916WI: Why is BMW also offering HUGE incentives on 09's right now? A good friend of mine is director of finance at a BMW dealer. He said 9/10 deals right now are for 09's. Why? BECAUSE THERE ARE VERY VERY FEW 10s out right NOW! He also said someone would be an IDIOT to not buy an 09 because of the incentives etc.., right now on them!

RAF-Perfect sense.

Equation=Borrowed money (has to be paid at some time), inventory (no one is getting paid anything to produce it so there is no gain on anything)

The sum of the parts does not equal the whole.

Zoom, I realize the big picture perspective is difficult for you, but I will try anyway. Your news article showed a single auto manufacturer in one quarter makes enough product to exhaust the CARS program of funding, and there are over 15 manufactures competing for these same dollars. That covers the erroneous supply issue you mentioned.

Lets discuss dealer bankruptcies. These same dealerships got this far without the CARS program what would a 30-45 day delay while people ordered a car do? Please provide facts.

Your repeated phrase of time value of money works if we were talking of an investment that grows or sustains value over time; these principles are cloudy at best when dealing with borrowed tax dollars placed into circulation through incentive programs to purchase depreciating assets on previously produced items.

Where did I say the program was not popular? Yes, there is an increase as your article showed. What you fail to understand is this program could have produced more tangible results than it did; it’s only 3 billion no big deal, right? Please continue to determine my level of comprehension it is amusing, such as your understanding of the TVM rule.

Wow, what a completely backwards proposition. I'm wondering how may dealers would go bankrupt, or consumers lose their jobs, while they're waiting months for their "new" car to be produced.

I'll repeat this again. The time value of money rule applies here. A dollar received today has more value than a dollar received later, because that dollar can be invested.

I think you just can't face the fact that the program was hugely popular, and manufacturers are now increasing production because of it. Either that, or anything other than tinkle-down economics doesn't compute for you. You've reached a new low of incomprehension.

MooShoo, you said 3 billion was enough to jump start the economy now you say it “is a pinch of you know what”…

The point you continue to fail to understand, I am for helping the economy. By simply implying they spent money does not mean it was spent in such a way to help sustain or generate further growth---that is the problem.

Let’s put your policy ideas to the test: You are now in charge of one the major three auto makers, what do you do with your production levels to remain competitive and profitable with the current situation? Your forecasted production levels of X are now going to be increased how much because of the CARS program? Now answer the same question if the CARS program required only new cars not yet in inventory to qualify.

Which of these two increase production the most? Which one of these brings more people back to work? Which one of these two generates more tax dollars through payroll and the business cycle? Which one of these two utilizes more of the supply chain?

As I said it is not about spending money to spur the economy, it is the targeted way the incentives were focused…it could have produced better results.

RAF, $3.0 billion of borrowing is a pinch of you know what compared to the total amount of debt - both public and private - compared to the capacity of debt to GDP. Your argument only holds true if credit markets are tight and Government borrowing runs up the cost of borrowing in terms of interest rates for the private sector. Take a look at interest rates...they are near historic lows. The problem is even though interest rates are low, there is no good place for business to be making capital investment. Putting it in simple terms, the "I" in the macro equation is a non-factor right now. You are completely missing the point here and do not understand the economy, business cycles, or credit markets. If you are skeptical of the policies of the current Adminstration, just admit it, and we will move on.

MooShoo your point is convoluted. First the 3 billion borrowed today by the government also removes 3 billion today from the market (liquidity) ---someone/company/fund/country bought the debt to finance the project.

To this point the money borrowed reduced existing inventories. For this to be a “gain” it will require the companies to build the same amount as they sold. I never said reducing the inventory was onerous; I said the program only targeted the existing inventory. Unless the program has changed you can not go into a dealership and order a new car and get the incentive. Thus the incentive was targeted to reduce overhead and holding costs, this is one of the flaws of the program. A better spending of the money would have required only new purchases, thus rewarding the whole supply/labor/sales chain.

The exact point I made about rewarding the whole process and not just the dealer or manufacturer is what Zoom decided not to read as he is to busy assuming everyone is in their own “land”.

You don't need a voucher, dealers will apply a credit at purchase

Henry
Blogger
www.cashforclunkersfacts.info
http://www.cashforclunkersfacts.info

Well said MooShoo.

