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08/20/2009 11:08:44 PM · #1 |
Success?
Failure?
Or will we have to wait to see?
Administration officials said applications for rebates will not be accepted after 8 p.m. EDT Monday and dealers should not make additional sales without receiving all the necessary paperwork from their customers. Dealers will be able to resubmit rejected applications after the deadline.
Through Thursday, auto dealers have made deals worth $1.9 billion and are on pace to exhaust the program's $3 billion in early September. The incentives have generated more than 457,000 vehicle sales. Administration officials said they have reviewed nearly 40 percent of the transactions and have already paid out $145 million to dealers.
Of the more than 475,000 vehicles sold under this program roughly 36,250 (7%) have received payment. Until the administration gets the funds allocated to the dealers, they are out thousand to over a $1 million dollars. The program that promised payment to the dealers within 10-days have some dealerships worried.
Your opinion.
Message edited by author 2009-08-20 23:10:17. |
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08/20/2009 11:53:34 PM · #2 |
If it helps "kick-start" the automotive industry in the USA, it might have been worth the expenditure.
Ray |
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08/21/2009 12:40:06 AM · #3 |
Originally posted by RayEthier:
If it helps "kick-start" the automotive industry in the USA, it might have been worth the expenditure.
Ray |
The problem with this is that it is a temporary stimulation, when the program is over the stimulation is over. If fact, this program may have just accelerated the time frame of certain buyers who were going to be in the market for a new car within the next year or two, leaving a smaller consumer base over the next year or so. Throw in the fact that dealerships are struggling to get reimbursed from the government plus battling to get inventory I don't think this program will have a positive lasting effect on the automobile industry. You will also see an increase in prices of used cars since they will be at a premium now that you have removed an enormous amount of good vehicles from the market.
Message edited by author 2009-08-21 00:40:51. |
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08/21/2009 01:07:58 AM · #4 |
Originally posted by trevytrev:
The problem with this is that it is a temporary stimulation, when the program is over the stimulation is over. If fact, this program may have just accelerated the time frame of certain buyers who were going to be in the market for a new car within the next year or two, leaving a smaller consumer base over the next year or so. Throw in the fact that dealerships are struggling to get reimbursed from the government plus battling to get inventory I don't think this program will have a positive lasting effect on the automobile industry. You will also see an increase in prices of used cars since they will be at a premium now that you have removed an enormous amount of good vehicles from the market. |
You've made some questionable assumptions here, and any proclamation of long term success or failure is only speculation at this point. It's possible that those with "clunkers" would not (or could not) have otherwise bought a new car at all if not for this program, and it would not affect purchases coming off a lease or replacements for older cars with high gas mileage, etc. Therefore, the stimulus only ends for a small segment, yet it helped spur some business when the manufacturers and dealers needed it most. For 7% of dealers to already be reimbursed in less than 4 weeks (processing began July 24th) on a program of this size is remarkable, and more personnel were added to help deal with the surge. Reimbursement could go faster, but then the risk of errors and fraud goes up, too. Battling for inventory is part of the goal as several manufacturing plants have reopened and Detroit is hiring again. The price of used cars isn't likely to rise as clunkers are almost by definition NOT good cars.
Message edited by author 2009-08-21 01:08:39. |
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08/21/2009 01:12:19 AM · #5 |
The program supplied an injection of (our hard earned) cash to get people to buy new cars. I am wondering if anyone has added up the amount of debt to the new car owners that has been generated by the program, and how many of those loans will default and the new cars be repo'd later.
I am waiting to see how much fuel prices drop now that half a million "gas hawgs" are off the road.
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08/21/2009 01:32:17 AM · #6 |
In Canada, we recently had a program that offered a government sponsored rebate for vehicles deemed to be "eco-sensitve" in fuel economy. Though I understand the premise of the "Clunkers" program is meant to stimulate car production/replacement, it seemed short sighted. A wiser solution IMO would be to maintain an incentive which would promote more fuel efficient vehicles over the longer term. It would spur the manufacturers to aggressively adopt fuel efficiency and ultimately lessen the demand for oil.
