks back in the local economy.
It also put allot of people on the road in cars that they won't be blistered in 2 or 3 years from now when it comes time to trade..
Joel - I can agree with you that it was better that individuals got the $, if the choice was between individuals and banks/FatCats.
However you don't really address my argument that the economic problems we faced is because we spend too much and go too far into debt which is phony $. We've been living on credit.
If you make $50K but spend $55K/year, what's the solution? Do you go get another credit card, and decide to go buy something? Live over-your-means on the new credit? What happens when you can't get anymore credit, and the interest is piling up, and the people who want to be repaid want their $? You have to cut back your future lifestyle say to $40K/year so you can pay off your debt. It is no different for this country.
When you hear of a negative trade-balance month-after-month, year-after-year, budget defictis, and increased national debt, those things tell you $ is flowing out of the country. We're overspending! The government is trying to keep U.S. citizens placated, by giving us a lifestyle that we can't afford anymore, because the rest of the world has taken a good portion of our wealth-creation (manufacturing)! It is hard for our economy to gain wealth when we create restaurant jobs and people who flip houses, or trade stocks actually think they are doing something useful (creating false paper-wealth is not actually creating physical-wealth!).
It is hard for our economy to gain wealth when we create restaurant jobs and people who flip houses, or trade stocks actually think they are doing something useful (creating false paper-wealth is not actually creating physical-wealth!).
We have been living through this bubble economy since the first Gulf War. The Dot.com bubble was the ultimate trickle down economic boom. The ones becoming millionaires were buying the goods that kept US all doing well. When it burst the low interest housing bubble took its place. Seems each bubble is bigger than the last. Will the sub-prime housing bubble be the bubble to end all bubbles?
C4C programs may be the least of our worries. I know 3 people that took advantage of the program and I am happy for them. It is a chance for me to see my tax dollars going to someone I care about. In reality it is just another waste of tax dollars added to the $1.5 Trillion this Congress and President have thrown to the wind. What is there to show for it?
Exactly. As you see today the stock market is getting hammered again. The stimulus has only provided short-term relief, but made the long-term problem worse. A lot of economists are saying watch out the 2nd half of this year when government incentives run-out (the government stops blowing air into the balloon that has the hole-in-the-side).
The government needs to stop incentivizing more consumption. We need to recover by producing more than we spend. That is what the government should be focusing on. We need to have programs that make the U.S. export more and import less. I'm glad to see the new jobs Ford is creating are paying $14/hr, which is much closer to what they should make to be competitive globally. I would like to see U.S. Ford workers make $40/hr, but then they have to do something exceptional that foreign workers can't do. You want to get paid better, then work better.
I would like to see U.S. Ford workers make $40/hr, but then they have to do something exceptional that foreign workers can't do. You want to get paid better, then work better.
They do, its called producing a superior car, truck, and SUV
I don't want to see them make $40 ph. Thats one of the things that had us screwed in the first place. I do belive that if Mr. Mullaley has to he will bust the Union
I am hoping Ford deals sternly with the remaining UAW workers. They need to say this is the way it is. We either make money with the cars you produce or we head to greener pastures.
Back to C4Cs.
Poetic justice would be served if Congress decided to have another C4C program NOW, while Toyota is on the no sale list. Toyota can sell the few Prius that Japan is able to build. No Camry, Corolla or RAV4s.
GM announced rebates for current Toyota owners ($1000 or 0% for 5 years).
Ford followed suit.
The government is way too slow to act. Plus Japan finally caved and allowed imports to qualify for their program, so right now the timing is wrong (late).
Ford went a step further and will include Honda in their program - thus tarring Honda with the Toyota brush. A little underhanded but were I done with our Accord I'd be down at the Ford dealership.
2015 Mazda 6 Grand Touring, 2014 Mazda 3 Sport Hatchback, 1999 Mazda Miata 2004 Toyota Camry LE, 1999.
>Ford went a step further and will include Honda in their program - thus tarring Honda with the Toyota brush.
That's a smart move. I hadn't read about it until now. Ford can better afFord to grant to both brands, but I wouldn't be surprised to see GM offer it to Honda also.
