Cash for Clunkers - a catastrophe for next year

[DetlefK]

A federal subsidy for citizens to buy new cars. Hmm... Think about it.

The market needs cash. So, people get encouraged to spend NOW on a car. Even people who would think twice about buying a new car, will buy one anyway: "We're never gonna get it this cheap again!"

Imagine that: A wonderful year 2009, in which almost everyone get's a cheap new car.
And now imagine the year 2010. Still, almost everyone has a new car. So, think about it:

WHO THE HELL IS GONNA BUY A CAR IN 2010?????

The problems are just forestalled for a year. What if the car companies don't make enough money to survive this year and next year?
They will go down tommorrow, and not today. Great.

[countingbluecars]

1. I don't believe "almost everyone"

will buy a new car in 2009.

[Cronus Protagonist]

2. ANSWER? The rest of us

And every year for a decade there will be more of us getting to that point. Not that buying cars for peeps is a good government policy, but the premise of falling off sales in one year is not accurate IMHO.

[Richardo]

3. My neighbor has an 18 year old Toyota that gets 28mpg city

He's not eligible for the clunker cash, so he'll buy when the car gives out.

There are plenty of old vehicles that will need replacing in 2010, especially since a lot of them (I bet) are having their maintenance deferred because of tight cash.

[ellenfl]

7. my toyota is 14 years old. i may need to buy next year too. eom

[asphalt.jungle]

20. and that's an official number?

from here
http://www.fueleconomy.gov/feg/CarsSearchIntro.shtml

or based on their gas buying history?

[hileeopnyn8d]

24. Exactly!

My husband's '95 VW Golf is holding on by a thread, but it still gets over 26mpg. I wish it qualified, because I know he'll wait till it's dead on the road to replace it. It's just what he does.

[scheming daemons]

4. Oh noes! If they buy cars NOW, they won't buy them NEXT YEAR!!!!1111!!!!!

The alternative is to go out of business NOW.


What an idiotic OP.

[global1]

5. Hopefully - Selling The Cars Today - Will Restart The Job Engine...........

People hired to make more cars. People hired to make more parts for cars. People hired to make the raw materials for the parts.
Now when these people get back to work and get a regular paycheck again. They will be out spending and putting money back into the economy. All of a sudden - more people back at work making more products, raw materials, transporting, selling, marketing - more money being earned because they are back at work. Then they can go out an purchase a new car next year.

We needed something to catalyze the engine. I think this Cash for Clunkers is very appropriate.

[FrenchieCat]

6. Can we just say....SIMPLETON POSTING!

[scheming daemons]

10. Smells moldy in this OP

[hatrack]

8. Sales cannibalization - it's the American Way . . . .

:eyes:

[DrToast]

9. Except more than 10 million people are buying cars each year. And this program is only...

...benefiting a few hundred thousand.

So to answer your question, over 10 million people will buy a car next year.

[n2doc]

16. Bingo!

Amazing how people don't do the math. I initially though, "woah, they must have sold a lot of cars with this program" but it works out to an "average" week of sales for the industry. Blip on the radar, folks.

[Zynx]

11. Ummm...No. Car sales are so depressed even at the levels they were at in July that there

is plenty of room for car sales to recover without this program. This was poor analysis and I hope you don't do this sort of thing for a living.

Sorry if that was harsh.

[trumad]

12. dumb op

[high density]

13. Well under CARS, both the old car and the new car need to qualify for the rebate

There are buyers who either do not have the "clunker" to begin with or are looking to purchase a new vehicle that doesn't qualify anyway because of its fuel economy.

[Hav]

14. Interesting..

Before I looked at your profile, I thought this is exactly the argument in Germany at the moment :).
Who knows, maybe 2010 will be a bit better for the market. It surely was a great programm for this time.

How many cars are sold every year in the US and how many will get support through this programme?

[GOTV]

15. I don't think the point was to permanently boost auto sales ....

.... it was to increase the average fuel economy of America's cars.

Sure, some sales that would have occurred next year occurred this year instead. That's one more year of higher MPGs we're getting.

[alcibiades_mystery]

17. Nonsense

There are several KINDS of ne2w car buyers. Cash for Clunkers happens to hit the non-standard new car buyers. It doesn't apply at all to people who buy new cars every three or four years (largely because their cars don't qualify for the MPG's), which is the category for the MOST new car purchasers. Indeed, all cash for Clunkers does is hold over the market until THOSE people get back into spending. That is, in 2010.

[Turbineguy]

18. This is the new RW talking point as well

Suddenly they are looking at "the long term". An entirely new concept for them. They are unused to it and get their analysis wrong.

The program encourages people to buy a new car now. But only those who can afford it now (credit and all). The program takes high gas consumers off the road permanently instead of adding them to the used car inventory. This prevents a corresponding drop in prices due to an inventory glut. Longer term, the US fleet overall burns less fuel (lower dependence on furrin oil).