This temporary measure did not seem to emphasize the needed governance for accelerated change. It does little to encourage innovation but rather appears to be a short term fix for a deeper problem. Innovation is one element which would allow the US auto sector to regain dominance.
But thats just my opinion. |
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08/21/2009 01:48:30 AM · #7 |
Originally posted by scalvert:
Originally posted by trevytrev:
The problem with this is that it is a temporary stimulation, when the program is over the stimulation is over. If fact, this program may have just accelerated the time frame of certain buyers who were going to be in the market for a new car within the next year or two, leaving a smaller consumer base over the next year or so. Throw in the fact that dealerships are struggling to get reimbursed from the government plus battling to get inventory I don't think this program will have a positive lasting effect on the automobile industry. You will also see an increase in prices of used cars since they will be at a premium now that you have removed an enormous amount of good vehicles from the market. |
You've made some questionable assumptions here, and any proclamation of long term success or failure is only speculation at this point. It's possible that those with "clunkers" would not (or could not) have otherwise bought a new car at all if not for this program, and it would not affect purchases coming off a lease or replacements for older cars with high gas mileage, etc. Therefore, the stimulus only ends for a small segment, yet it helped spur some business when the manufacturers and dealers needed it most. For 7% of dealers to already be reimbursed in less than 4 weeks (processing began July 24th) on a program of this size is remarkable, and more personnel were added to help deal with the surge. Reimbursement could go faster, but then the risk of errors and fraud goes up, too. Battling for inventory is part of the goal as several manufacturing plants have reopened and Detroit is hiring again. The price of used cars isn't likely to rise as clunkers are almost by definition NOT good cars. |
Of course it's specualtion though I feel I have have some valid, educated opinions. It is fact that some have bought earlier than they had intended due to this program, these are now buyers who will not be in the market for a car in the months to come. You pair this with an already slow market and lack of inventory and you are putting dealerships in a tight spot in the near future. As for 7% being reimbursed and you thinking that is impressive, tell that to the 93% who are on a working floor plan who are already cash strapped from poor sales in the last year and a tight credit market available to dealerships. I agree you have to worry about fraud but this should have been thought of before implementing the program. Again, about the inventory, sure it sounds great that you sold so many cars your out of inventory but when you have nothing to sell the following months it's a problem, you boosted sales for two months and decreased them for the following months. I will agree that it will put the lines back to work and that is a good thing, but for how long is the question, only time will tell. As for your understanding of "clunkers" in relation to this program your wrong. Sure some are crap but "many" are perfectly operational and quality used cars that are being trashed and taken out of the market simply b/c of their MGP rating. |
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08/21/2009 07:29:16 AM · #8 |
Originally posted by trevytrev:
As for your understanding of "clunkers" in relation to this program your wrong. Sure some are crap but "many" are perfectly operational and quality used cars that are being trashed and taken out of the market simply b/c of their MGP rating. |
Ah, no.......that's the thing of it. The used car industry is tanking so badly that this is a gift, pure and simple.
We have a pretty decent '05 Ford 500 Limited, and it doesn't qualify for the program by 1 mpg. This is a really well maintained, beautiful, garage kept car that *theoretically* is one of the perfectly operational cars that are being taken out of the system.
Except that the market is so upside down that instead of being able to flip-flop it into a newer version of the same thing, we now have to drive it 'til it quits because it's not worth sh*t on the used car market.
We will *not* be providing cashflow into the flagging auto industry simply because of that.
Granted, it's not like this car is a gross polluter or anything, but we are in a position to carry a car payment without defaulting on it......but we won't be now.
We are the buyers that the industry needs now, because we're looking at the upside of $25K in a car that we now won't buy.
Also, the fact does remain that there is a large percentage of cars that are being removed from the road that shoud be. The improvements that are being made by the technology curve are happening so rapidly that the "perfectly good" used cars that you are referring to are not that desirable to have on the road.
