‘Clunkers’ Auto Rebate Plan So Popular That It’s Already Broke

[KRonn]

Right, and that was my understanding. I just don't know if there have been any changes where some spare parts can be removed. But yeah, that would get messy and allow a corruption of the program.

Cars are always stripped before they are crushed (except when the Mob pays for the crushing in the movies).  Why would this be different?

Because these are cars paid by government money and the junkie gets use of the parts that taxpayers paid for. This seems a freebie given to him, courtesy of the taxpayers, where usually the spare parts dealer or junkie would have to pay something to get the car. Or if he does pay, someone else makes money off of something that was paid by the govt. Just messy, though I don't know the details of how it all works. But I saw questions like this raised on the news.

[jimmy olsen]

They need to do a Chinks 4 Cash program so I can turn Mono in for money. He'd be living out his life dream of being worth something and I'd get a weekend with the hookers and Jamaicans.

Jamaicans?

[grumbler]

Because these are cars paid by government money and the junkie gets use of the parts that taxpayers paid for. This seems a freebie given to him, courtesy of the taxpayers, where usually the spare parts dealer or junkie would have to pay something to get the car. Or if he does pay, someone else makes money off of something that was paid by the govt. Just messy, though I don't know the details of how it all works. But I saw questions like this raised on the news.

Whoever crushes the car buys it at auction, transports it, strips it, crushes it, and sells the scrap metal and parts.  It is the latter sales that pay for the former costs.  The dealer and manufacturer get the rebate, because it is coming off the price of the car and they cannot then re-sell the traded-in car.

If the dealer gets much from the auction, this could be an issue, I suppose.

[DontSayBanana]

Because these are cars paid by government money and the junkie gets use of the parts that taxpayers paid for. This seems a freebie given to him, courtesy of the taxpayers, where usually the spare parts dealer or junkie would have to pay something to get the car. Or if he does pay, someone else makes money off of something that was paid by the govt. Just messy, though I don't know the details of how it all works. But I saw questions like this raised on the news.

If the dealer is prohibited from profiting on a vouched vehicle, why should the junker be able to?

[KRonn]

Because these are cars paid by government money and the junkie gets use of the parts that taxpayers paid for. This seems a freebie given to him, courtesy of the taxpayers, where usually the spare parts dealer or junkie would have to pay something to get the car. Or if he does pay, someone else makes money off of something that was paid by the govt. Just messy, though I don't know the details of how it all works. But I saw questions like this raised on the news.

If the dealer is prohibited from profiting on a vouched vehicle, why should the junker be able to?

I'll assume it's been taken care of with how the program works, don't know for sure. But I was a bit surprised by news reports asking the questions.

[grumbler]

If the dealer is prohibited from profiting on a vouched vehicle, why should the junker be able to?

Because that's his business.  He has to absorb all of the up-front costs.  Why shouldn't he be able to recoup his costs + profit on the back end?  The market is gonna be flooded with used parts, driving down prices.  How can you create a sensible regulatory scheme that takes that into account?

Simpler to let the existing system handle it, and if some junk dealers make some extra cash, to live with that.

[Monoriu]

Expectations were managed.  They announced that the program would run until October 1 or until the money ran out, whichever came first.  They had a meter running on their web site showing how much of the billion was left.

If they keep eating their own words by throwing more money into the programme, they'll create an expectation that whoever applies for the rebate will get it, that metre be damned. 

[Razgovory]

Simpler to let the existing system handle it, and if some junk dealers make some extra cash, to live with that.

Let it be known that Grumbler supports a tax payer "Bail out" of junk dealers.

[grumbler]

Let it be known that Grumbler supports a tax payer "Bail out" of junk dealers.

Well, since the wackos try to turn managing health care costs into "kill Granny," I am sure they can try to turn 'allow the existing system to work' into ' a tax payer "Bail out" of junk dealers!' 

[DGuller]

Coming back to the spare parts question, I saw the piece on the news that said that dealers were asked to pour caustic liquid into the engine to ruin the car.  This makes it sound like the car is not salvaged for the spare parts, or at least not the spare parts for the engine or fuel system.  What a waste.

[alfred russel]

Coming back to the spare parts question, I saw the piece on the news that said that dealers were asked to pour caustic liquid into the engine to ruin the car.  This makes it sound like the car is not salvaged for the spare parts, or at least not the spare parts for the engine or fuel system.  What a waste.

When a window is broken, it must be repaired, which requires the purchase of a new window and installation services. That will employ both window makers and installers. But to get those people jobs, someone needs to throw bricks through windows. That is where the cash for clunkers program comes into play. 

[DGuller]

When a window is broken, it must be repaired, which requires the purchase of a new window and installation services. That will employ both window makers and installers. But to get those people jobs, someone needs to throw bricks through windows. That is where the cash for clunkers program comes into play.

To be fair, though, broken window fallacy is not necesserily a fallacy during periods of high unemployment.  Premature destruction of the window is a waste, but so is a large chunk of the worforce sitting on its hands when it could be doing something useful.

I do think that there are good things that are coming from this program.  The old cars are much dirtier, and much less safe, than the new cars.  Giving people a push to get rid of those cars does have some societal benefits.  Is it worth the price tag?  By itself, probably not.

