Cash for Clunkers - why does congress hate me ?

[CRM114]

Is this program about the environment or motivating people to spend money on cars?

[mbs]

Originally Posted by kvrdave

If people are driving true clunkers, they likely can't afford a new car even after $3,500-$4,500 free money.

Not always true. I upgraded my 2nd car (my winter car, a 98 Jeep) and would not have done so without C-f-C. I paid cash and could have certainly afforded it without C-f-C, but this was a good enough deal to warrant a purchase earlier than I had planned. I'm frugal with my cars, so if there is life in the car (despite being a clunker), I'm not going to buy a new one. I don't mind driving a clunker worth $1500, but when I can get $4500 for it, it certainly makes sense to trade it in.

FWIW, I improved my gas mileage by 5 MPG. But like I said, this is my winter car. My non-winter car gets 35+ MPG.

[mbs]

Originally Posted by JOE29

Yeah, that's waht I want to do, take on a new car loan when I can barely pay off my other bills, sign me up for that!

Not all of us are in your situation.

[mbs]

Originally Posted by Heat

Anyway, from what I’m reading, dealers aren’t negotiating when customers are using the cash for clunkers program since the dealers had to wait for the money plus the possibility they wouldn’t get paid.

This isn’t a cash for clunkers program, it’s a cash for dealers / manufacturers program – I really hope it doesn’t get more funding.

I was able to negotiate. I ended up with the X-plan price from Ford, which is non-negotiable (probably better than I would have negotiated to), but when I was looking at Jeep and Toyota, I was negotiating with them.

[al_bundy]

i was talking to my inlaws about this yesterday. apparently their '93 Ford Taurus is not eligible, but their 2003 Acura 3.2TL is eligible for CFC. which one pollutes more?

[kvrdave]

Originally Posted by mbs

Not always true. I upgraded my 2nd car (my winter car, a 98 Jeep) and would not have done so without C-f-C. I paid cash and could have certainly afforded it without C-f-C, but this was a good enough deal to warrant a purchase earlier than I had planned. I'm frugal with my cars, so if there is life in the car (despite being a clunker), I'm not going to buy a new one. I don't mind driving a clunker worth $1500, but when I can get $4500 for it, it certainly makes sense to trade it in.

FWIW, I improved my gas mileage by 5 MPG. But like I said, this is my winter car. My non-winter car gets 35+ MPG.

I am betting you, paying cash, etc. are not typical in CFC purchases.

[BKenn01]

Are there any stipulations as to how long you have to own the clunker? If not, I wonder how many people are buying old junkers to cash in on the credit on the new car.

[kvrdave]

It has to be in your name and insured for the previous year.

[Baron Of Hell]

I think I will take part in this. I guess I will start looking into cars now. I was planning on buying a new or used car anyway. I currently have a 98 tracker that gets great millage but is a little long in the tooth. I've been saving for a couple of years in my outside account so will be paying cash.

[Birrman54]

When you say "great mileage" - are you sure your vehicle will even qualify?

[wmansir]

No 98 Chevy tracker will qualify as a clunker. Even the 4WD auto gets 21 MPG combined, which is over the 18 MPG limit.
---------------

The DOT put out some encouraging statistics:

The Transportation Department said Monday afternoon that based on 80,500 cash-for-clunker applications — which officials believe is about a third of the total deals so far — average fuel economy of the new vehicles was 9.6 miles per gallon better than the old ones, 25.4 m.p.g. versus 15.8 m.p.g., an improvement of 60.8 percent. ...

Part of the reason for the gain was that some people were turning in old trucks for new cars. So far, 83 percent of the “clunkers” were trucks or S.U.V.’s and 60 percent of the new vehicles were cars, the department said.

link

[Venusian]

Originally Posted by CRM114

Is this program about the environment or motivating people to spend money on cars?

both?

"It's good for consumers. It's good for dealers and auto manufacturers," White House spokesman Robert Gibbs said. "It's good for our energy security and our environment."

[crazyronin]

Originally Posted by wmansir

No 98 Chevy tracker will qualify as a clunker. Even the 4WD auto gets 21 MPG combined, which is over the 18 MPG limit.
---------------

The DOT put out some encouraging statistics:
link

It'll be great to see if the Khazzoom-Brookes Postulate still works.

