The Good, Bad, And the Ugly: Who Benefitted the Most From Cash For Clunkers?

This program has been a wake-up call in so many ways...

— Anthony (View Profile)

Posted on 8/27/2009 12:22:26 PM | reply to this comment | Votes: 2   

Coincidentally, 41% of the new vehicles achieve WORSE gas mileage than the average CLUNKER traded in. 41% of the new vehicles sold were trucks.

Remind me again, why were we giving tax payer money to people buying trucks?

— Shredmo (View Profile)

Posted on 8/27/2009 12:35:30 PM | reply to this comment | Votes: 7   

And to follow up with Shredmo’s observation – did we (the taxpayers) just encourage more people to over-extend themselves financially? How many of these buyers really needed to upgrade their vehicles vs. how many made an impulse purchase?

— hybridfarce (View Profile)

Posted on 8/27/2009 2:24:45 PM | reply to this comment | Votes: 4   

Why is Detroit responding so slow still, even to things like this?

— Caraficionado (View Profile)

Posted on 8/27/2009 2:37:10 PM | reply to this comment | Votes: 2   

Unless inaccurate data was given, it looks like there has been a big turnaround during the last week of the program. Originally, I was told that American manufacturers were on top and that majority of the money didn't go to California. lol

— WorldofLuxury (View Profile)

Posted on 8/27/2009 2:40:28 PM | reply to this comment | Votes: 3   

American Manufacturers are not on top because (for the most part) American cars are crap. Folks weren't choosing American cars before. Why should they all-of-a-sudden be interested in American cars now?

If Obama said that the clash for clunkers program is only for american makes then you would have a post here by 009 stating that the Obama policy isn't fair towards foreign makes.

Obama just can't win as far as some people here are concerened (009). Because no matter what he does, folks here are going to say it's wrong.

There has to be at least one thing that Obama has done for the good of the country? Too bad some folks here (009) would never acknowledge it. hmmmm.

Like I said before. Learn how to accept democracy. You (009) and the country as a whole would be better off.

— LexSucks (View Profile)

Posted on 8/27/2009 3:38:20 PM | reply to this comment | Votes: 0   

Onklt VW got a small piece of the pie, the rest of the Germans got left out and they have no lesser division like all three major japanese brands to make up for the lost, this is gotta suck!

— Badgewhore (View Profile)

Posted on 8/27/2009 3:42:53 PM | reply to this comment | Votes: 1   

What the bleeding heart hand-wringing liberals forgot was who the consumer of the clunkers are. The urban poor, who can barely afford a weekly cash payment to the corner used car lot now have fewer cars to choose from and the prices just went up about 20% because supply has been cut. They can't afford the payment on a new car so turning a clunker in does them no good. Great job Obama - you screwed one of your most loyal voting blocks.

— cantaffordone (View Profile)

Posted on 8/27/2009 3:44:50 PM | reply to this comment | Votes: -1   

I think that used to be the way it was LexSucks... but now its changed. You are finding more and more "Pot Lots" around the urban areas offering no credit checks, and in house financing. The cars they sell are $6,000 or less lumps.

They basically buy the worst trades out there and retail them to people who have no other option. Put some money down, make your payments to us, if you miss a payment we take your car back.

— Timzilla (View Profile)

Posted on 8/27/2009 5:09:55 PM | reply to this comment | Votes: 4   

Looking at the net impact of the program, this is probably one of the better uses of stimulus money I have experienced. It will likely help get the auto industry producing again, help improve the environment, and won't cost the taxpayer anywhere nearly as much as advertised.

If you think about what it is going to take to get the auto industry moving again - we have to get credit flowing, then we have to get a massive inventory reduced and then we can start building cars again.

From a credit perspective, this proved that there was enough credit out there and people can get credit if they want to buy a new car.

From an inventory perspective - this wiped out a significant portion of the inventory overhang. The car companies will have to begin producing cars again to replenish supply. Indeed, some have already announced such production ramp ups.

From an environmental perspective, one had to trade in their clunker for a car that provided at least 2 to 4 miles per gallon improvement in mileage. Assuming people traded in clunkers that gave 18 MPG when new and only got a 2 MPG improvement, it is still an 11% improvement in fuel efficiency. Since the clunkers are probably not achieving the same MPG figures as they did when new, the average increase is probably better than 11% and probably more in the range of 15% to 20%. The emissions are significantly lower on newer cars as well, so we'll all breathe a little better as well.

With respect to cost - this program is an incentive. The taxpayer is not carrying the whole cost of people purchasing cars. If you assume that the average purchaser received a $4.2k in incentive and the average transaction value is about $20k, then almost $1.2k (assuming 6% sales tax rate) is generated immediately in tax revenues at the state / local level through sales tax. Assuming the salesman made a commission and the dealership and car company earned some revenue, there will likely be some offset from an income tax level as well. Hence, the net cost to taxpayers is less than the $3 Billion that is often advertised as the cost of the program.

One could argue that the Cash for Clunkers program just pulled forward demand and all of these benefits would have been realized in the future without taxpayer assistance. Perhaps this is the case - we'll never know if these clunkers would have been traded on used cars, new cars or kept on the road for an extended period of time. The idea behind a stimulus is to get money and goods moving now to jump start the economy rather than waiting out an especially vicious business cycle.

— vikast (View Profile)

Posted on 8/27/2009 5:45:18 PM | reply to this comment | Votes: 2   

it should have been done in january!!!! That way the plants would not have been shut down in May and June. It would have helped dealers get through slowest time of the year. Our dealership did 190+ in clunkers hopre we get paid!!!!

— toDD73 (View Profile)

Posted on 8/27/2009 6:03:47 PM | reply to this comment | Votes: 1   

By the way we had a ton of cash customers on this program. These are people that only bought a car because of the gov't money. Civic and Fits were the most common purchase.

— toDD73 (View Profile)

Posted on 8/27/2009 6:07:53 PM | reply to this comment | Votes: 3   

These numbers are seriously flawed. How is it that GM placed second in overall new vehicle purchases and not a single one of their vehicles are in the top ten sales list? I think the other top ten list is more accurate.

— Joe_Limon (View Profile)

Posted on 8/27/2009 7:47:10 PM | reply to this comment | Votes: 3   

Looks like Chrysler is to blame not GM and Ford. Chrysler was a no-show.

— rocker (View Profile)

Posted on 8/28/2009 12:45:04 PM | reply to this comment | Votes: 2