By on August 27, 2009

Post-clunker mortem, CNNMoney says 700,000 clunker-traders “probably got a good deal.” The rest, not so much. “If you bought a car without a clunker in the last month, you’ve overpaid.” Ya think? “During the weeks the Clunkers program was in effect, buyers of the Toyota Corolla paid 29% closer to the full sticker price than before the program started, according to data from Edmunds.com. Prices were also higher on other popular models. Ford Escape prices were 13% closer to full sticker, and Ford Focus prices were 12% closer . . . on a dollar-for-dollar basis, car buyers were getting less car for their money after negotiating the deal.” And now?

Post-C4C, new car inventories are as spent as a [joke deleted]. In the short term, prices will remain firm. After that, well, we know the domestics’ have cranked-up their factories, readying themselves to meet demand that’s already been satisfied. Although automakers financial statements will be blessed (they log cars leaving the factory as “sold”), how do you spell languish? As The King would say, that’s when the heartache begins.

Look for prices to plummet in November and December after dealer showrooms have filled up ahead of what is traditionally the slack season for car sales.

Binge and purge doesn’t work for dieters. It’s not going to work for the car industry either.

[Thanks to gslippy for the link.]

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55 Comments on “The Truth About Cash for Clunkers (Again, Still): Buyers Paid More...”


  • avatar
    joeveto3

    Pure supply and demand. As a C4C partaker, all we saw was a feeding frenzy — not the best environment to try to haggle your way to a better price.

    Reminded me of a bridal shop sale, with a bunch of women jumping, screaming, and fighting for the same dress.

    If you saw something you liked, you grabbed it, or risk losing it.

  • avatar
    mg601

    I got 9K off msrp for a 335d . don’t think I could have gotten more.

  • avatar

    Not to mention the hike in sticker prices due to fuel efficiency being en vogue again. This was an out & out gift to the Middle Class… wait for the return favor.

  • avatar
    ohsnapback

    All CFC did was steal future sales.

    Given unemployment rates, and the growing unused capacity of automakers, look for almost every automaker to dramatically ramp up production again, no matter what they claim.

    Dealers will be crying come October, and they will beg for more Government Cheese.

    This article states anyone without a clunker paid more than they would have prior to CFC – if you include even a nominal cash value ($500 to $1,000) for those who trader clunkers in, I contend that many people who DID trade a clunker in paid more for their shiny, new car than they would have prior to CFC, given that dealers jacked prices up on the most popular models to MSRP or damn near it.

    There are already reports of huge numbers of CFC buyers having ‘buyer’s remorse.’

    That’s what happens when governments disturb equilibrium.

  • avatar
    european

    ohsnapback
    +1

    im lovin it HAHA

  • avatar
    PeteMoran

    Logic has gone right out the window here.

    People made purchases during C4C at price-point “X” because it suited their circumstances to do so.

    Those people a) could afford a car, b) had an otherwise worthless vehicle and c) were mobilised into the market when they would have otherwise sat on their cash.

    Any “relationship” to prices “other people” paid are nonsense. No-one held a gun to those “other peoples’” heads before they drove their new Corolla off the lot.

  • avatar
    segfault

    I’m betting that a different story would emerge if you looked at the deal sheets for these C4C deals. I bet a lot of people paid something close to MSRP less the C4C rebate (no factory rebates). I’ve already read stories on Edmunds about dealers refusing to deduct the C4C rebate from a previously negotiated (non-C4C) price.

  • avatar
    nj1266

    The program achieved what it set out to achieve. It stimulated sales adding to GDP growth and clearing cars off the lots. It removed gass guzzler off the road and replaced them with more fuel efficient cars. If this lowered gas consumption even a bit, then that is fine by me.

    The cost was a mere $3 billion. The Feds are spending 100 billion on Iraq per year and 60 billion on Afstan per year. The return on that investment is slim to non. No one is complaining about that spending, but when it comes about this small yet effective program all I read on TTAC are complaints.

  • avatar
    european

    @PeteMoran

    most ppl dont follow the prices regularly and couldnt compare the c4c price to the non-c4c price.

    and with the $4500 incentive they thought they got a sweet deal and bought a car, that turned out to be more expensive to them. it was the take it or its gone mentality. sad.