[alfred russel]

When a window is broken, it must be repaired, which requires the purchase of a new window and installation services. That will employ both window makers and installers. But to get those people jobs, someone needs to throw bricks through windows. That is where the cash for clunkers program comes into play.

To be fair, though, broken window fallacy is not necesserily a fallacy during periods of high unemployment.  Premature destruction of the window is a waste, but so is a large chunk of the worforce sitting on its hands when it could be doing something useful.

I do think that there are good things that are coming from this program.  The old cars are much dirtier, and much less safe, than the new cars.  Giving people a push to get rid of those cars does have some societal benefits.  Is it worth the price tag?  By itself, probably not.

I agree, I just wanted to post that. :p

[KRonn]

http://www.msnbc.msn.com/id/32269548/ns/business-autos/

'Cash for clunkers' boosts Ford sales in July
1.6 percent increase is first year-over-year sales rise since Nov. 2007

Lured by the government's cash-for-clunkers campaign, car and truck buyers started to return to Ford Motor Co. showrooms last month, with the automaker reporting its first U.S. sales increase in nearly two years.

July sales of Ford, Lincoln, and Mercury light vehicles rose 1.6 percent from the same month last year. Ford sold 158,354 vehicles, a 2.2 percent increase over last month and a sign that consumer fears that fueled the worst U.S. auto sales slump in a quarter-century may be easing.

Ford's sales, led by the redesigned midsize Ford Fusion, and strong sales of the Escape crossover vehicle and F-series pickup line, offered encouraging signs for industry analysts who predicted a modest improvement in the second-half of the year.

The clunker program boosted Ford's sales despite concerns about whether it would be suspended during the final two sales days of the month. The program was expected to boost industry sales overall, which were down 35 percent in the first half of 2009.

Called the Car Allowance Rebate System, or CARS, the clunkers program offers owners of old cars and trucks $3,500 or $4,500 toward a new, more fuel-efficient vehicle, in exchange for scrapping their old vehicle.

Congress approved the plan early in July, but the government considered suspending it on Thursday after an overwhelming response threatened to deplete the $1 billion allocated for the rebates.

But the program continued and the House voted to allocate another $2 billion to keep the sales going. Senators were to vote on the plan this week.

Tom Libby, an independent Detroit-area auto analyst said the government rebate program provided a big shot in the arm to automakers at a time when it appeared overall sales may be stabilizing after months of sharp declines.

"It has psychologically been had a huge positive effect for the industry, which is what it needed," Libby said.
   
Video
  Ford: 'Clunker' sales put us over the top
Aug. 3: George Pipas, Ford's Chief Sales Analyst tells CNBC that the "cash-for-clunkers" program created traffic and sales for Ford vehicles, that they otherwise wouldn't have had.

CNBC

But it remains unclear whether customers will keep buying cars when the program is over, he said. Often, demand falls off after large incentive programs end.

"Almost without exception, we have seen a drop off," he said.

George Pipas, Ford's top sales analyst, attributed the company's higher sales to its more fuel-efficient products, saying that consumers are trending toward better gas mileage despite gasoline prices around $2.50 per gallon.

Analysts expect other automakers to turn in strong performances for the month, most notably Korea's Hyundai Motor Co., which may pass Chrysler Group LLC and Japan's Nissan Motor Co. in sales for the first time in history. Subaru of America Inc. on Monday said its US sales leaped 34 percent in July on sizable sales improvements for most of its models.

German automaker Daimler AG said its sales in the U.S. fell by 24 percent in July, amid plunging sales of its Smart minicar and Mercedes-Benz luxury vehicles.

Still, industry analysts predicted that July sales, if converted to an annual rate, would top 10 million cars and trucks. It would be the first month this year that sales rose above the depressed 10 million figure.

General Motors Co. and Chrysler, both of which have gone in and out of bankruptcy protection and are surviving on a total of $65 billion in government aid, each have said their expenses are so low that they can break even if U.S. sales run around 10.5 million per year.

"There's no question that the clunkers are going to help us get above the 10 million unit mark this month," said Erich Merkle, president of the industry consulting firm autoeconomy.com in Grand Rapids, Michigan.

If more money is allocated to the CARS program, then August could also see a boost, and that could keep sales going until employment losses stabilize in the fall and consumers' fears of making big-ticket purchases start to ease, Merkle said.

While the clunkers incentives could pull some sales ahead from later in the year, most people who trade clunkers wouldn't have been looking for new cars without the government incentives, Merkle said.

In the fall, if job losses start to abate, then typical new car buyers who don't have clunkers might come back into the market, he said.

As recently as 2007, U.S. car and light truck sales topped 16 million vehicles, but economic troubles, tight credit and a lack of consumer confidence sent sales plunging late last year and during the first half of 2009.

Led by clever marketing and strong new products like the Genesis luxury sedan, Hyundai was expected to see an 8 percent sales increase, Edmunds predicted.

[Barrister]

Coming back to the spare parts question, I saw the piece on the news that said that dealers were asked to pour caustic liquid into the engine to ruin the car.  This makes it sound like the car is not salvaged for the spare parts, or at least not the spare parts for the engine or fuel system.  What a waste.

The thinking is owever is that these spare parts would only be used to repair other gas guzzling cars, keeping them on the road longer.  The intent of the program is to get older cars off the road altogether.