‘Clunkers’ moved almost 700,000 new cars

[RamboLiberal]

Source: MSNBC/AP

The popular Cash for Clunkers program generated nearly 700,000 new car sales during the past month, giving the U.S. auto industry a badly needed jolt of activity during the deepest decline in auto sales in two decades.

The government, releasing final data on the car incentives, said Wednesday that dealers submitted 690,114 sales totaling $2.88 billion, bringing the program to a close under its $3 billion budget. Japanese auto manufacturers led American companies in new car sales through the program, which ended late Monday.

Many dealers are still waiting to be repaid for the Cash for Clunkers incentives they gave car buyers and were allowed to submit paperwork seeking reimbursement until late Tuesday.

-----

The biggest industry beneficiaries were Japanese automakers Toyota, Honda and Nissan, which accounted for 41 percent of the new vehicle sales. That outpaced Detroit automakers General Motors, Ford and Chrysler, which had a share of nearly 39 percent. Toyota Motor Corp. led the industry with 19.4 percent of new sales, followed by General Motors Co. with 17.6 percent and Ford Motor Co. with 14.4 percent.



Read more: http://www.msnbc.msn.com/id/32567404/ns/business-autos/

[Barack_America]

1. Top 4 cars built in the US, according to the article.

Sounds like the program worked.

I wonder what sales percentages the companies normally achieve, i.e. did the C4C program increase the Big3 market share?

[MercutioATC]

2. I'm not denying the success of the program, but where's the sustainability?

C4C demonstrated that if you pay people $4500 to buy a new car, a lot of people will buy new cars.

...and that was good.


The problem is that we can't keep paying people to buy cars. This is a blip. It's not sustainable.

[TheWraith]

3. Neither is any other part of the stimulus program.

Nor is giving an overdose victim a shot of adrenaline. But it can jump-start the system, and get things past the crisis point.

[shadowrider]

4. The point is

did people buy cars that caused increased manufacturing or did they buy cars that were sitting on the lot and not moving (for one reason or another).

I'll reserve judgment for how successful this was for another 6 months when repos will begin to happen to people that were enticed to buy more car than they could afford by the use of this program. Then they'll be without their new vehicle, and won't have the "clunker" they traded in. The cost of used cars will be higher because of the shortage of them now that 700,000 are off the streets. Then where will they be?

Personally, I think the decision to crush the clunkers was a mistake. These vehicles could have been put back out on the lot for people in search of a cheaper means of transportation that was better than what they currently had.

As for me personally, I could have traded in my vehicle but I never, never, never, ever buy a brand new one. The depreciation for simply driving it off the lot is more than I can afford. I want one that's 3-4 years old in good shape. A lot of those are now simply gone.

[onenote]

13. i think you'll be able to find a used car if that's what you want

There are, depending on whether you look only at passenger cars or include trucks, somewhere between 150 million and 250 million vehicles registered in the US. So, its not as if taking 700,000 cars and trashing them somehow creates a big shortage. And by your own admission, you're only interested in a 3-4 year old car. While I haven't seen the stats, I'd guess that a signifcant percentage of the 700,000 vehicles traded in and destroyed were older than that. Every single person I know that traded in a car under the program traded in one that was at least 6 years old.

Finally, only around 110,000 of the trade ins were passenger cars (the rest were SUVs, pick ups and work trucks) while over 400,000 of the new car purchases were cars rather than trucks or SUVs.

[shadowrider]

16. Maybe you're right

but I have no desire to get rid of my current vehicle, regardless of incentive, unless I find a deal and a half on a used one.

[texastoast]

23. We were told that a three- or four-year-old car wouldn't qualify for the C4C program

I think the newest car was about 2004 and a gas hog.

Getting them off the road will be a teeny piece working to help curb global warming.

I think you might be right about repos. You can't trust a bank as long as the CEOs are getting their bonuses.
.