[fujishig]

Originally Posted by Venusian

both?

The thread in otter has an article saying that they drastically changed the bill to allow for more new vehicles to be eligible for the mileage "upgrades." I still say it's primarily to stimulate new vehicle sales. With all the vehicles sold in this period, we'll see how the rest of the year pans out.

[Red Dog]

Interesting article about how buyers likely just held off their car purchase or accelerated their purchase in response to the program.

http://online.wsj.com/article/SB1000...html#printMode

More Cash for Clunkers?

Despite the frenzy, another $2 billion may not sell any additional cars.
By JEREMY ANWYL

Nearly everyone now seems to be praising “cash for clunkers”—the federal program recently launched that will credit you up to $4,500 to trade in your old car for a more fuel-efficient vehicle. President Barack Obama says the program “has succeeded well beyond our expectations and all expectations.” Transportation Secretary Ray LaHood claims “this is the stimulus program that has worked better than any other stimulus program that was conceived.”

But cash for clunkers is also a program in limbo, having quickly run out of the $1 billion budgeted for it. Congress must now decide whether to let it die or whether to pump more money into it. So it’s time to ask if this program is really a good idea.

It is true that Internet car shopping activity, showroom traffic, and sales are all up, which is why the auto industry wants to keep the program going.

I love a good sales surge as much as anyone. But it’s not that simple. First, it’s not clear that cash for clunkers actually increased sales. Edmunds.com noted recently that over 100,000 buyers put their purchases on hold waiting for the program to launch. Once consumers could start cashing in on July 24, showrooms were flooded and government servers were overwhelmed as the backlog of buyers finalized their purchases.

Secondly, on July 27, Edmunds.com published an analysis showing that in any given month 60,000 to 70,000 “clunker-like” deals happen with no government program in place. The 200,000-plus deals the government was originally prepared to fund through the program’s Nov. 1 end date were about the “natural” clunker trade-in rate.

Clearly, cash for clunkers was underfunded from the start. Consumers quickly figured that out and rushed to take advantage before funding ran out.

This sales frenzy was inevitable. We have crammed three to four months of normal activity into just a few days.

What everyone fails to realize is that once this backlog is met, interest in the program will fade.

There is also an ironic unintended consequence. Car companies have cut the number of vehicles coming off their assembly lines in response to the recession, which is leading to spot shortages. This is particularly the case for fuel-efficient models the program was suppose to encourage consumers to buy. As prices for these autos rise, buyers will inevitably use their cash-for-clunker dollars to buy less-efficient models and thus crush one of the touted environmental benefits of the program.

Despite the weight of these arguments, the Senate—never one to let the facts get in the way of a popular spending item—will likely approve additional funding for cash for clunkers this week.

But the good news is that car sales will be up this summer. Why? Car prices are usually slashed in August and September to make room for the next year’s models arriving late in September. In anticipation, buyers have been putting off purchases all year, so demand has been building and will likely force a spike in buying over the next couple of months.

Will that spike reach into October, when the new models are out and prices return to normal? Not likely.

There is another lesson to learn from the past few weeks. Just as we saw in 2001 with zero percent financing and in 2005 with employee pricing, cash for clunkers has united the industry around a common “buy now” message. The aggregate weight of that message, more than the message itself, could energize buyers.

So should Congress drop more money into cash for clunkers? The program is not a cure-all for auto sales. Only a return of consumer confidence can trigger the fundamental sales increases the industry desperately needs.

And so, on balance, I’d have to say “no” to more money for cash for clunkers.

Mr. Anwyl is CEO of Edmunds.com.

[JasonF]

So the Wall Street Journal is taking the position that a $4,500 subsidy has no effect on consumption? Wow ... if President Obama can get conservatives to take that position, maybe he really does have magical powers.

[Red Dog]

Originally Posted by JasonF

So the Wall Street Journal is taking the position that a $4,500 subsidy has no effect on consumption? Wow ... if President Obama can get conservatives to take that position, maybe he really does have magical powers.