As the stimulus of this program works its way through the economy, economic activity increases. The result of this is more people who will be able to buy cars next year and on.

As any program of this sort, there is some social engineering that comes from it. With some lower priced gas-hog cars not available some will use public transport.

The primary problem to the RW is that this program seems to be working and getting all sorts of people into the showroom. Since car demand is created anyway and not based on "my car is old and needs replacement", this idea of the bottom falling out in 2010 is meaningless.

Even with $3 billion we are only talking about 750,000 cars. That's just over 6 percent of expected new car sales anyway.

[damntexdem]

19. Almost everyone? Well, it sure doesn't include me. Everyone but me?

But why stick to cash-for-clunkers and cars? If the stimulus package causes the economy to rebound this year, won't that just increase the risk that it will make next year look worse?

Maybe the key is to make things much, much worse now so they can look so much better next year.

[Uzybone]

21. another clear case of not thinking before you post

[Ikonoklast]

22. Let's see your numbers for potential buyers this year vs. next.

Can you project replacement rates for autos based on current average age of vehicle, which, by the way, next year will be older if people keep their current ride?

Lots of people will buy cars next year. They may have to in order to replace an aging, high mileage, low fuel economy, higher maintenance vehicle.

[scheming daemons]

23. hit-and-run post by a low post-count DUer.... repeating a RW talking point..... hmmm....

[quaker bill]

25. The program, even if expanded

is not all that big. On the highest upside, we are talking about less than 10 percent of total vehicle sales, in a slow year. More like 5 to 6 percent in a busy year prior to the recession.

[PBS Poll-435]

26. Thanks for your concern

Idiot.

[Peacetrain]

27. sorry but that is the most clueless reason for opposing C4C that I have seen yet

Because they are buying 2009, they won't buy in 2010.. think about that for a minute.. I mean really think about what you just posted, in its entirety.

[karynnj]

28. True - If EVERYBOBY bought a car this year

But, the vast majority of people will not buy a car this year. In fact, I suspect that, even with this, automobile sales for the year will be down from prior years. Here are the Bureau of Transportation numbers - http://www.bts.gov/publications/national_transportation_statistics/html/table_01_17.html You can see that 2008 was down from past years. The economy was showing problems, but not until September did things look bleak. From accounts of how bad the recession was and how dealers were selling little, I suspect the 2009 numbers were very very low.

This year's offer will move people who are already close to making that decision but are holding back on spending. This will give people in all the industries related to producing and selling cars income, which they use giving others income. This is one piece of stimulus. Given this and others, the economy is revived.

[itsrobert]

29. Are you forgetting "Keeping up with the Jones"?

The Jones buy new car with cash for clunker discount. The neighbors have to keep up. They go out and buy a better car. That is how our economy is run.

[gmoney]

30. A Boortz fan, eh?

This is like the old joke about a guy sees a new store, "Al's Rug Shop" so he goes inside.

The store is empty, except in the center of the room is the most beautiful rug he's ever seen. He simply has to have this rug for his living room.

"Hi, I'm Al, can I help you?"

"Yes, I'd like to buy this rug... I don't care what it costs."

"I'm sorry sir, this rug is not for sale."

"Why not?"

"Look around sir. If I sell you this rug, I"m out of business!"


Boortz mentioned the "if everyone buys cars THIS year, who will buy them NEXT year" fallacy on his show the other day, trying to tar the overly successful CARS program as a failure. Also, some lame shit about how "scrapping" the turned-in cars will hurt those people who are looking for spare parts. It's really grasping at straws.

NOBODY was buying cars until this program came along. Not everyone will qualify, but it will get SOME people to buy cars, and get old low-mileage wrecks off the road. If this stimulates the economy, more people will be able to buy cars the traditional way next year. Don't worry your pretty little head about it.

[ellie]

31. Yes, everyone has a new car

All 200 million of us! What an interesting post.

[NYC_SKP]

32. Simple. A new program: "Cash for Cash for Clunkers Cars"

In which 2009 buyers may turn their new cars in for even more efficient cars.

This way even more cars are sold.

They do this every year until everyone has participated.

And then they start all over again with HOUSES!!!

:P

[RayOfHope]

33. Us, probably. Our cars barely miss the MPG cutoff. Hubby's car is getting old

and we're hoping to get another year out of it.

[Doctor_J]

34. This point was made on Hartmann today

By a right-wing nut case like you!

b-bye, loser

[Avalux]

35. Yeah - the program is a real disaster. You sound like Sen. DeMented.

Or one of those who are against the program for no good reason.

[mkultra]

36. the end result will be a net positive effect

as some people who where on the fence are now off.

[WonderGrunion]

37. Is the glass always half empty to you?

The $1 billion of the CARS program spent so far has helped to purchase 250,000 cars. There are over 250 million vehicles on the road today. When does 0.1% of the vehicle population equate to "everyone having a new car"? People will be buying cars in 2010, ideally with their new jobs from the recovering economy.