I don't think so. Ford and GM are providing a service to people who are looking for a car right now and whose confidence in Toyota or Honda has been shaken a bit. Some people don't have the luxury of waiting an indefinite period of time for a fix that may or may not be forthcoming.
There is nothing underhanded about it. It is the nature of the Biz. We went even further then some have said here. here is the announcement
Ford Division is announcing Trade-In Assistance cash. This is a National Program. Program #33208 Customers That currentley own or lease a 1995 or newer Toyota/Honda/Lexus/Scion/Acura Car, Truck, or SUV who trade in will recieve $1000 toward the purchase or lease of an eligible 2009/2010 Ford Car, SUV, or Truck
What's the big deal? It's only a 1000 buckaroos. I could understand getting motivated to dump my Toyota if the motivation was 4000. You could ask the dealer for 1000 off of MSRP any day of the week.
That reminds me of the certificate I got in the mail from GM in their owner's loyalty program current owners were sent certificate worth $1000. Good thing I didn't use it cause week and a half later through an email was told that it was now worth $2000. Imagine that and now another $1000 on top of that if I was to trade a Toyota? Plus a $2000 rebate (select models)? That's $5K before the value of the trade? Would you say that's better than C4C?
GM was giving $7,000 rebate on any Saturn or Pontiac a few weeks ago. You still might be able to get one, as the unsold ones were bought by dealers and now being sold as used. In this market anything < 25% off sticker after rebates and discounts, is not that good a deal, unless it's a recently released vehicle (then you shouldn't buy it, if you don't have to).
Remember GM now has government money to throw into their rebates, so the sky's the limit. Wait. Many economists are predicting Round II of the recession as the support of the balloons (stimuli) in our economy are coming to an end. And with Obama calling for level-funding and no new discretionary spending, you're not going to be seeing $ shoveled into these programs.
Big deal? No. It's just a tap on the shoulder indicating there are alternatives and you should have a look today. And, as Joel0622 points out, this is on top of other discounts and rebates.
The original point was that Ford and GM were somehow doing something underhanded. Whether $1,000 is a big deal or not doesn't seem to address that issue.
I am sure the consumer will get the shaft. If they are trading in a late model Toyota, I am sure the resale has tanked. And the dealer will be giving you a lot less than they would a few months ago. Just a gimmick to get people into the deserted show rooms.
I understand the official criteria of success for C4C is that it took future demand and moved it to the present. Yes, it generated activity for dealers, but the question is, What Next? Will a whole new group of consumers now step forward to buy cars? Or has the year's demand for new cars been satisfied? It's a good question, and I can only guess what the future will hold.
If the market drags, will the response be another round of government subsidies? It seems to me this is how we got into the situation. People don't buy new cars unless someone puts cash on the hood. Might be okay in the short term, probably not in the mid- to long-term. At some point, people have to be willing to pay somewhat more for cars than it cost to produce them.
Personally -- My family fleet includes two 1999 Saabs. Both have been in the family for their lives and still run like bears. Still, I'd have considered the C4C opportunity. EXCEPT -- since our 10+ year-old cars are efficient, clean 4 cyls, they didn't qualify. So someone else made this decision for me. Also, both cars show every sign of providing years of safe, dependable, enjoyable, environmentally friendly service in the future, and I wouldn't say thanks by consigning either one to the wrecker. Also, they're long since paid for, which to me is the best feature of a car.
So from where I sit, I'd say the government should not be taking $$$ from me and giving it to SUV drivers so they can buy what they should probably have bought in the first place if they used a bit of common sense. Many people just seem unequal to the task of prudent management of their personal finances and continually need someone to prop them up. It doesn't bode well for the future.
The editors at Automotive News predict residuals will drop a little, and gradually. No drop-off-a-cliff residuals.
It will all depend on how it takes to get them fixed. Even if they come out with a solution today but it takes 3 months to get a part and get it in a shop who will fix it we don't want it. Who wants to trade for something you can't put back in the market place for 90+ days. 90 days in the car business is like one dog year.
Production yes, because they are going to address the plants first. But what about poor old Joe Consumer with his 2004 model who is told the part is on back order, or us? Do you really think a Toyota dealer is going to care a whole lot about taking care of a recall on a car for a Ford Dealer. We will get the part when everyone else is taken care of.
