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08/21/2009 12:25:58 PM · #26 |
Originally posted by LoudDog:
By post clunker slump I'm saying sales will be worse then before the clunker program. The normal market will be there, minus those that already cashed in. It may only be a couple percent, but sales in Sept will not be higher then they were in July (was the clunker program only in August?) |
A 30% gain minus a "couple percent" loss is a very large net positive.
Originally posted by trevytrev:
I work for a dealer automotive group that has 3 Ford dealerships, 1 Chrysler and 1 GM dealership along with multiple used car dealerships...it will remain to be seen if the amount of buyers who bought earlier instead of later will have an effect on the industry for the year to come, and it is big concern of the dealerships. It will also remain to be seen the impact of removing a large portion of automobiles from the used car market. |
Precisely. We don't know yet how this will work out. You work for the same industry that failed to anticipate higher gas prices, was ill-prepared for the recession, and was caught off guard by the success of this incentive. Not exactly psychics, are they? Maybe the percentage of "early" buyers spurred by this program will be offset by those in a better position to buy as a result of the economic ripples of a business stimulus. We shall see. |
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08/21/2009 12:31:37 PM · #27 |
Originally posted by trevytrev:
I'm not sure I get how this is a gift to the used car industry according to your statement. You said yourself you are not in the market for a vehicle even if you qualified for the stimulus(at least that is how I interpreted the statement). |
I looked back at how that was writen and it didn't translate well....sorry....
I saw it as a gift to the auto industry NEW car sales simply by helping both buyers and manufacturers and their dealers.
I wouldn't have been in the market via that manner because my car is simply too new and efficient to make any financial sense or qualify.
But......my car is worth a bunch less than it should be for its age, mileage, and condition historically. Usually, a top of the line, heavily optioned vehicle will trade in nicely at 80K and four years old......not the case now.
I was in the market, but the value of it plummeted so badly that even though it's part of the game to take a little bit of a loss to drive a new one, I simply won't transfer owed monies onto a new payment.....and at four years, if they can't at least wash it out, I won't do the deal.
Originally posted by trevytrev:
There will be an effect on the market of used cars that cost $4500 or cheaper, some say no big deal but tell that to middle to low income families that will have a hard time finding quality used cars at a reasonable price and to the dealerships, large and independent, that sell them. You simply cannot take 450,000 vehicles out of the market and not expect a effect, granted not all those would be good cars to resell but many are. |
True that, but there will also be a lot of stuff taken off that roads that are in the grey area of viability.......and that lower end vehicle market is a minefield.Thing is, there are new cars out there now at the lower end of the scale that are more affordable for someone working at all that are available with financing that would be easier to crunch than coming up with $3400 cash for something of dubious future. If you can get a brand new cars for $109.00 a month payment, with a warranty.....
The vehicles available today are cheaper than five & ten years ago at the low end. And for the most part, they're much better built, too. I have a 2007 Focus, base car, and it's been awesome......37K on it and *nothing* has gone wrong with it.
I wish I could say that with some of the much higher end junque I've owned in the past.....
Originally posted by trevytrev:
Yes, I agree that there is a benefit to the increased MPG and some older cars being removed from the roads, though I also agree with Louddog that we probably should have made the MPG increase larger to really get the movement going to more efficient cars. |
That's a nice idea and all, but the CAFE requirements have done a superb job in forcing the increased technology needed to get the industry to the point it's at now, and the efficiency is pretty terrific......unfortunately, this increase is part of what's created the problem. Part of what's wrong with the market is the prohibitve cost of repairing these vehicles with multi-speed overdrive transmissions, mutiple processer, four cam engines, and electronic gew-gaws that make life in the cockpit oh so pleasant.
I've seen immaculate cars with 70K on them going for pennies actross the auction block because a perfectly beautiful car needs a $4200 transmission.....and $520 labor to install it.
If that car's worth $6000 when it's repaired, do the math....
Another problem is what we, the consumers, demand......apparently judging by the amount of Excursions, Sequoias, Escalades, Navigators, Titans, Hummers, Armadas, and other 6000 pound behemoths that are flying off the lots, we have learned *nothing* from the 1973 debacle.
Originally posted by trevytrev:
I'm not sure what's going to happen to industry either and being that I have worked in it about half my life and still do you could say I'm a bit concerned. |
I got out once I worked in the service office at a Ford dealer and watched updates on streaming downloads taking 30-90 minutes A DAY coming in......you absolutely cannot keep up with that in the aftermarket....it's proprietary information for a while.
This information will take years to trickle down to where it's usable through the various computer software you can buy......by which time, it'll be on vehicles that you have to be careful not to put too much money into repairing.....
