Cash For Clunkers: Did it work?

They say all car dealers will be reimbursed in total by September 30th, 2009 for each vehicle that meets the government’s guidelines for the CARS (AKA Cash for Clunkers) program.
The biggest question still unanswered is “did it work?”. 

This program had 2 purposes:  to stimulate the economy and remove inefficient, older model vehicles – the “gas guzzlers” – from the America’s highways.  While well-intentioned, it appears some side effects from the program could be negative:

  • Auto sales were accelerated:  Future sales were pulled forward by the lure of $4500 OFF the retail price which enticed many Americans to take advantage of the moment and purchase newer cars.  By doing this, sales totals (per unit) are lower now than they were last year this time. 
  • Persons without car payments:  Folks who did not have a car payment to contend with prior to CARS now have one – or at least some of them entered into multi-year financing agreements.  This would certainly curtail some of my other spending if push comes to shove.
  • Prices for recycles metals go down:  At least in the short term there is a glut of metal on the market causing the price to be lower.
  • Prices for wholesale vehicles:  Prices for wholesale vehicles are up making is less advantageous for car dealers to purchase wholesale vehicles for their lots.  Also, we are seeing wholesale vehicle inventories are tighter than ever before. 
  • Lower instances of donated vehicles:  Many charities say their donations are down because of the lack of vehicles available.

 

 

So who’s making out here with the CARS program?  Certainly some automotive dealers have increased profits but it is not the windfall a lot of Americans think it is.  Remember, most car dealers were already stressed due to the economic turndown before “cash for clunkers” ever came along.  We won’t even discuss the strain some dealers are feeling on their cash flow due to the government’s lack of swift reimbursement.

The real winner seems to be the recycling industry.  They get the metal, spare parts, wheels, etc.  Oh, I know the government has strict guidelines on how and when these part can be used.  I did not fall off the truck yesterday – a lot of people in the recycling business are going to strip these cars and sell everything that does not have a VIN on it – for a profit.  What a God-send! 

Lastly, I’m disappointed and frustrated when I see some nice vehicles – still in the prime of their life – being killed in the name of government and gas mileage.  Surely someone could use these vehicles for a good cause.

So answering the question:  Did it work? is more difficult than ever.  Yeah, it worked for some but I don’t think I, as a taxpayer, really received the greatest benefit – or any at all – from it.

 

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Posted by Admin on Jul 22nd, 2010 and filed under Politics. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.

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