I speak from experience. We are just now finishing up a cruise control recall that came out over a year ago. Its taken that long to get parts for every one. And this effected allot less cars.
Comments
Because demand went up, and supply went down.
Supply and demand always applies.
>> Well,
>> let's see who got the best of that "deal".....
>>
>> If you traded in a clunker worth $3500, you got
>> $4500 off for an apparent "savings" of $1000. You could have gotten
>> $3,500
>> if you had just traded the car in. So you really are $1,000 ahead
>> (depending on your clunker's value) at this point. Not too bad...
>>
>> However, you WILL have to pay taxes on the $4500
>> come April 15th(something that no auto dealer will tell you). If you are
>> in
>> the 30% tax bracket, you will pay $1350 on that $4500.
>>
>> So, rather than save $1000, you will actually pay an
>> extra $350. to the feds. In addition, you traded in a car that was most
>> likely paid for. Now you have 4 or 5 years of payments on a car that you
>> did
>> not need, trading in a "clunker" that was costing you less to run than
>> the
>> payments that you will now be making. Even if you save $1,000. dollars a
>> year in gas due to better mileage, you're still gonna be in the red for
>> five
>> years....hello?
>>
>> But wait, it gets even better: you also got ripped
>> off by the dealer. For example, the month before the "cash for clunkers"
>> program started, every dealer in LA was selling the Ford Focus with
>> all
>> the goodies including A/C, auto transmission, power windows, etc for
>> $12,500. because competition was stiff due to poor sales from the stalled
>> economy.
>>
>> When "cash for clunkers" came along, they stopped
>> discounting them and instead sold them at the list price of $15,500. So,
>> you paid $3000 more than you would have the month before. Honda, Toyota
>> ,
>> and Kia played the same list price game that Ford and Chevy did. Now
>> let's
>> do the math...
>>
>> You traded in a car worth: $3500
>>
>> You got a discount of: $4500
>> ---------
>>
>> Net so far +$1000
>>
>> But you have to pay: $1350 in taxes on
>> the $4500
>>
>> --------
>> Net so far: -$350 (that's
>> minus....in the red)
>>
>> And you paid: $3000 more than
>> the car was selling for the month before
>> ----------
>>
>> Net Loss: -$3350
>>
>> We could also add in the additional taxes (sales
>> tax, state tax, dealer prep, etc.) on the extra $3000 that you paid for
>> the
>> car, along with the Five years of interest on the car loan; but let's
>> just
>> stop here while you kick yourself. Suffice it to say that those costs
>> will
>> be much higher than any savings you get from "better mileage".
>>
>> So who actually made out on the deal? FEDZILLA
>> collected taxes on the car along with taxes on the $4500 they "gave" you.
>> The car dealers made an extra $3000 or more on every car they sold along
>> with the kickbacks from the manufacturers and the loan companies.
>> Manufacturers got to dump lots of cars they could not give away the month
>> before. Lots of good or repairable used cars got taken off the market,
>> crushed and sold as scrap metal to (ready for this?) CHINA! (Look it
>> up...)And the poor consumer got saddled with even more debt that they
>> cannot
>> afford.
>>
>> FEDZILLA'S merry men (who promised that people
>> making less than $250,000. would pay "not one red cent more in taxes")
>> will
>> make millions in new tax revenues after convincing Joe Consumer that he
>> was
>> getting $4500 in "free" money from the "government" In fact, Joe was
>> giving
>> away his $3500 car and paying an additional $3350 for the privilege.
>> Chicago politics gone global...with an agenda.
>>
>> If you find errors in this math, please let me
>> know..., I'm always willing to learn new things; and if
>> you took "advantage" of the Clunkers deal, I have some swamp land down in
>> Florida that's for sale...
>>
>>
>>
>>
The problem is that the clunker rebate is not considered income by the feds and probably won't be considered income for any states either. So with the first part of that email being false how can we hope to trust all the rest?
You really should learn to google or read the actual rules on the cars.gov site before you post things that are blatantly false.
http://www.cars.gov/faq#category-06
Is the credit subject to being taxed as income to the consumers that participate in the program?