An INCREASE in PRODUCTION isn't the only measure for a stimulus to be succesful. A reduction or halt to layoffs and bankruptcies is just as important. Automakers weren't done laying people off before C4C. Suppliers and dealers weren't done going bankrupt. I guess the rest of the supply chain doesn't matter in RAF-land, not to mention the other manufacturers mentioned in the article:

"Honda Motor Co. is adding Saturday overtime shifts at its auto assembly plants in East Liberty, Ohio; Lincoln, Ala.; and Greensburg, Ind. Its Civic sedan ranks as a top Clunkers seller and is built in Greensburg and Alliston, Ontario.

Toyota Motor Corp. last month began increasing production of "core" models such as the Corolla sedan — a top Clunkers seller — the RAV4 crossover and the Tacoma truck at its U.S. plants.

And Hyundai Motor Co. is recalling more than 3,000 employees at its plant in central Alabama to meet growing demand for its vehicles.

Chrysler is adding overtime at most of its plants to respond to expected demand for its 2010 models, a spokesman said."

Zoom, great link. I encourage everyone to read it. Not only is Ford increasing production, Honda is adding shifts in 3 U.S. Plants, Hyundai is adding shifts in Washington, and Chrysler is adding O.T. at most of its U.S. Plants. It is obvious from the article that inventory in terms of days of supply are rapidly falling and increased production is taking place.
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RAF, the days of inventory are rapidly falling for auto companies. If they don't have vehicles in the supply line, they lose market share to their competitors. They cannot afford to do that because the break-even point for auto manufacturers is a huge number of units. You keep banging on the fact that C4C reduces inventory, and somehow this is onerous. How much cost of goods do you think is tied up in a vehicle? I'll tell you - a lot. They don't turn inventory, they don't have cash to pay suppliers, creditors and workforce.
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You just pointed out that "The incentives offered by the government will cover between 670,000-850,000 units depending on the incentive figure used." Let's go with the smaller number. For simplicity sake, lets assume most are buying smaller, 4 cylinder vehicles to max out the government payout on the clunker (e.g. the buyer wants to get maximaum of $4,500 - the math works too, it is a $3.0 billion subsidy at 670,000 units). Going with the simple example, the average new vehicle sale price is $25,000. That means consumers are purchasing $16.7 billion dollars of vehicles, subsidized by $3.0 billion of government stimulus. Auto manufacturers can make payments on debt, pay suppliers, and have cash flow to pay workers.
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No applause necessary. Its called getting the economy jump started in the only industry that really can float the boat.

Zoom, it appears your wonderful news story on Ford (great company) is slanted. Ford is going to increase production 10,000 units by years end. Using simple math it is easy to figure the results of the 3 billion dollar incentive on Ford’s great news.

Assuming the expanded production, as stated in the article, is to replace dealer inventories. The incentives offered by the government will cover between 670,000-850,000 units depending on the incentive figure used. An increase of one company by 10,000 units is a rotten return on our borrowed tax dollar investment.

The only way this is a win for us is when 69 other auto companies increase their production levels by 10,000 units to replace current levels…otherwise the tax payers subsidized the auto industry and dealer network to off load inventory without more labor.

does gm get their 10 out before chrysler? dont have any 10's not for a few more weeks.

Sometimes a special new model will come out early when o9(ie) are not coming any more and be called a 10. Then have a VERY long selling yr or yr 1/2.

Ihavealife.....calm down--you're an idiot!:) Obviously they sold the trucks--that's what car dealerships do! The '09 models were being offered with $6000 incentives to move them off the lot--figure it out.......If you were such a great investigator why didn't you say something about the '10's not being there when I made that post back in July? Probably because the trucks were there at that point.......right? A genius, you are not:)

The U.S. climbed out of the Great Depression, and every recession since, with government spending and large national debts. It's the only method proven to work. The size of our debt is proportionate to how close we were to another depression.

"...do you think it would be more feasible to genertae more revenue by lowering the prices on many of the new vehicles today?"

NO! That's how GM and Chrysler got in the mess they're in. They tried to compete on price, instead of beating the competition by making a more compelling vehicle. All those years of incentives not only provided no profits, they hurt resale value, which hurts new-car values, which requires more incentives...

My advice? By an almost-clunker.

henispheres- the cars get expensive because of the insurance, wages, pensions, etc.cost of steel, cost of parts etc. lower them and the cost will come down.It isnt the dealer that is getting all that money!!!!

zoom- it would be interesting for you to find dodge and t&c vans since most are sold out of them as well and they qualify.

Zoom-Let me back you up for a minute.

My point-We keep mounting debt on top of debt. Short term, it's ok. Long term not ok. Return on taxpayer investment will not pan out.