[Divine Discontent]

6. it was multi-pronged - it cleaned up the environment in its own way by removing 700,000

smog-producers for many new cars that have little emissions compared to what was traded in - that is great! Secondly, the gas mileage increase was literally around 100 miles per fillup - again, great. Yes, it's not 'sustained', but it helps get them (car makers) through who employ a lot of people and have many related business partners, and helped 700000 people get a newer car for reliability and savings. I wish I could have been a part.

[JonQ]

11. Re; enviroment

Check out this post I put up on the subject.

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=103&topic_id=475183&mesg_id=475183

In some cases yes it was a net decrease in carbon, in others no.

[jberryhill]

22. Sucking Air Out Of A Siphon Doesn't Keep The Fluid Going Either /nt

[JonQ]

5. I think a valid question that has yet to be answer is how much of those 700,000 purchases

occurred because of this, and how many would have happened anyway (although perhaps later in the year) and people simply took advantage of the free money?

I could get alot of people to go to the store today if I offered them a 100 bucks to buy their groceries on Wednesday instead of waiting until the end of the week. Of course I would expect the amount of groceries bought on the other days would plummet to account for the shift in spending. I'm out lots of money and there is no net increase in sales, merely a movement in trends.

Not really a winning situation there.

[Divine Discontent]

7. the increases over what was expected have been documented, you'll have to research to find them

but it's a significant bump - cars were barely leaving lots - and now many lots were very scarce! That's a huge increase over what was expected.

[JonQ]

8. Right, now there is an increase

but isn't it likely that in the future there will be a decrease? How many people buy a car one month, then a new one the next, and so on? For most it's a big investment, done sporadically. So buying one now means they won't buy a new one for some time.

An increase of 700,000 cars sold in one month, followed by a decrease by 700,000 in the subsequent months isn't really a net gain. It's merely a shift in buying habits.

[Divine Discontent]

9. understood, and I agree to an extent, however, many people could not have bought a new car had they

not received the credit - case in point - a 13000.00 Nissan Versa or Hyundai Elantra - cheapest production cars in the USA for sale that have automatic and AC - only 8000 or so after the rebate and scrap trade in are figured in, and not even bargaining on price. That made a new car very possible for many people who could pay $125 a month for a new car.

[JonQ]

10. Which brings up another issue

those likely influenced by this are probably not top earners.

They'll likely be in the lower end of the spectrum. So now instead of an older car that is paid off they have a new car that they have to pay for. Hopefully they've figured that in to their budget (although the rate of debt in this country argues that most haven't). But what if they now lose their job, not an unreasonable possibility in this economy. Now they are worse off than before and they can't even sell their old car because its gone and they don't own this new one. An issue.

Also by removing used cars from the market they will drive up the price of the remaining used cars. Who is most likely to buy a used car because they couldn't afford a new one (even with the bonus)? I think in the long run this will likely hurt the very poor, help the middle class, and have little net affect on the automotive industry.

[Robb]

12. On the used cars

...Who is most likely to have a used car to sell?

The only problem I see with the program is what you talk about, that people now have payments than might not have had them before. Good bet most of the clunkers were paid off.

[Divine Discontent]

14. your arguments certainly have merit, but I believe the savings of less pollutants

in the air, gas savings in the tens of millions, less need for gas, removal of dangerous old cars from the road, spurring production when it's needed desperately, and all the other positives outweigh the percentage of people that will lose their jobs and have to scrape to keep their car - but, if they didn't have a new car to travel around in, they'd not be able to find work in a wider area. I had a car that overheated so bad I had to work a few miles away in my small town or not at all. I couldn't have went to a city for work, but could have with a new car. There's plenty of issues both ways, but again, I believe the positives, primarily the pollutants and the boost to the economy of $15 billion (estimate) in car sales for the past 4 weeks are very good things.

[onenote]

15. there has been a surplus of used cars

In Maryland, there were around 61,000 used cars sold in July 2007. That number dropped to around 57000 in 2008 and rose slightly (despite the clunkers program) to around 57700 in 2009. The average price of a used car in July 2007 was $8545. It dropped to around $7800 in July 08 and dropped further in July 2009 to $7482.