NO. The CARS Act expressly provides that the credit is not income for the consumer.
back to top
I can tell you that we sure didn't make an extra 3,000 dollars on every clunker we did. I doubt hardly any dealers did. Lastly why would somone clunk a car worth 3,000 real money to get 4,500? You could sell it on your own and get more then 4,500. Most of the clunkers I saw were dollar cars. Real junkers who weren't worth any where near 1,000 dollars let alone 3,000. There were a couple of trucks that I thought would be worth more as trades initially but on closer inspection they were rusty or had serious mechanical problems. Some of them had bad accidents in the past or were salvage titles.
So who forwarded that email to you and where did it come from originally? Would love to see what organization generated it in the first place to see who's agenda they are trying to push by lying.
You mean you can't tell? It's from the Vast Right-Wing Conspiracy
The same people who were so silent over the past 8 years cry like babies now. Wonderful :sick: :lemon:
C'mon ateixeira, that's simplistc thinking and I think you know it. Obviously supply and demand equilibrium is affected by the economic model involved and as competition decreases the equilibrium coefficient is less effective in response. It is also affected by outside factors such as technology changes, product innovation and government restrictions or intervention.
What the government did was help dealers reduce their inventory at taxpayers expense. This allowed the dealers to reduce supply and screw customers on price, particularly galling because we paid for it! C4C was not thought out and was a waste of tax money for most everyone except the dealers and a relatively few people with clunkers. It didn't really help Detroit. Dealers are now keeping their inventories lower so there hasn't been a lot of rebound Detroit car production in response to the effort, and I believe Japan was the biggest winner in sales attributed to to C4C as well. Its one thing to use tax monies as loans to GM in order to give them time to get through BK and keep people employed, it is quite another to use our tax monies to artiifically distort supply and demand and transaction prices. Nixon tried fiddling with supply, demand and pricing. The result that Ford and Carter inherited was a disaster.
IMO all C4C really accomplished was further increasing our deficit for nothing significant in return. Same goes for first time home buyer rebates and all this other nonsense. Down the road all of this easy spending deficit stuff is going to weaken the dollar, increase inflation and ultimately hurt the American economy and citizens. If you're going to spend tax dollars to supplement the economy, at least do like Roosevelt and Eisenhower and spend it on something constructive like roads and infrastructure.
The crisis came first.
Wall Street got 100x as much money and we don't hear 1/10th of the whining about that. I guess automobiles are just more visible.
I'll agree with the suggestion to improve the infrastructure, though.
Are you saying that all those clunkers traded in are still on the road? I don't think so.
A win-win ...
The buyer won. The government won. The dealers won. But somehow the taxpayer was left out of the equation and stuck with a bill of about $25,000 for each transaction. So it's more like win-win-win-LOSE!
tidester, host
SUVs and Smart Shopper
I'd rather give 3BN to such a project than 3BN in aid to hostile ungrateful nations.
tidester, host
SUVs and Smart Shopper
I guess that depends on how you define "clunkers." The feds had their definition and you have yours.
I'd rather give 3BN to such a project than 3BN in aid to hostile ungrateful nations.
That's a red herring. I'd rather not be subsidizing someone else's purchase of a car.
tidester, host
SUVs and Smart Shopper
A red herring maybe, but the government is going to subsidize things no matter what you or me want - people have no real say in this system...some evils are lesser than others. I'd rather not subsidize a lot of things.
I guess we both agree on the need for change.
tidester, host
SUVs and Smart Shopper
It also ignores that lots of people who came in ended up buying a car and not trading a clunker in even though they came in because of the clunker program to being with.
Some people had a car they thought was a clunker but really wasn't or was worth much more then the $4,500. Those new sales cost the gov't nothing but did move the SAAR up. Those people came in because of C4C but didn't use any money from it.
Then there are the people who bought used cars instead of new cars for one reason or another. That didn't help the SAAR but it did help the local economy and the dealer selling that car.