That's part of the problem with the used car industry in the first place......the developments in technology are starting to be akin to what's happened in the computer industry......what was hot five years ago, ain't so hot now. The price differential just makes it that much more glaringly obvious.
I really don't know what's going to become of the automobile industry in the future......it's really somewhat scary to me as someone who made his living from it for almost four decades. I got out of it because of that.
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08/21/2009 08:41:19 AM · #9 |
Originally posted by Ivo:
In Canada, we recently had a program that offered a government sponsored rebate for vehicles deemed to be "eco-sensitve" in fuel economy. Though I understand the premise of the "Clunkers" program is meant to stimulate car production/replacement, it seemed short sighted. A wiser solution IMO would be to maintain an incentive which would promote more fuel efficient vehicles over the longer term. It would spur the manufacturers to aggressively adopt fuel efficiency and ultimately lessen the demand for oil. |
The only problem with this premise is that the existing eco-sensitive proposals come at an alarming cost to the eco system.
Electric cars...sure, but how harmful to the environment is a programs that would have us power up coal fired plants to generate the surge in electrical demands.
Bio fuels... sure, but just how much more fossil fuels do we expend to produce this wonderful eco-friendly product.
Solar powered vehicles...not much chance of that in the foreseeable future.
Yes there are ways, but they aren't here yet.
I have a great proposal... let me work from home. There truly isn't much in my line of work that I could not perform from the comfort of my own home. Meetings you say... well that can be done via conference call.
I would save oodles on fuel purchases and would readily pay more in taxes and the government could give tax credits to those individuals that have no option but to show up at their working environment.
Or, maybe ... just maybe we could consider having better mass transit systems... something akin to what they have in many European countries.
Ray |
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08/21/2009 09:34:41 AM · #10 |
Originally posted by RayEthier:
Electric cars...sure, but how harmful to the environment is a programs that would have us power up coal fired plants to generate the surge in electrical demands.
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That's why I love living in quebec where we have a non-fossil-fuel-based electricity prodution
Originally posted by RayEthier:
Solar powered vehicles...not much chance of that in the foreseeable future.
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Not so distant future. If engineering students with little funds can make a mon0place 100% solar car, I can only imagine what can be acheived by a big automobile corporation (they simply lack the motivation).
World Solar Challenge
My school's car
Edited with links
Message edited by author 2009-08-21 09:42:27. |
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08/21/2009 09:45:28 AM · #11 |
First off, i think the program was a nice boost to the auto industry and was a far better and more effective use of tax dollars then the stimulus fiasco. Take that 787 billion and put even a quarter of it into programs like this for appliances, home renovations, new home purchases and it would do far more good, more rapidly then the stimulus bill ever will.
However:
It would have been nice if even a % of the cars were donated to non profits for rebuilding and re-sale, or donated to people that could use them but can't afford them. A lot of the trucks could have been used for people to start businesses. scraping all the perfectly useable or easily repaired vehicles to replace with newly made ones seemed like a huge waste and not very green. At the lease, engines and parts off those cars could have been salvaged. A lot of value/money was simply thrown away.
If the goal was to fix the environment, why was it not manadatory that all cars purchased must get over 30mpg? or even 25mpg? 2-4 mpg gain doesn't seem worth the manufacture of a new car and the scrap of the old when you are talking carbon footprint math. You could buy a hummer and qualify for the program! I think the program worked well, but if green was the goal it could have been much better.
The govt did a great job demonstrating their ineptness in how the program has been managed and run. Had they outsourced it to a private company to manage, dealers would have their money and more cars would have been sold as there would not have been the waits.
I agree with Trev in that a lot of people that may have been planning on buying in the next year or two just sped up their decision. We'll see about sales in the next year. Yeah, a lot of people bought that had no plans to, but a lot of future potential buyers are now out of the market and I'll bet lunch there will be a slump in sales.
It's a shame that over half the cars sold were not American, but there is not much anyone can do about that...