I worry about the industry as a whole.....
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08/21/2009 12:35:31 PM · #28 |
Originally posted by scalvert:
Originally posted by LoudDog:
By post clunker slump I'm saying sales will be worse then before the clunker program. The normal market will be there, minus those that already cashed in. It may only be a couple percent, but sales in Sept will not be higher then they were in July (was the clunker program only in August?) |
A 30% gain minus a "couple percent" loss is a very large net positive.
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A couple percent loss per month over time can be equal to or greater then 30%.
And I guess you are not willing to take the bet?
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08/21/2009 12:36:17 PM · #29 |
Until all the deals have been reimbursed for the 'CARS' program the market has taken a net loss. So in actuality on the surface it looks good, kind of like saying I sold 1000 cell phones today but forget to tell you I sold them for a loss. It's all about P&L. I'm not going to call it a success nor a failure yet, I think we will know that thirty days out from Monday.
Most deals work on the model of 'floorplan' which means they do not pay the manufacture for the vehicle delivered to the lot until it is sold or if it's not sold in a set period of time. Now that all these cars have been sold, the deals have ten days to pay the manufacture. If it takes longer than that to get the 'CARS' government reimbersment then they go into a net loss. The long it takes the less capital they have to pay employees and overhead.
Another thing is that the used car business it the bread and butter of a car lot. More profit is made with the sale of used cars than new. Also in most dealerships the sales associate makes more money when he/she sales a used car. But because the clunkers were crushed instead of sold as used, the used car deals are having a hard time getting the inventory they need to stay in business.
As I stated in the Obama care thread;
Originally posted by SDW:
...
I have to agree with you  ericwoo. Just like the 'cash for clunkers program' so will go government healthcare. I know some are saying the 'cash for clunkers program' is a huge success. Far from it! They ran out of money in a week, are not paying the dealerships on time, and scraping perfectly good parts that could be salvaged to help fix other cars that people don't want to turn in for $4500. Now the are going to add more debt to this program. It's a false since of sales. What happens when the program stops and people stop buying as many cars because the program is terminated. You will see an inflated sales spike caused by a government handout then a fast drop in sales. Does anyone remember when MSN and Microsoft were giving people $400 towards a computer if they signed up with there internet for 2 years? Well most of the companies that participated in the program lost a lot of money because they only paid about 1/3 of the money to the participating companies. You know - red tape. If that happens in the auto industry ... more bailouts??? we will have to see.
... |
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08/21/2009 12:36:58 PM · #30 |
Originally posted by scalvert:
Maybe the percentage of "early" buyers spurred by this program will be offset by those in a better position to buy as a result of the economic ripples of a business stimulus. We shall see. |
Hey, I'd like to buy a new family cruiser.......ours will be coming up on 100K in the next year, so it's a foregone conclusion that the fuse is lit.......nobody knows how long it is, though.....
But if our old one continues to be worth nothing, then we will run it 'til it dies.....
It's really a shame that one of the best cars Ford ever made, at not quite four years old and 80K, equipped to the max and garage kept, is worth about 20% of what it sold for new.
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08/21/2009 04:06:46 PM · #31 |
What's scary is ...last week the effort had paid retailers for only 2 percent of their claims.
The effort being "Cars for Clunkers" program.
If the government is so slow with paying these claims, what will happen if they start to run health care?
Another quote from that article:
"dealers have been forced to effectively finance the CARS vouchers for buyers until the dealers are reimbursed by the federal government, placing a strain on dealers' balance sheets that, if prolonged, could eventually offset some of the benefits of the program."
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08/21/2009 04:34:13 PM · #32 |
Originally posted by Nullix:
What's scary is ...last week the effort had paid retailers for only 2 percent of their claims.
The effort being "Cars for Clunkers" program.
If the government is so slow with paying these claims, what will happen if they start to run health care?
Another quote from that article:
"dealers have been forced to effectively finance the CARS vouchers for buyers until the dealers are reimbursed by the federal government, placing a strain on dealers' balance sheets that, if prolonged, could eventually offset some of the benefits of the program." |
If the manufacturers & unions hadn't dug themselves such a deep hole in the first place, this wouldn't even be an issue.
There financial woes are completely and totally self-inflicted.
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08/21/2009 05:47:23 PM · #33 |
Originally posted by MelonMusketeer:
T
I wonder how many people bought a "clunker" to trade in for a new car, I/E bought a 89 Ford for $700, and traded it for a new car, and realized a tidy discount on the new car.
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Given that you had to show proof both of owning the trade in, and having it insured for a minimum of 1 year prior to the sale, i doubt that anyone tried this. And if they did, they were sorely disappointed.