  • avatar
    ohsnapback

    The only ones praising this program seem to be dealers and those work at dealers.

    The consumer and taxpayer got ‘the shaft,’ big time.

  • avatar
    romanjetfighter

    Buyers having remorse is personal irresponsibility. The government put out an incentive, and it’s up to the people to decide whether they should buy it or not. No one forced them to buy the car.

    What’s next, blaming car companies for having end of year clearances with huge discounting, disturbing “equilibrium” and making buyers do dumb stuff?

  • avatar
    musicalmcs8706

    ohsnapback: I talked with someone who works in a used car lot at a new car dealership. This has driven prices of ALL used cars up through the roof and they have nothing cheap on the lot anymore. I had talked to him a few days after C4C and at that time he said it was good. My how that’s changed.

  • avatar
    John Horner

    People who got in on the program in the very first days often got very good deals. Once it became obvious it would be a runaway success, of course dealers backed off on discounts on popular models.

    Saturn Astras could be had at give away prices the whole time though :).

  • avatar
    Bearadise

    nj1266@ the complaints are about the fact that such a small percentage of C4C money has been paid to the dealers. (I was in several of my dealer clients today, 10% paid was the highest I found, a couple have not gotten paid on the first deal yet.) C4C is, in effect, a single-payer plan. If the feds muck up a measly $3 billion program, God help us all if/when we get a single payer health care program costing in the mega-trillions.

    IMO, it is not the Federal government’s job to put out incentives. That’s my money that is being taken from me by force and given to somebody else so they can get a better deal on a new car.

  • avatar
    nj1266

    Bearadise,

    The $3 billion dollar in waste is NOTHING compared to the $766 billion in waste on the Iraq war. Do you complain about that as well? Is it the govt.’s job to waste our tax dollars on ill begotten wars? Is spending 766 billion on Iraq more worth more than spending $3 billion to stimulate car sales, put some people back to work, remove gas guzzlers off the streets and lower dependence on foreign oil?

    Is it the govt’s job to bail out the financial sector to the tune of $700 billion? Did you complain about that too?

    People complain about this program as if it is a huge waste of money when in fact it was a very small amount spent that added to economic growth, put people back to work, and reduced gas consumption therby helping the environment. What is wrong with that?

  • avatar

    I originally heard that some dealers were raising their prices on cars so they didn’t lose any money with the $4500 rebate. FORD specifically.

    Then factor in how C4C caused dealers to run out of inventory on models like focus, Fusion, edge, Miland hybrid, fusion hybrid, etc and you get the supply & demand issues which cause prices to rise.

  • avatar
    PeteMoran

    @ european

    I understand your point, but I don’t regularly look at car prices either. I tend to give purchasers more credit, especially the ones targeted via C4C.

    As an example, I won’t know (and don’t care) that the price was higher/lower last month, last year or might be cheaper next week.

    If the complete offering doesn’t work (brand, model, features, price, lease) then walk away.

    @ Flashpoint

    …. you get the supply & demand issues which cause prices to rise.

    Which I would contend has absolutely nothing what-so-ever to do with a freely made individual decision to buy.

    It’s also entirely healthy for business to make a profit.

  • avatar
    reclusive_in_nature

    On the topic of the $766 Billion “waste” in Iraq, my three years of experience there can attest it was money well spent. A lot of bad people (the type that would happily crash a plane into a building or set off a dirty bomb) got rehabiliated permanently via an increase in their lead uptake. I could go and on about the unreported benefits of us being there, but this post isn’t about the Iraq war.
    As for C4C, I’d rather have seen that $3 Billion go to a) Ways of keeping gasoline cheap, or b) Finding a way of actually REMOVING greenhouse gasses from the air so our dickless leaders no longer have an excuse to tell me what I can or can’t drive.
    Better yet, how about a “Cash for Vehicles People Actually Want”? Trade in a vehicle that gets better than 30MPG (to be resold to low income families at a discount) and you get $9000 toward the sports car, SUV, or truck of your choice. The longterm high prices and taxes associated with those vehicles would boost the economy more than economy cars would.