Just a fear here, but I hope too many people didn't get into cars and loans they can't afford that will end up being repo'd in a year. I wasn't looking at loan programs being offered, but I bet a lot of people put zero down, I hope they didn't do that no payments the first 12 months crap. |
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08/21/2009 09:48:52 AM · #12 |
Originally posted by LoudDog:
It's a shame that over half the cars sold were not American, but there is not much anyone can do about that...
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We have to be carefull with that. We may choose a Ford or GM, but end up with a car built (or mostly) in asia, instead of a Hyunday built in the USA by american workers....
Sometimes (not always, but sometimes) buying non-american can give jobs to americans.... irony... |
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08/21/2009 09:49:14 AM · #13 |
Originally posted by NikonJeb:
We have a pretty decent '05 Ford 500 Limited, and it doesn't qualify for the program by 1 mpg. This is a really well maintained, beautiful, garage kept car that *theoretically* is one of the perfectly operational cars that are being taken out of the system. |
If you are selling it for $4500 I'll buy it! |
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08/21/2009 09:54:11 AM · #14 |
Oh yeah, one more However, why was there a bottom end limit to the age of the car? If i had a 1970 pickup that got 11 mpg I could not have traded it in for a new truck that pollutes far less and gets over 20mpg.
Instead of a new truck I'm driving that oil leaking, smoke spewing, gas burning, bucket of rust that isn't safe to drive next to on the freeway every day. I'd much rather have that off the road then the cars i seen taken off the road. |
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08/21/2009 10:04:07 AM · #15 |
We're trading in a 1996 Ford F-150 that gets far less than the 14mpg rating the government had it listed at ... our intention was to buy a 2010 Buick LaCrosse or possibly a Buick Lucerne ... but unfortunately they don't qualify because the combined MPG rating was less than 22 ... We've since test drove a Nissan Altima, Nissan Maxima and will test drive a VW CC today ... unfortunately, we will end up with a foreign car and not a GM product like we'd hoped .. but this is the only way we'll get $4500 for our old pickup truck ... once this transaction takes place we'll sell my boyfriends 2000 Buick Park Ave and his son's old 1998 Grand Prix (currently sitting in the driveway collecting dust) and purchase another pickup to replace the CFC's one ... I'm still driving my Envoy with no plans to get rid of it because I work from home and don't put many miles on it ...
Message edited by author 2009-08-21 10:05:16. |
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08/21/2009 10:50:08 AM · #16 |
The 1985 ? cut off date was lobbied hard by the car classic and replacement parts people as well as collector org's.
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.
I drive a 91 S10 Chevy pickup, and get about 22 mpg hauling a big topper and about 1,200 lbs of tools and parts that I use for my work around the agricultural area here. I paid 1,100 for it and painted it myself, which was the reason it was cheap. It's paid for, and runs great. I don't feel that I would be happy having a new payment book and new car for the trade.
I still don't think that fuel prices will be reduced by lower demand due to the less efficient cars being off the road. I don't believe in the "global warming" scare thing, but would be interested in knowing if the production of a half million new vehicles will offset the reduction in emissions due to the better mileage. I think that people will drive more miles with the new cars since it will be cheaper per mile, not counting the new payments.
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08/21/2009 11:21:59 AM · #17 |
Originally posted by trevytrev:
It is fact that some have bought earlier than they had intended due to this program, these are now buyers who will not be in the market for a car in the months to come. |
That's not a fact. It's only your opinion, and it's just plain wrong. At first, I thought the same as you... once this is over, all the people who would otherwise be buying will be out of the market... but then I realized that many of these people are NOT those who would otherwise be buying. I personally know of several people who traded in clunkers to get this "deal" who would not have otherwise replaced that car EVER. I also know of many people (including myself) who will need to replace a car in the next few years, but don't have a qualifying clunker now. The normal market will still be there, and while it isn't likely to match the current surge given the economy, this program probably didn't clear out the "regular" buyers either. Meanwhile, this surge has had a ripple effect through dealerships, manufacturers and suppliers â all of whom are busy again, resulting in more jobs, more money flowing through the economy, and thus more people who could buy a car. Time will tell how this shakes out.