Zoom-Let me ask you this. Aside from this C4C (I agree that we have to try something) program, do you think it would be more feasible to genertae more revenue by lowering the prices on many of the new vehicles today? Oponents might say, "Well, we won't make money". In reality, the domestic automakers are not making money anyway so why not sell more volume at more affordable price until they can come up with a better selling car or something. People have no jobs so how do they expect belt tightening and unemployed peopele to purchase vehicles. In my view, they are really expensive. I am thinking about buying one but man the prices are really high.

zoom you may have numbers that may be off a bit. I will tell you why. If it counts or not.

Had a couple people with 00 caravans DONT qualify but all years around do and t&c did. CAME in for clunker and still bought with a small value for the trade in. so it did bring them in just isnt TECHNICALLY a CARS.


some have come in for CARS and the value was a bit more. again gotthem in but not technically a CARS

hemispheres, you seemed to be confused about the purpose of C4C. It was never intended to help GM or Chrysler alone. Buyers using C4C are not restricted on what brand they buy.

916...Let it be my first......I have NEVER called anyone a nasty name on these blogs,you are my first...916 you are a IDIOT !!!! Fagan didn't have 2010 listed 2 weeks ago.Whatever makes you feel good...spin away !!! By the way the 1 Suburban and 2 Tahoes they did have are SOLD !! WOW..Didn't you say something like...They would sit because nobody wanted them ??? Spin.........

"Ford to boost production of Focus, Escape
DEARBORN, Mich. – Ford said Thursday it will build more of its popular Focus and Escape vehicles and boost overall production of cars and trucks this year to help dealers restock depleted showrooms.

Ford Motor Co. needs to keep up with demand for two popular models — the Focus compact and Escape crossover — both ranked as top sellers under the federal government's Cash for Clunker program. It also wants to maintain a reasonable level of cars and trucks so its dealers won't come up short on hot models later this year."
http://news.yahoo.com/s/ap/20090813/ap_o...

Wow Zoom, a real stimulus indeed!
3 billion minus 50 billion is, I think negative 47 billion.

The government already has provided an estimated $50 billion or more to GM alone. 7 billion to Chrysler or more.

When can we expect to see our money back? That's what I thought.

Can GM be viable enough to compete again? (they were never in the game to begin with)

I never said "ramp" production, which I take to mean an "increase" in current production.

"now the auto industry has to resupply inventory"
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Your assumption is panacea. Why would an industry that could not sell extra product without help now ramp production to replace surplus inventory? Yes, all was not surplus, but your statement is not indicative of the outcome.

Make | Model | Share of sales with clunker trade-ins

Ford Escape 4.8%
Ford Focus 4.5%
Jeep Patriot 3.6%
Dodge Caliber 3.1%
Ford F-150 2.9%
Honda Civic 2.9%
Chevrolet Silverado 1500 2.6%
Chevrolet Cobalt 2.5%
Toyota Corolla 2.3%
Ford Fusion 2.2%
http://www.edmunds.com/help/about/press/...

The C4C program is a form of economic STIMULUS. The $3 billion invensted by the government is leveraged 3-5 times that amount at purchase. C4C pulled forward demand, stopped auto dealership defaults and bankruptcy’s, emptied dealer lots and now the auto industry has to resupply inventory. So, the “investment” actually paid off hugely, as the tax increase we might see, will be significantly cheaper than the domino effect of more business closings and more personal bankruptcy’s.

Government spending is what got us out of the depression, and every recession since. The country recovered from those collapses (and government spending), and we'll recover from this one.

Ihavealife--Don't be an idiot.......The 2010 inventory at Fagans was listed right on their website. The rest of your comment makes no sense. They had '09 inventory on their lot(according to their website) which was not selling......However when the taxpayers begin to subsidize $4,500 of the purchase, of course people are going to come out of the woodwork and buy the vehicles......It doesn't take a genius to figure that one out:)

916, the top car sold is just that, the top car. It is not the total of the manufacturers sales. GM, 18.7%, Toyota 17.9%, Ford was 16.3% of the total sales in the program when the numbers came out before more money was allocated.

MooShoo, your assumption, declining inventories in an otherwise stagnant auto industry will lead to increased production to replicate previous levels is without merit. The auto industry was a lobbying force behind the incentive program to help it alleviate the large surplus of unsold inventory.

Your second point, the answer is not what industry but by what method. As I stated about the current incentive program, instead of targeting inventories which only benefit those holding unsold previously produced product, why not require ordering cars not yet produced. This action then employees the whole supply-production-sales cycle, requiring the efforts and gains of the whole industry and not simply helping rid unsold product for the manufacture and dealerships…how did this help the assembly worker?

Just because the effort was made does not require applause for trying.