  • avatar
    mpresley

    When the government has to subsidize what no one on their own would buy…well, then how stupid is that? These companies should have been allowed to fold, and their toxic assets removed from the economy. Now, all that happened is they live for another day, and things will be even worse in the long run. What’s next, once no one has a clunker to “trade in”? Will the government (ie, taxpayers and Chinese bondholders) continue the bailout? Don’t know about taxpayers, but the Chinese are getting wise.

    A citizen who went to sleep in 1965, before the comprehensive Immigration Act and the transformation of our country into more 3rd World status, upon waking up and viewing C4C would agree with Ripley: “did IQs drop sharply while I was away.” And they’d be right.

  • avatar
    findude

    Cash for Clunkers (Bucks for Trucks) was a decent idea with a suboptimal implementation. It should simply have been a tax credit.

    It’s worth considering issuing tax credits (state or Fed) to people who trade in used cars (subject so some criteria) for new ones that are more fuel efficient/less polluting than the old car. There are already tax credits for buying hybrid, electric, and CNG vehicles. This would motivate higher turnover over the long run without causing spikes in the market–complicated for manufacturers/dealers as well as consumers.

  • avatar
    dwford

    People who got in on the program in the very first days often got very good deals. Once it became obvious it would be a runaway success, of course dealers backed off on discounts on popular models.

    This is exactly what happened at my dealership. When we started writing deals in early July, customers were still shopping on price, and we wrote really short deals. Once the program officially kicked in and the flood gates opened, we raised prices to full MSRP on all the 4 cylinder cars.

    So the smart ones that recognized the good deal and took advantage of it early had the chance to shop around to get the best deal. Those that waited until the frenzy started got what they got. Same as it always is. Supply and demand.

    And believe it or not , prices will stay high for a while. We are in between the 09 and 10 model year, and dealers don’t want to unload the 09s at huge discounts just yet, or they will be at a competitive disadvantage vs other dealers that still have them, since the 09s have bigger factory rebates. Look for the unloved trim levels and unloved models to get the best deal.

  • avatar
    NulloModo

    A new Focus has somewhere between $800 and $1200 mark up from invoice to MSRP. Assuming a top line ’09 Focus SEL, someone willing to negotiate hard could have gotten invoice with rebates, giving them a total savings of around $3700 pre-C4C. Being very generous and assuming their ‘clunker’ was worth $1000 as a trade, that gives them $4700 in savings. With C4C at full sticker, voucher with rebates is still a savings of $6000 – $7000, so obviously the customer with a clunker still got a better deal with the program.

    If you change the situation around to a ’10 model with no rebates, the C4C customer still comes out ahead vs. ’10 without C4C but with invoice pricing, and very close to the deal he could’ve gotten on an ’09.

    Yes, customers without clunkers paid higher prices, but plenty of them decided to wait on the sidelines until the program was over, and will now be coming in. By law (at least in this state) we have to give the customers all rebates that they qualify for. Yes, it is possible to just jack up the selling price of the car to account for rebates, but we don’t do that, although I did hear the local Toyota store was trying it.

    We had some customers complaining that we were raising prices or taking away incentives towards the end of the program, which just isn’t true, we were staying at MSRP from the beginning. The difference was that in the last days of the program the inventory had been so shopped through that the mid and low level trim vehicles were already gone, and all that was left to choose from were the highly optioned models. Similarly, the ’09s with higher rebates went first, while the ’10s with new features, slightly higher prices, and less incentives remained longer. It’s not trickery to sell a newer car with more options for a higher overall price, you pay for having extra features and a year less depreciation.

  • avatar
    TaurusGT500

    nj1266 : August 28th, 2009 at 1:21 am

    The $3 billion dollar in waste is NOTHING compared to the $766 billion in waste on the Iraq war. Do you complain about that as well?</em>

    …..sooooo if I grasp this reasoning correctly… if you don’t complain about every (real or imagined) injustice in the world … you don’t have a right to complain about any of them!

    hmmm. missing. something.

  • avatar
    Robstar

    hasn’t C4C left a lot of SUV’s/larger vehicles on dealers lots? Can we still snap up deals on say, a 3 row people carrier that can tow a boat?

  • avatar
    jaje

    It was like a government sponsored Employee Pricing for Everyone tactic. And I agree that it wound up stealing future sales as those who had a guzzler junker jumped on it but now the next 5-6 months those customers are now lost. It was not the best idea – as the transplants had the best small fuel efficient cars sans the Focus. They seemed to make out the best. Also interesting that old Fords were the most traded in vehicles.