On reimbursements, it hasn't even been 30 days yet, and it's not uncommon for "normal" reimbursements to be paid on a 30, 60 or even 90 day basis. Meanwhile, not all dealerships suffer. As an example, GM is providing cash advances to dealerships to hold them until the reimbursements come through. It shouldn't be that surprising that the government wasn't quite prepared for the popularity of the program given that sales performances exceeded GM's own internal forecast "by over 60,000 vehicles, largely driven by the CARS stimulus program.â |
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08/21/2009 11:32:00 AM · #18 |
Originally posted by NikonJeb:
Originally posted by trevytrev:
As for your understanding of "clunkers" in relation to this program your wrong. Sure some are crap but "many" are perfectly operational and quality used cars that are being trashed and taken out of the market simply b/c of their MGP rating. |
Ah, no.......that's the thing of it. The used car industry is tanking so badly that this is a gift, pure and simple.
We have a pretty decent '05 Ford 500 Limited, and it doesn't qualify for the program by 1 mpg. This is a really well maintained, beautiful, garage kept car that *theoretically* is one of the perfectly operational cars that are being taken out of the system.
Except that the market is so upside down that instead of being able to flip-flop it into a newer version of the same thing, we now have to drive it 'til it quits because it's not worth sh*t on the used car market.
We will *not* be providing cashflow into the flagging auto industry simply because of that.
Granted, it's not like this car is a gross polluter or anything, but we are in a position to carry a car payment without defaulting on it......but we won't be now.
We are the buyers that the industry needs now, because we're looking at the upside of $25K in a car that we now won't buy.
Also, the fact does remain that there is a large percentage of cars that are being removed from the road that shoud be. The improvements that are being made by the technology curve are happening so rapidly that the "perfectly good" used cars that you are referring to are not that desirable to have on the road.
That's part of the problem with the used car industry in the first place......the developments in technology are starting to be akin to what's happened in the computer industry......what was hot five years ago, ain't so hot now. The price differential just makes it that much more glaringly obvious.
I really don't know what's going to become of the automobile industry in the future......it's really somewhat scary to me as someone who made his living from it for almost four decades. I got out of it because of that. |
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).
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.
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.
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. |
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08/21/2009 11:35:47 AM · #19 |
Originally posted by MelonMusketeer:
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. |
There is a very strict rule of the CFC's program that states the the clunker MUST have been continually registered and insured in the person's name for one full year in order to qualify ... they were trying to prevent people from running out to buy an old piece of junk for cheap and turn around and get up to $4500 for it ... |
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08/21/2009 11:36:42 AM · #20 |
Originally posted by scalvert:
Originally posted by trevytrev:
It is fact that some have bought earlier than they had intended due to this program, these are now buyers who will not be in the market for a car in the months to come. |
That's not a fact. It's only your opinion, and it's just plain wrong. |
Willing to make it interesting? I'll bet lunch there will be a "post clunker slump". (note to news agencies, I've got a copyright on that term)
Originally posted by scalvert:
On reimbursements, it hasn't even been 30 days yet, and it's not uncommon for "normal" reimbursements to be paid on a 30, 60 or even 90 day basis. |
Is it common for the govt to say they will reimburse in 10 days but then take 30-60-90 days? 30 days is not a problem, but when you are promised 10 and plan on 10 and it takes more then 10 it is a problem. Dealers have bills too. |
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08/21/2009 12:02:33 PM · #21 |
Originally posted by LoudDog:
Willing to make it interesting? I'll bet lunch there will be a "post clunker slump". (note to news agencies, I've got a copyright on that term) |
Originally posted by scalvert:
The normal market will still be there, and while it isn't likely to match the current surge given the economy, this program probably didn't clear out the "regular" buyers either. |
Originally posted by scalvert:
Is it common for the govt to say they will reimburse in 10 days but then take 30-60-90 days? |
It's a new program, and even the auto manufacturers didn't predict such a huge response. If it takes longer than expected, then people [rightfully] complain about the delay. However, if they rushed through the paperwork to get the payments out on time, then people would [rightfully] complain about fraud and waste when invalid claims go through. Take your pick.