916wi- well I would rather pay for this than ALL the other crap we pay for as tax payers like their fancy hotels and write off dinners and golden toilets and your fancy suits. May I go on!!!??? Finally I get something out of the deal. I dont drive a clunker SO I guess I should whine about it too. I didnt get a tax credit on two new cars I bought last year. I didnt get a tax credit on the insulation of my home in 08. they had it in 07 and 09. But oh well. I will get a credit on the cars I sold this year. what comes around goes around. Stop complaining about it!!

JMO....If 916 was hung with a gold rope he would still complain !!
916....A week or so back you said there were 2010's on the lot at Fagans??? Guess you were wrong ? You also said that they wouldn't be able to sell the cars/trucks they did have...and by only selling 25 on the C.A.R.S deal sure are a lot of people buying american made cars/trucks.....

Hannah.....I know that English is probably your second language, so forgive me if I misinterpret your points......The reason that most people are upset has absolutely nothing to do with jealously, but EVERYTHING to do with it being our money that is financing these people's new car purchases.....Where do you think the $3 billion came from the money fairy?

Good questions RAF.

First paragraph. Inventories decline, the workforce is called back to work. Unemployment levels are presently very high. Getting people back to work is the first step towards and growing economy and net job creation. This is the typical business cycle model associated with recessions and subsequent expansion cycles that has occured since WWII.

Paragraph two. I see where your going, but give me an example. If you had to pick a product or industry what would it have been? You have $3 billion, how would you used it to leverage up a lot of spending (consumption) in order to jump start the economy? Housing would normally be a good choice, but given all the problems with that sector, its a bad choice now. Energy, transportation, agriculture...?

Pharm.....The latest report that I saw listed the top 5 cars sold, all but one of them was a Honda or Toyota......I guess we'll have to wait until all the numbers come in.....

"MooShoo responds: One man's loss in another man's gain. We regained control of OUR government in November, 2008."
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That's one of the stupidest statements I've seen in a while. We haven't had OUR government in this OR the LAST century. When being a graduate of Harvard, Princeton, or some other Ivy League equivelant, and/or some connection to big business or the Kennedy family to get elected, then, maybe then, we'll get our government back. We don't have any thing like OUR government. We have THEIR government. The government of the wealthy and priveledged - and out of touch with the American people because the one thing they are NOT is like you and me. They are there for THEMSELVES, and they know it, and they laugh at people like you, MooShoo, who eat whatever they stick on the plate in front of you, and you are thankful for it. Obama is no messiah. He's no different than the rest of them. We need term limits now, to get these professional politicians out of office and get some good folks in there who really know what it's like to be an American, and really care. You need to wake up, MooShoo, and so does anyone who thinks like you do. We need representative government like the founding fathers envisioned and prescribed, and that's not something we've had in my lifetime or yours, or even that of my parents. TERM LIMITS ARE NOT AN OPTION, THEY ARE REQUIRED.

janesvillean said---“The response of the stock market since the stimulus passed has shown that investors are more confident once the government showed that it was willing and capable of taking swift action to help the economy.”

Wow, how do you figure that? The market fell 1,000 points in the first two weeks of the bill's passage, then required three weeks to gain back the losses from that date---5 weeks later. On July 10th of this year the DOW closed only ~600 points above what it was on the day the bill was passed; 5 months later.

The DOW has climbed ~1000 points since that day in July. But, to say the “gains” are due to the stimulus package are disingenuous. Most investor reaction is to immediate/timely events and don’t wait 5 months before acting.

This is another example of how a governmnet program creates MASSIVE fraud, and organized crime. Word on the street is that you all ready have mass scamming of this program. One of the biggest ones being junk yards simply swapping VIN numbers off a real junk car with a C4C car. The junk yard car goes to be "recycled" by your wonderful governmnet program. The car that was traded in, and supposed to be junked, goes back onto the used car lot to be sold! Trust me, you'll be hearing a lot more about it in the near future. Can't wait to see the fraud and scamming they get once we have national health care. That will be the biggest scam of all time for organized crime.

916, I haven`t seen the figures lately, but when they halted the program to get more funding, Toyota had the second largest percentage of sales in "Cash for Clunkers." GM was first and Ford third. That is the same order they finished for the whole month of July, and GM has outsold Toyota every month since late last year.

MooShoo, although we seem to disagree, I do have a couple of questions.

The targeted incentive was for product already in inventory and on dealer’s lots. Besides removing the manufactures and dealers burden of carrying fees/expenses what was stimulated? The labor expense to create this product has already happened; where did this create further positions of employment anywhere?