Putting all that in the article or actually doing some real random sampling or interviews would of course wreck the shock value of $24,000 dollars per deal though.
tidester, host
SUVs and Smart Shopper
C4C was bad for people in that it put the government deeper into debt, and it put more debt on the consumer, or withdrew savings and investments (for those who paid cash). It put both sections deeper into debt. Normally this would not be bad, and being in debt is not necessarily bad. But this is not normal-times, because we have been going deeper and deeper into debt year-after-year. The cure can not be the same thing that created the problem!
The 17M annual car sales of 2 years ago and the decade of increasing home values was only possible because of our government and the consumer going deeper and deeper into debt, which we can't afford; there is not sufficient welath behind it. Our country is like a person making $50K/year who spends $55K/year on goods. That can occur for a while, as a person can draw on savings, and then borrow from banks and friends and family. But it can't continue forever.
You can argue that many of the individuals who bought on C4C could afford it. But you still come back to the point that the government could have spent the $3B in other ways, and the consumer could have spent their $ on other things as well.
So NO, further overconsumption and debt is not good. We need to get back to a point where we consumption $ = production $
Removing clunkers from the road was more of a secondary benefit and was there more to appease the greenies.
I still wouldn't accept the $24,000 dollar figure as perfectly valid as how do you know for sure the person was going to buy a car the month before or the next month anyway.
You don't. You know how often someone tells me they are a serious buyer? Tells me they are going to buy today, this week this month? I hear that at least once a day and it is probably true less then half the time. Plenty of those people do buy eventually, and I keep up on my customers so I typically know if they bought something somewhere else, but they often times buy a month or more down the road. I have people I have chased for a year or more with every conversation ending with the, "I am going to buy this time," line. Short answer is you can always trust what people say when asked a question like that. I think you can trust it even less when it is something politically charged like this program
Edmunds argument is that the majority of those sales would have happened eventually anyway but eventually doesn't do us very much good right now. It helped to have all those sales then and clear the decks for dealerships. There were tons of dealerships just drowning in excess floorplan costs and C4C helped them wipe that out.
Sure it is easy to say that they could have spent the $$ on something else but with our goverments track record for spending does it really matter? At least with this program it put the money back in the hands of Joe and Jill Consumer and not in the hands of some Corporate Fat Cat.
The trickle down effect was great on it to. Not only did it jump start our business big time but it also generated business for allot of our vendors and put big bucks back in the local economy.
It also put allot of people on the road in cars that they won't be blistered in 2 or 3 years from now when it comes time to trade..
I just hope they do it again
However you don't really address my argument that the economic problems we faced is because we spend too much and go too far into debt which is phony $. We've been living on credit.
If you make $50K but spend $55K/year, what's the solution? Do you go get another credit card, and decide to go buy something? Live over-your-means on the new credit? What happens when you can't get anymore credit, and the interest is piling up, and the people who want to be repaid want their $? You have to cut back your future lifestyle say to $40K/year so you can pay off your debt. It is no different for this country.
When you hear of a negative trade-balance month-after-month, year-after-year, budget defictis, and increased national debt, those things tell you $ is flowing out of the country. We're overspending! The government is trying to keep U.S. citizens placated, by giving us a lifestyle that we can't afford anymore, because the rest of the world has taken a good portion of our wealth-creation (manufacturing)! It is hard for our economy to gain wealth when we create restaurant jobs and people who flip houses, or trade stocks actually think they are doing something useful (creating false paper-wealth is not actually creating physical-wealth!).
We have been living through this bubble economy since the first Gulf War. The Dot.com bubble was the ultimate trickle down economic boom. The ones becoming millionaires were buying the goods that kept US all doing well. When it burst the low interest housing bubble took its place. Seems each bubble is bigger than the last. Will the sub-prime housing bubble be the bubble to end all bubbles?
C4C programs may be the least of our worries. I know 3 people that took advantage of the program and I am happy for them. It is a chance for me to see my tax dollars going to someone I care about. In reality it is just another waste of tax dollars added to the $1.5 Trillion this Congress and President have thrown to the wind. What is there to show for it?
Exactly. As you see today the stock market is getting hammered again. The stimulus has only provided short-term relief, but made the long-term problem worse. A lot of economists are saying watch out the 2nd half of this year when government incentives run-out (the government stops blowing air into the balloon that has the hole-in-the-side).