Message edited by author 2009-08-21 12:02:50. |
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08/21/2009 12:04:33 PM · #22 |
Originally posted by RayEthier:
Bio fuels... sure, but just how much more fossil fuels do we expend to produce this wonderful eco-friendly product. |
I read an interesting factoid shortly after bio-diesel was heralded as the second coming that if we planted soybeans on every square inch of arable soil in the entire world, it would support 10-15% of the demand for fuel.
I'm thinkin' that falls a tad short......8>)
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08/21/2009 12:06:15 PM · #23 |
Originally posted by Louddog:
Is it common for the govt to say they will reimburse in 10 days but then take 30-60-90 days? |
Originally posted by scalvert:
It's a new program, and even the auto manufacturers didn't predict such a huge response. If it takes longer than expected, then people [rightfully] complain about the delay. However, if they rushed through the paperwork to get the payments out on time, then people would [rightfully] complain about fraud and waste when invalid claims go through. Take your pick. |
So that's a yes? :)
edit - quotes...
Message edited by author 2009-08-21 12:13:23. |
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08/21/2009 12:11:18 PM · #24 |
Originally posted by scalvert:
The normal market will still be there, and while it isn't likely to match the current surge given the economy, this program probably didn't clear out the "regular" buyers either. |
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?)
I agree that a lot of the buyers may have been people that would have never bought a new car, but not all were, and probably not even most. A lot of people bought new cars that will not be in the market for a new car for awhile now. For the automakers, I fear this was little more then an advance on their paycheck. |
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08/21/2009 12:13:14 PM · #25 |
Originally posted by scalvert:
Originally posted by trevytrev:
It is fact that some have bought earlier than they had intended due to this program, these are now buyers who will not be in the market for a car in the months to come. |
That's not a fact. It's only your opinion, and it's just plain wrong. At first, I thought the same as you... once this is over, all the people who would otherwise be buying will be out of the market... but then I realized that many of these people are NOT those who would otherwise be buying. I personally know of several people who traded in clunkers to get this "deal" who would not have otherwise replaced that car EVER. I also know of many people (including myself) who will need to replace a car in the next few years, but don't have a qualifying clunker now. The normal market will still be there, and while it isn't likely to match the current surge given the economy, this program probably didn't clear out the "regular" buyers either. Meanwhile, this surge has had a ripple effect through dealerships, manufacturers and suppliers â all of whom are busy again, resulting in more jobs, more money flowing through the economy, and thus more people who could buy a car. Time will tell how this shakes out.
On reimbursements, it hasn't even been 30 days yet, and it's not uncommon for "normal" reimbursements to be paid on a 30, 60 or even 90 day basis. Meanwhile, not all dealerships suffer. As an example, GM is providing cash advances to dealerships to hold them until the reimbursements come through. It shouldn't be that surprising that the government wasn't quite prepared for the popularity of the program given that sales performances exceeded GM's own internal forecast "by over 60,000 vehicles, largely driven by the CARS stimulus program.â |
Shannon, I work for a dealer automotive group that has 3 Ford dealerships, 1 Chrysler and 1 GM dealership along with multiple used car dealerships. I have friends, family and colleagues that work for competing dealerships, large and small, and all have stated the same, that there are buyers who have accelerated their buying plan because of the program. We have had customers state that they were not in the market for a new car for a few months to a year and this prodded them into buying now and not later. This is my life six days a week, so my "opinion" definitively isn't wrong and I would say that I probably have a better perspective of things in this industry from the dealership point of view than you. Sure there will still be buyers, but 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.
As for the reimbursement, that's great that GM is fronting the money since it's government money anyway, now what about the other dealerships with out the backup? Cash flow for a dealership will cripple and put them out of business, especially with the way banks have tightened their lines of credit on automobile dealers. |
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