    Now if only we can do something smart as a country to encourage the purchases of fuel efficient cars – slowly artificially raise the price of gasoline to curb demand rather than asinine tactics to artificially inflate demand for small fuel efficient cars (which costs much more than it ever does to work).

  • avatar
    paulie

    ohsnapback

    I spoke of this exact thing in earlier postings.

    First, promotions like this do take from future sales.
    It works often, however, in consumer OTC products because hopefully you grabbed a future loyal user.
    But these products are used up and repurchased often.
    No so for autos!
    This whole event stunk.

    Second, a TTAC B&B jokingly spoke of C4Appliances.
    At the time it was funny…NOW its in the Chicago Tribune as being planned for by the government!!!!
    Folks, the unspeakable US debt is in numbers I can’t even fathom…hello!
    The drunken spending is becoming sick.

    At the Ford dealer 2 days ago, they refused to come down from 46K on the SHO.
    Serious!
    I laughed and told them I’d be back when they are begging it out the door at 36K.
    This is the direct result of our governments giveaway of our money to others in its social experiment.
    So, in the end, some got deals, the rest are fucked and have to pay more.
    So where in hell is the good deed?!

    I just emailed my sister this TTAC feature and told her NOT to buy her new Flex now, but wait for November.

    This whole affair makes me….acerbic!

  • avatar
    texlovera

    @reclusive_in_nature & @TaurusGT500:

    Completely agree. Plus, it makes no sense to “waste” another $3B because you’re already “wasting” $500B.

  • avatar
    Robstar

    Paulie> Where is this c4appliances?

    My wife & I just bought new stainless steel appliances but now have leftover fridge/dishwasher. We still need a replacement (gas) drier/washer as the electric ones are killing us (on cost).

    Details please? :)

    It can’t hurt to get back part a small part of the 40-50% of our income we are paying in taxes, can it ?

    (Yes I’m adding in federal income, local sales tax (10.25% until we moved recently), state tax (might move up from 3-4.5%) , gasoline tax, soda tax, property tax, etc prior to deductions…)

  • avatar
    70 Chevelle SS454

    It stimulated sales adding to GDP growth and clearing cars off the lots. It removed gass guzzler off the road and replaced them with more fuel efficient cars. If this lowered gas consumption even a bit, then that is fine by me.

    The cost was a mere $3 billion. The Feds are spending 100 billion on Iraq per year and 60 billion on Afstan per year. The return on that investment is slim to non. No one is complaining about that spending, but when it comes about this small yet effective program all I read on TTAC are complaints.

    Wait, what? So, you classify money taken from the taxpayers and handed to bankrupt car companies (and their unions) as “stimulating sales” of cars, but you consider money taken from the taxpayers and handed to defense contractors and soldiers as waste?

    Do you even realize how inconsistent those positions are? Seriously, the broken windows fallacy still holds, and I don’t pretend that either case “stimulates” the economy, but if you think defense spending is a waste, then you have to admit that the cash for clunkers program took the taxpayers’ money and reallocated it to a use they did not approve of.

  • avatar
    jckirlan

    I think I may have over paid for my Bentley but I made it up on the Rolls.

  • avatar
    Pch101

    All CFC did was steal future sales.

    There’s no proof of that, and basic economics would tell you that this is wrong.

    Econ 101 – price reductions lead to increased sales for most goods. The rebates lowered the effective price, which given the shape of the demand curve should have increased sales. (The demand curve for cars is not flat.)

    While there is little doubt that some sales were slightly pulled forward, it’s wrong to think that 100% of them would have been. That simply doesn’t make any sense, given the curve.

    And if a sales was substantially pulled forward, then that is a benefit, as a dollar earned today is better than a dollar delayed.

    People can debate the magnitude of the benefit and whether it was worth it. But there can be little doubt that it will contribute to third quarter economic growth, and that is going to be an important number watched by a lot of people who count, including employers trying to figure out whether they need to gear up. For that alone, it may have been worth it.

  • avatar
    gslippy

    @nj1266:

    Your comparison of the Iraq/Afghanistan wars to CFC is apples and oranges. Wars are not typically waged based upon ROI. If they were, the US ought to simply take over the Middle East, Mexico, Norway, Nigeria, Venezuela, and Russia to seize the world’s major oil reserves and stop paying for their products. But we don’t operate that way.