An approach, still targeted, of less incentive for current inventory and greater incentive for ordering of a new product not in inventory, would have benefited assembly workers, suppliers, trucking companies, and others; creating or sustaining employment beyond the approach taken to reduce inventories.

We do agree that some help in sparking the economy is needed. I believe the approach taken by this program was not the best use of the American taxpayers borrowed money.

Raystone....Don't worry--It seems like the tide is shifting as far as the out of control spending is concerned. The uprising of support against the health care reform legislation--specifically within the democratic party itself--is incredibly refreshing to see!

What is undeniable is that the CARS program is just another taxpayer subsidized bailout for the automakers. I highly doubt the majority of these people walked into the dealership carrying a bag loaded with $12-15K as they climbed out of their clunker. The majority was financed with debt. As what typically happens in our society want overrides need and the monthly payment is stressed over the total cost....after all--"It's only $300 a month"....As far a stimulating that market segment.......That's great--they ramp up production, the automakers get everything going again just in time to load up the dealerships with inventory, so it can sit for a year when the program ends and everyone who was even considering buying a new car in the next year or two has already because of the incentive. At least Honda and Toyota were the big winners with this--I guess the American consumer is a little smarter than I was giving him credit for:)

MooShoo, I feel sorry for you. When the government takes the rest of your liberty and prosperity and crashes the dollar, you'll be the last one to see it coming.

RAF, sometimes we will just disagree. I appreciate the thoughtfulness of your answers.

Raystone asks: So, when did we lose control of OUR government ?
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MooShoo responds: One man's loss in another man's gain. We regained control of OUR government in November, 2008.
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Raystone asks: MooShoo - I thought we went through this...more borrowing and spending is going to fix the mess that too much borrowing and spending got us in to begin with ?
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MooShoo responds: Raystone - I cannot answer because the premise of your question is flawed. It completely disproves the statement that there are no dumb questions.
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Any more stupid questions?

MooShoo, Janesville missed the point of this thread…this is about a specific program not the larger stimulus package.

I agree that increased demand results in lower inventories (mostly) and causes increased production (possible employment increases) to facilitate. What we seem to disagree with is this is a bubble in the demand side that has no way of sustaining or increasing production and demand levels.

MooShoo - I thought we went through this...more borrowing and spending is going to fix the mess that too much borrowing and spending got us in to begin with ?

RAF, cash for clunkers has everything to do with increasing consumer spending, which is by far the largest component of GNP. If inventories fall, workers are called back to their jobs and production increases. When people are working, personal incomes rise, and we work ourselves out of a recession. I does not make a difference whether it starts with private investment, public spending, or consumer confidence. You may have a political or policy slant on the topic, but the economy does not differentiate.
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If credit markets don't work, then the program does not work. Most people will finance the purchase, not pay cash. Loan making can expand the money supply, but its too complicated to explain to those who do not have finance backgrounds or economic degrees.
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Janesvillian gets it and explains it very well.

Seems like this is one government program we can all agree nobody wanted or asked for. So, when did we lose control of OUR government ?

but these people ARENT buying electric cars just regular cars. I still dont get what you mean.

hannah - That is exactly my point!!!!!!!! They are brainwashing people into buying future vehicles that nobody will be able to afford and aren't practical.

One more thing. DO you have a FAmily WELL THEYLL HAVE TO DRIVE IN A DIFFERENT CAR. So then you spent $40 to save on gas. WOW I CAN BUY lots of gas for $40k.

Like I mentioned do the MATH!! It wont make sence for MOST!!

and you really think $40k electric cars will FLY off the lots. what do you think the price of a battery is for those. I would say around $5k. The electrics now are $5k and last about 5 years. that is a lot of gas. you also cannot go over 45 with this car. the people who will buy these are the ones will MONEY and big suvs to haul their other "toys" Sorry cant get to work going 45 they prob wont be allowed on the hwy. I would also hate to meat up with a lets say grand prix size car!!!OUCH. or lets say a tahoe can you say TOTALED. how much to insure this tiny car??????????

have you read about the SAFETY of this car. some say rated safety for driver and say DONT CARRY A PASSANGER. I DONT THINK SO!!!!!!

They want to raise the average fuel economy so that when the Cap and Trade legislation comes to pass, $6-8 per gallon gas is less painful.

hannah - I think you're still confused on what I'm saying. These new electric cars coming out, are going to cost all of $40,000. This is the real reason they are wanting to persuade people to get rid of their current vehicles.

like i said cars are moving LIKE THEY USED to for this time of year. he recession is what is screwing with people.

nobody is buying $40k vehicles!!!!!! most are around $20-$25k minus the deal. I do have one that is 40 but nothing to do with clunker sale.