[JonQ]

20. I imagine that's a result of few people buying cars period

and selling off the ones they had, prior to this. And the general collapse of most of our economy.

We'll see if that trend holds true.

[TheEuclideanOne]

17. Can somebody explain why so many people are pissing on this program?

From what I can see, it seemed like a huge success. I am actually surprised to see alot of folks here on DU complaining. But here is how I see it (along with some of the complaints that I keep hearing):

a) 700,000 cars are on the road replacing ones that had really poor mileage.
- It is good for the environment and will save the owner money on gas.

b) Auto dealers sold alot of cars. That means that business and their employees are making money that goes back into the economy. I keep hearing "We are not getting reimbursed fast enough for the cars we sold". So I think, what kind of an ingrate says that?!?!?! You just sold 10,000 cars that you would have not sold in this economy and you have the nerve to fucking complain that the check is not in your pocket the next day? I feel like saying to them...."One other way that you would be out of the money would be if you didn't sell 10,000 cars, so shut the fuck up."

c) The people who bought these cars will now have payments that they can't afford.
- Really??? So people have to complain that the people who bought the cars might possibly have trouble making payments at some point down the line. Some of those cars were super cheap after the 4500. Nonetheless, people are stating it as if it is fact.

d) Dealerships are out of inventory and can't sell any more cars.
- Is that really a problem? If I had a business and my biggest problem was that people suddenly rushed in and bought everything that I am selling, I would be pretty damn happy.

e) I hear that people would not have bought these cars if not for the taxpayer giving $4500. It is not sustainable.
- Isn't that the whole point of a stimulus program? To stimulate by giving money where it would normally not be needed.


The way I see it, I would like to see more programs like this, but I hear nothing but negativity. Just venting a bit and wondering if I am alone here.

[SpiralHawk]

18. EXPLANATION: Republicons want America to FAIL

The Republicons FAILED so thoroughly and pathetically in their 8 years of mis-rule, that they want all of America to FAIL and join them in the cesspool of self-loathing and self-pity.

[TheEuclideanOne]

21. I agree, but seeing alot of negativity on MSN and here on DU

makes me wonder if anybody is giving the program its props it deserves. So far, I hear the administration calling it a phenomenal success, but not too many other places.

[Psephos]

24. Money from taxpayers given free to people wealthy enough to be buying new cars

Seems like the reverse of progressive economics.

What else could have been done to stimulate growth with that money? Specifically, what else that didn't involve a trickle upstream from those who can't afford a new car to those who can?

[TheEuclideanOne]

26. I am not too clear on your point.

In the title, you refer to them as "people wealthy enough to buy new cars" but your second question refers to them as people "who can't afford a new car". Can you clarify?

[Psephos]

29. Sure

What I meant was that taxes are collected from everybody. Those who received the $4500 gift are fairly well-off, or they wouldn't be shopping for a new car. Some of the money they received came from people who cannot afford a new car. In part, poorer people are subsidizing richer people. Meanwhile, the cars turned in by the richer people were completely destroyed, which puts upward pressure on the used car market, where the poorer people must buy their cars.

On top of that, the program most benefited foreign car-makers. GM and Chrysler lost market share as a result - hardly a design outcome.

http://www.reuters.com/article/GCA-Autos/idUSTRE57P5C220090826?sp=true

Additionally, there was no co-ordination between government and GM and Chrysler, so GM and Chrysler did not have adequate inventory on hand due to curtailed production and end-of-model-year draw-down. The program's timing was based on political rather than economic analysis, so money and effort were wasted.

[Mnemosyne]

25. Most excellent analysis, TEO. Thank you! n/t

[TheEuclideanOne]

27. Thanks!

I was doing a bit of a sanity check here to see if it was just me or not.

[Mnemosyne]

28. You did well! :) n/t

[Omaha Steve]

19. We bought a Cobalt with a klunker last Friday

We got rid of a polluting 18 mpg for a gas miser.