I'm not sure that's the WSJ's 'position.' For example, I don't read a George Will or Charles Krauthammer column and conclude that's the WP position.

I don't think most informed conservatives take the position that all subsidies are alike and will produce the same results.

[kvrdave]

Originally Posted by JasonF

So the Wall Street Journal is taking the position that a $4,500 subsidy has no effect on consumption? Wow ... if President Obama can get conservatives to take that position, maybe he really does have magical powers.

When the program is over (which I think it is), do you think they will sell more cars than with the program? The idea that people were enticed to buy is what they wanted, but if those people were going to buy in the next year anyway, you've just made the sales earlier.

But will this make a net gain of sales over a year or two year period? That debatable.

[GizmoDVD]

Can't wait to see the ratio of people who had their cars repo'ed after failing to make their new fangled 'monthly payments'. The people getting financed right now.. Credit scores below 400. Classic.

[mbs]

Originally Posted by GizmoDVD

The people getting financed right now.. Credit scores below 400. Classic.

You want to back that BS up with a source?

According to AutoNation (only the country's largest dealership), the average credit score on their Cash-For-Clunker deals is over 700.

http://www.cnbc.com/id/32233571

[CreamyGoodness]

Originally Posted by mbs

Not always true. I upgraded my 2nd car (my winter car, a 98 Jeep) and would not have done so without C-f-C. I paid cash and could have certainly afforded it without C-f-C, but this was a good enough deal to warrant a purchase earlier than I had planned. I'm frugal with my cars, so if there is life in the car (despite being a clunker), I'm not going to buy a new one. I don't mind driving a clunker worth $1500, but when I can get $4500 for it, it certainly makes sense to trade it in.

FWIW, I improved my gas mileage by 5 MPG. But like I said, this is my winter car. My non-winter car gets 35+ MPG.

Wonderful. A government plan to give money to people, like you, who don't need it.

What a country!

On a side note... I wonder how many of the people taking advantage of this are the same people who complain about Obama being a socialist..?

[Bandoman]

Originally Posted by kvrdave

When the program is over (which I think it is), do you think they will sell more cars than with the program? The idea that people were enticed to buy is what they wanted, but if those people were going to buy in the next year anyway, you've just made the sales earlier.

Exactly. I was going to be buying a new car next year, but will almost certainly accellerate that if Congress funds the CARS program again. My 95 Odyssey gets 18 mpg city, so it should qualify. Thank you, President Obama and Congress!

[fujishig]

Originally Posted by CreamyGoodness

Wonderful. A government plan to give money to people, like you, who don't need it.

What a country!

On a side note... I wonder how many of the people taking advantage of this are the same people who complain about Obama being a socialist..?

He actually is the target audience. He wasn't planning on buying a new vehicle without this program, and would have been perfectly happy with his older vehicle. He can also apparently afford the car. I'm not saying he needed the money, but this is exactly who the bill is tailored for. While I still don't like it, better that than giving the money to people who would have bought a new car anyway, or who really can't afford to buy a new car even with the government money in the long run.

And I can't be too mad, if they had some kind of program to trade in CRTs and upgrade to flat screen televisions, I think I would take advantage of it...

[Hank Ringworm]

Originally Posted by CreamyGoodness

Wonderful. A government plan to give money to people, like you, who don't need it.

What a country!

On a side note... I wonder how many of the people taking advantage of this are the same people who complain about Obama being a socialist..?

It's amazing that the government actually does things other than giving money to poor people, I know.

[sracer]

Originally Posted by CreamyGoodness

Wonderful. A government plan to give money to people, like you, who don't need it.

What a country!

Define "need". We had mortgage bailouts for people who were irresponsible in their finances and took out mortgages too large for them to afford. They "needed" a bailout?

I've said from the beginning, don't give handouts and bailouts to people who were irresponsible, give them to people who were RESPONSIBLE. Those are the people who will use the money wisely.

Originally Posted by CreamyGoodness

On a side note... I wonder how many of the people taking advantage of this are the same people who complain about Obama being a socialist..?

What difference does that make? You aren't going to try to paint them as hypocrites are you?