Ok, for those of you that are confused on my use of the word investment. Here was my point. The government is using your money to invest in ripping you off even more in the future by bribing you into getting rid of your junk to only screw you into trying to buy a $40,000 new vehicle down the road. The auto industry is a money pit that we are all going to pay for big time! Can't some of you see that?

spark- youre so smart. you correct a car is a bad investment. but wrong using the investment word. It is a depreciating asset!! dont get confused and use the word investment.

doesnt matter new or used it will depreciate. It just depends how much money you are willing to lose. If you keep a $40,000 car for 20 years it doesnt cost to much per year to own.

people have their own reasons for buying new or used and you need to figure out what is best for you and your budget.

unidentified"I'm not a big fan of CARS. First off, most dealerships over the years have offered push pull or drag sales that gave people 3,000 for anything."

this is a used car program. used cars are marked up enought to "show you" 3500 for your 100 car. what if is actually worth 3500??? they just sold a used car for retail.

New cars are not marked up this much. So you really are saving a lot on a caliber for example. caliber has NEVER had 4500 rebate even at way past year end. well now it is at zero but when this started it was 4500 and 4500 for clunker. you have saved 50% window sticker. Hope that explains push pull drag.

That is why you see a jeep with 400k on it.
It is why you see cars at 100k BREAK!! YOU DONT TAKE CARE OF THEM!!! It isnt the company that built the car!! I hear it all the time "never needed anything" yes they do MAINTANCE!!!

916wi"and will probably be picking up the tab for the finance companies when they repo the car..."

Like I have said many of these people are paying cash for these cars. Many buying these cars also have a usual cycle of trading and thought NOW IS THE TIME. many have bought a car for their child. what used car can you get for $10,000 with bumper to bumper warranty and lifetime on engine and tranmission-(some brands only). buy usuall cycle I mean 7-10 years. I really dont think youll see many repos. If they are the bank isnt going to lose much becasue the value should be equal to the loan with all the "cash" shown down.

cookie- meaning to tell you caliber rbate was 2500 now down to ZERO. cannot find them anyway. Patriot down to $1500. cannot find them anyway.

I think this is a great program and some say they should have passed that first bunch of money into the people.

The timing of this stinks!!!! we cannot get more 09 cars and by the time the 10's drop no clunker money will be left.

It is like old times selling cars again. atleast for a month (or week )till all the money is gone again)

Some of you may seem jealous you cannot get this program yet you are still the ones who wouldnt have bought a new car anyway so I dont understand why you are complaining.


cookie- not sure your term "free" car. they arent free. just a really good price on them. nobody is stopping you from getting one!!

Also not ALL will buy a new car. I dont think this will effect car repair aS much as you are stating. These old cars prob were never fixed anyway. you still need to MAINTAIN the car. atleast you SHOULD> many wont do that either cause that cost money.

when was the last time you flushed your fuel system?
tranmission fluid?
brake lines?
axle fluid?
OIL CHANGE?
rotate?

I have a real problem with the engine being destroyed on the clunkers. It makes no sense to me. I agree with whoever said they should change the title to salvaged so that it can't be sold again.
There are lots of people out there happy with their clunkers and could use those parts that are now destroyed in the engine.

Yet ANOTHER gov't thing that you think starts out as a joke but actually end up HAPPENING.

RetiredAirForce, the stimulus was intended to replace the drop in consumer spending that crippled the economy (and which has not returned to 2008 levels). The majority of the spending was directed toward sectors of the economy that needed to keep or retain jobs during this period of reduced spending. That certainly applies to car dealers and car manufacturers. Imagining that it was intended to create new, permanent jobs that would outlast that spending is a way of changing the terms of debate. Obviously that would be a desirable outcome, but it is almost impossible to measure, and is secondary to the purpose of replacing consumer demand. The response of the stock market since the stimulus passed has shown that investors are more confident once the government showed that it was willing and capable of taking swift action to help the economy.

Up until now, I have found cars to be a very good investment. I buy an $800-1200 car, clean it up drive it for a few months, and sell it for $1000-2000. Car payments are for suckers. With cash for clunkers, I have no idea what will happen to the low end market, but I am not looking forward to it.

MooShoo, this program had nothing to do with increasing liquidity it was a targeted incentive to help the auto industry…what about that don’t you see? There is nothing on the macro fed policy side that this program had anything to do with. As I said this targeted policy creates no sustained economic stimulation, aside from the initial purchase. Did any of this create new business opportunities? How many more people are employed because of this 3 billion dollar program?