The government needs to stop incentivizing more consumption. We need to recover by producing more than we spend. That is what the government should be focusing on. We need to have programs that make the U.S. export more and import less. I'm glad to see the new jobs Ford is creating are paying $14/hr, which is much closer to what they should make to be competitive globally. I would like to see U.S. Ford workers make $40/hr, but then they have to do something exceptional that foreign workers can't do. You want to get paid better, then work better.
They do, its called producing a superior car, truck, and SUV
I don't want to see them make $40 ph. Thats one of the things that had us screwed in the first place. I do belive that if Mr. Mullaley has to he will bust the Union
Back to C4Cs.
Poetic justice would be served if Congress decided to have another C4C program NOW, while Toyota is on the no sale list. Toyota can sell the few Prius that Japan is able to build. No Camry, Corolla or RAV4s.
Ford followed suit.
The government is way too slow to act. Plus Japan finally caved and allowed imports to qualify for their program, so right now the timing is wrong (late).
I think they did it just to say they're not copying GM, though.
Too bad Equinox is in short supply. Just think of all the RAV4/Highlander/Venza buyers they could have conquested.
Maybe the GM Lambdas (Traverse) will sell out, though.
That's a smart move. I hadn't read about it until now. Ford can better afFord to grant to both brands, but I wouldn't be surprised to see GM offer it to Honda also.
2014 Malibu 2LT, 2015 Cruze 2LT,
I don't think so. Ford and GM are providing a service to people who are looking for a car right now and whose confidence in Toyota or Honda has been shaken a bit. Some people don't have the luxury of waiting an indefinite period of time for a fix that may or may not be forthcoming.
tidester, host
SUVs and Smart Shopper
Ford Division is announcing Trade-In Assistance cash. This is a National Program. Program #33208
Customers That currentley own or lease a 1995 or newer Toyota/Honda/Lexus/Scion/Acura Car, Truck, or SUV who trade in will recieve $1000 toward the purchase or lease of an eligible 2009/2010 Ford Car, SUV, or Truck
GM was giving $7,000 rebate on any Saturn or Pontiac a few weeks ago. You still might be able to get one, as the unsold ones were bought by dealers and now being sold as used. In this market anything < 25% off sticker after rebates and discounts, is not that good a deal, unless it's a recently released vehicle (then you shouldn't buy it, if you don't have to).
Remember GM now has government money to throw into their rebates, so the sky's the limit.
Big deal? No. It's just a tap on the shoulder indicating there are alternatives and you should have a look today. And, as Joel0622 points out, this is on top of other discounts and rebates.
The original point was that Ford and GM were somehow doing something underhanded. Whether $1,000 is a big deal or not doesn't seem to address that issue.
tidester, host
SUVs and Smart Shopper
If the market drags, will the response be another round of government subsidies? It seems to me this is how we got into the situation. People don't buy new cars unless someone puts cash on the hood. Might be okay in the short term, probably not in the mid- to long-term. At some point, people have to be willing to pay somewhat more for cars than it cost to produce them.
Personally -- My family fleet includes two 1999 Saabs. Both have been in the family for their lives and still run like bears. Still, I'd have considered the C4C opportunity. EXCEPT -- since our 10+ year-old cars are efficient, clean 4 cyls, they didn't qualify. So someone else made this decision for me. Also, both cars show every sign of providing years of safe, dependable, enjoyable, environmentally friendly service in the future, and I wouldn't say thanks by consigning either one to the wrecker. Also, they're long since paid for, which to me is the best feature of a car.
So from where I sit, I'd say the government should not be taking $$$ from me and giving it to SUV drivers so they can buy what they should probably have bought in the first place if they used a bit of common sense. Many people just seem unequal to the task of prudent management of their personal finances and continually need someone to prop them up. It doesn't bode well for the future.
It will all depend on how it takes to get them fixed. Even if they come out with a solution today but it takes 3 months to get a part and get it in a shop who will fix it we don't want it. Who wants to trade for something you can't put back in the market place for 90+ days. 90 days in the car business is like one dog year.
What's that, a little less than 2 weeks?
I speak from experience. We are just now finishing up a cruise control recall that came out over a year ago. Its taken that long to get parts for every one. And this effected allot less cars.