It's no wonder that so many folks think others are scamming the system, when it seems some just sit around thinking of ways for it to be done. ;/ |
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08/21/2009 07:43:12 PM · #34 |
Originally posted by shamrock:
Originally posted by MelonMusketeer:
T
I wonder how many people bought a "clunker" to trade in for a new car, I/E bought a 89 Ford for $700, and traded it for a new car, and realized a tidy discount on the new car.
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Given that you had to show proof both of owning the trade in, and having it insured for a minimum of 1 year prior to the sale, i doubt that anyone tried this. And if they did, they were sorely disappointed.
It's no wonder that so many folks think others are scamming the system, when it seems some just sit around thinking of ways for it to be done. ;/ |
People have plenty of free time to think up scams, since a lot of them are out of work. Many are getting as much from their unemployment as they were making while they were working, if you factor in that they do not have to drive to work anymore.
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08/24/2009 11:42:52 PM · #35 |
| A good read on MSN about the program and it's possible benefits and side effects. |
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08/25/2009 12:59:09 AM · #36 |
| Considering the dealerships marked up the cars at least by $3k if not more I think this program was not all it was cut out to be. I know this because I bought a Jeep last year, 12k miles, $15k for it, now find that same Jeep I got for $15k .... you can't ... it's $18k or more! We passed on the deal because of it (hubby has a Jeep with 270k+ miles on it but what he had to buy in return wasn't worth the $$'s he would have gotten for it because of the mark ups and what he was "allowed" to buy in return which was a 4 cyl piece of crap in our opinion). |
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08/25/2009 01:31:55 AM · #37 |
I believe the intent of the program was well-meaning, but that ol' Law of Unintended Consequences is a real bastard sometimes.
My concern is that a lot of folks in marginal financial health saw this as a "now or never" opportunity and signed on to likely 5 figures of additional long term debt, tied to an asset that is almost certain to depreciate from the moment it is bought. With job growth still significantly in negative territory, there is a chance of a wave of auto repossessions similar to what happened (and continues to happen) in the real estate market.
It's concerning to me that the government is counting on people leveraging themselves even further to spur consumption. It suggests they have no other viable options. The US is hell-bent on inflating our way out of this mess. Foreign governments are not going to buy our debt forever, and I still believe the Treasury is going to have to monitize the debt, at which point we will see inflation the likes of which we may never have seen here before. |
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08/25/2009 06:29:04 AM · #38 |
Originally posted by antares1966:
tied to an asset that is almost certain to depreciate from the moment it is bought. |
No, GUARANTEED to depreciate from the moment it is bought.
The law of supply and demand has wreaked havoc on the market and with the increased expenditures for the technology repairs as the cars go out of warranty, we will never see decent resale value until the economy does a complete turnaround.
Couple that with the free money at the finance table with the interest incentives, and there's virtually no reason to buy a used car.
That's the case with many of the potential buyers right now.......they have perfectly good cars from a conventional trade-in situation, i.e. three to five years old, less than 100K on them, and the cars aren't worth what's owed on them so they're not going to trade into an upside down loan.
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08/25/2009 09:35:29 PM · #39 |
Originally posted by antares1966:
I believe the intent of the program was well-meaning, but that ol' Law of Unintended Consequences is a real bastard sometimes.
My concern is that a lot of folks in marginal financial health saw this as a "now or never" opportunity and signed on to likely 5 figures of additional long term debt, tied to an asset that is almost certain to depreciate from the moment it is bought. With job growth still significantly in negative territory, there is a chance of a wave of auto repossessions similar to what happened (and continues to happen) in the real estate market.
It's concerning to me that the government is counting on people leveraging themselves even further to spur consumption. It suggests they have no other viable options. The US is hell-bent on inflating our way out of this mess. Foreign governments are not going to buy our debt forever, and I still believe the Treasury is going to have to monitize the debt, at which point we will see inflation the likes of which we may never have seen here before. |
I think you may be right. The program created a bubble, which will burst later. I know someone who decided not to get cash for clunkers for his old truck simply because it forced him to buy a new car. He's gonna wait for later, for the repo's. Americans are curiously adamant in their efforts to maintain a way of living that is probably gone for good. Each one of us alone in our cars, driving like we're a day late & a dollar short. How did the automobile industry ever let it come to be that you can owe more money than the new car is worth the second you hit the street? If the new car gets repo'd before depreciation has caught up to the debt, it will be the auto industry that takes the financial hit. All those formerly new cars that are now suddenly worth so much less $.
Message edited by author 2009-08-25 21:39:00. |
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