Zoom - Thanks for reiterating my point. Maybe the Government should stop investing all their time and OUR money for the cause.

"Cars are one of the worst investments a person came make."

Cars aren't really an investment, are they.

Unidentified, from what I've heard, Chrysler dealers were offering those incentives ON TOP OF the C4C program to get rid of 2008 and 2009 models. That's why their lots are empty. Remember that many of these same dealers had a large oversupply of vehicles before the program.
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This program isn't forcing people to get in over their heads with an auto loan. Loan standards are MUCH more strict now than they were 6 months ago. Many people simply moved up their purchase from fall/winter to now. The time value of money rule applies here. A dollar received today has more value than a dollar received later, because that dollar can be invested.

right on Spark

Cars are one of the worst investments a person came make. Especially a new one. All the money this Government has spent on such an item that soaks money right out of the consumer is sad. It's just another scam that people think will help. So you're going to offer people money (which we'll be paying for) to turn in their junk only to try and purchase a higher priced vehicle that will put them further in debt. Just wait and see, the auto industry will be the #1 source of all the economic crap we have to deal with in the future. It's already happened.

I'm not a big fan of CARS. First off, most dealerships over the years have offered push pull or drag sales that gave people 3,000 for anything. So for another 500 dollars people are willing to get locked into a payment for another five years? Moreover, many of the cars being turned in are nice working cars that could have gone to poor families that need transportation. The used car market will now be more inflated, which only further hurts those on lower economic levels.

There's probably alot of people out there, like myself, who need to get rid of an older car to get a new one. But with the questionable economic outlook, can't make the move to be saddled with 48-60 months of payments. (I haven't had a raise in 3 years).
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I'm guessing the people who bought new vehicles are taking a huge chance on that or either that could've afforded a new vehicle regardless. IMO

916 - I agree with you but lets take it further. Did the cash for clunkers put anyone back to work? All they essentially did was create personal debt and clear a few car lots. How about requiring automakers to match the 3500-4500 with our money they were given in the "bailout". Then you might see the wheels really move & the auto plants might be able to actually generate some jobs out of this rather than just clear a few lots of cars/trucks they would have had to discount by this much anyway just to sell - think about it, every year they give 3-4k "rebates" anyway just to make room for the model change. This looks like another "bailout" of the auto industry that we all just got snowballed into.

RAF, you do not know what you are talking about. Please define for me what you think the macro-economic model is. While your at it, tell me what you would do to get us out of the current recession.
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One of the major problems with the economy was lack of liquidity. Lenders could not and would not make loans. The first step was infusing cash into credit markets so capital was available. Is not making loans so consumer purchase autos stimulating the economy?
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How much leveraging of private money and loans do you think cash for clunkers accomplishes RAF? Humor me at take a guess.

MooShoo, you are wrong, the economic equation did change. This was a targeted government “credit” towards a single sector of the economy with no provisions for increased demand in the future; non-sustainable bubble, a far cry from what is needed to stimulate the economy.

People/individuals know best what they want or need. If the government wants to stimulate the whole economy, having people spend their own money is the best way.

I may be just cynical, but cash for clunkers feels a bit like a scam to me.
Government bails out G.M. and Chrysler (Ford opts out,G.M. gets the most)
Government institutes Cash for Clunkers program to the tune of one billion dollars.
Program is a "success", first billion goes quick, two billion dollars more gets added.
Program creates need for more cars from the car companies.
The government program benefits the car companies (again), the car dealers, and the people that can hopefully afford it (plus have a clunker sitting around).
Just seems like another bailout to me (imo).

Me too, free car would be nice - that is the next govt. stimulus pkg. didn't ya know? I heard the repair shops are taking a hit by lack of business repairing older clunker cars and business is down on that end. But hey, the new car dealers are racking in the money for a change. Tick for tack I guess. Hurt/suffer one job to make another job more profitable even though it will be a short run that is the govt. way.

Too funny MooShoe......You're right--we'll see how how long spending this $3 billion of taxpayer infusion stimulates the economy. About a quarter of a million Americans took on an additional $15-20K worth of debt(if they were driving "clunkers" they were probably not in the best financial position to be buying a new car) in a down economy where unemployment continue rise. I'm sure there will be another taxpayer sponsored bailout of the finance companies who lent the balance of the cash. Taxpayers bailed out the auto companies so that they could manufacture the car, subsidized the auto dealers by offering people this huge incentive to buy the car, and will probably be picking up the tab for the finance companies when they repo the car.......Crazy time we live in!!!! For some reason I feel like I should get a free car out of this!!!!

Raystone, I do not disagree with your premise that an artifical housing market created boom. Speculation on housing, easy credit, and yes, AIG was actually expected to "insure" the secondary market on mortage backed securities. I wonder when AIG executives actually realized they were EXPECTED to honor their commitment. I am not pleased. You, me, and everyone else are sitting on homes that a worth less today then they were a year ago. PO'ed is an understatement on how we should feel about it.

In case you boys have not figured it out, the government establishes monitary and fiscal policy. You may disagree with it, and that is fine. The last time I looked in my back pocket, it was a Federal Reserve Note. Not a freakin' GM Note, nor an British Petroleum Note, nor a Bank America Note.
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RAF, the economic equation has not changed, it is those who are calling the shots that changed. You may not like it, but hunker down, supply side Hoover economics does not work in a world recession.
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Regardless of what "stimulates" demand, the outcome is better than where we are now.

This just further proves how the government changes the economic model. The incentives, borrowed from future taxes, given to people today have increased demand causing a crush on supply. Note: the same thing will happen with health care, more people with demand yet supply (doctors and hospitals) are the same…supply will suffer = waiting lines.

Just think of all those perfectly good motors destroyed that someone could had used to fix their car/truck but cant afford to buy a new car. Instead of destroying the engine, how about just branding the title?

MooShoo - not all consumer spending is created equal. We just lived that with the artificial housing boom created with cheap money, liars loans,and government guarantees. Cash for clunkers and other stimulus is more of the same.
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We need consumer spending based on genuine market demand, not more misguided borrowing and spending and debt.
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When a family saves, downsizes on the Mcmansion he's in hock up to his neck on, trades in the starbucks for home joe, and later invests a little of his little savings in his brother's vegetable farm, we'll know America is on track again.
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Government borrowing and spending is more misplaced debt based spending on top of misplaced debt based spending.

"GNP" is a false indication of how well people will do economically, another rather meaningless jumble of letters of little significance to most things.
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Think of this:
If all cars/trucks magically started getting half their fuel mileage tomorrow, the "GNP" would go up dramatically because "more gas/diesel would be sold"....The "GNP" would go up but would this benefit the economy???

Raystone, the macroeconomics equation is: C+I+G (X-M) = GDP. Investment is a small component of that equation. So is G. Neither one is a "false" component. You need to go back and study the books.

Consumer spending is the biggest component of GNP. If the government can leverage that component, it will induce spending. If car and truck inventories fall, manufacturing will increase production to meet the falling inventories. That may jump start the economy.

Cash for clunkers is prolonging the recession the same way the "stimulus" is and will for many years. In short, borrowing and spending is what got America into its' economic mess. Now, the government is pushing more borrowing and spending, both from the government and personally.
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The federal reserve for years kept the punch bowl filled with artificially low interest rates, encouraging boom times and the unnatural increase in housing prices, a crash was sure to follow.
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For the economy to recover, people need to save and invest later in the production of goods and services for which there is a true demand and not debt based demand. This is how the GDP grows and prosperity is created.
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Cash for clunkers and the stimulus is "false investment". It doesn't represent a true economic recovery based on consumer demand, but what the government is unjustifiably spending our children's money on, creating debt for future generations.

I wouldn't say this program is prolonging the recession or helping bring it to an end. We have already seen that Ford posted gains in car sales in July, obviously helped by this program. This program will come to an end in November if I recall correctly, ( I might be wrong so don't virtually slam me for that). It is only my opinion, but I would not be surprised that when this program comes to an end, we will see drops in car sales again. I'm not hoping for that situation, but I just think that things are not as good as the administration has been saying they are. We will have to see a sustained month after month increase of auto and durable goods sales to confidently say that this recession is finally turning around.

I'd love to hear a sound economic argument for how this program is prolonging the recession. Something that increases consumer spending is part of what helps end a recession.

I'm not sure you can say this is prolonging the recession by any stretch of the imagination. It is incenting people to purchase new vehicles by giving generous discounts for garbage cars and pushing the sales of new vehicles which is keeping hardworking autoworkers in their positions. Many of these cars get awful gas mileage, which is a waste of money, and require a lot of money for maintenance. Proposing that someone drive a 1994 Cherokee with 400,000 miles and put money away is not necessarily prudent. Cash for clunkers is one the best government programs we've seen in many years.

I beg to differ; it's giving us a boost.

I agree

Just when more Americans start doing the right thing and saving their money, and not buying a new car when they don't have to, the federal government screws things up again. Cash for clunkers is prolonging the recession.

Do the salvage yards pay any money for the clunkers?