    These wars are waged to eliminate sources of terrorism, free people from tyranny, and prevent future attacks on the US and its friends. Calculating ROI for such endeavors is dubious. I could make the same argument for being engaged in WWII – how would one calculate ROI for that?

    However, someone has calculated ROI for CFC (based upon pollution savings), and the results are disappointing. The air, and the economy, would have been better off to just let people replace their cars when they were ready.

  • avatar
    John Horner

    “Cash for Clunkers (Bucks for Trucks) was a decent idea with a suboptimal implementation. It should simply have been a tax credit.”

    Tax credits do not drive much consumer behavior. Waiting until next Spring to get the $3500-$4500 back would have had very little effect on buyer behavior.

    Effective feedback loops have a very short time span between the action step and the reward/punishment step. Tax credits entail a very long time lag between action and reward.

    ” … but if you think defense spending is a waste, … ”

    Could we at least be honest enough to go back to calling that part of the government the Department of War? The “Department of Defense” didn’t even exist until after World War II. Invading Iraq was a war of choice, not a defensive act. In order for something to appropriately called defense there must have first been on offense.

  • avatar

    The other genius part of the program: its limited life span. Nothing creates sales like a sense of urgency.

  • avatar
    gslippy

    @Pch101:
    “…including employers trying to figure out whether they need to gear up”

    Gear up for what? What about CFC will raise future demand, even if one believes that CFC didn’t steal future sales?

  • avatar
    Pch101

    Gear up for what?

    A good GDP number will be a signal that consumption is returning, and employers who have been depleting inventories and cutting labor to the bone will need to start investing and hiring again.

    I know that this is a car website, but this particular program has really almost nothing to do with cars. The cars are just a means to an end.

    Cars are useful because the government can hand the consumer a dollar, and get perhaps $3-5 worth of consumption in return. In the case of cars, that $3-5 is a lot of money in absolute terms, plus some of it feeds back into the financial sector, creating more business for lenders. All of that spending — both the government spending and the consumption — goes to the growth number.

    All of the chatter about fuel economy, etc. was window dressing for the greater goal of inducing spending (including from those who didn’t even qualify for the program, but end up in the car market anyway as a result.) Cars and houses are the most costly things that most of us buy. The government has programs meant to encourage spending on both, because it wants to induce individuals to spend large chunks of money in one shot.

  • avatar
    Mike Kelley

    Here is a link to the government “cash for refrigerators” plan:http://www.miamiherald.com/opinion/editorials/story/1205835.html

  • avatar
    carve

    Edited: my comment had to do with whether the rebate counted as taxable income. It does not.

  • avatar
    jkross22

    People complain about this program as if it is a huge waste of money when in fact it was a very small amount spent that added to economic growth, put people back to work, and reduced gas consumption therby helping the environment. What is wrong with that?

    Ohhh, I get it. So, “It didn’t waste that much so what’s the problem?” I wonder if many non-bankrupt people or companies share this philosophy.

    *****

    “All CFC did was steal future sales.”

    “There’s no proof of that”

    I think he meant there is no proof of that yet. Proof will be in September – December numbers.

    Pretty basic calculus here to reach that conclusion: Lack of artificial tweaking of demand + reduced inventories + typically slow selling season = car sales tanking.
    ******

  • avatar
    Bunter1

    jkross22-Proof, or rather evidense is already coming in.

    Just read an article on sales on Edmunds.com

    After C4C dropped the sales rate dropped from SAAR of 15M to 8M.

    Obviously it can, and probably will rebound from that. But how much, for how long.

    If I was to bet on this I would say it pulled forward a lot of sales and I will not be surprised if it encourages many intenders to wait for the next crazy deal (whether driven by the industry or the Govt).

    It is possible that the Govt, if they re-up C4C, could drive the whole industry into the “feast or famine” sales cycle that GM has shown works so brilliantly (I see F&F deals are back).

    :^P

    Don’t worry kids, this could get worse!

    Bunter

  • avatar
    Rada

    It all comes down to those who did not qualify for the program coming here and complaining about government waste.

  • avatar
    Pch101

    I think he meant there is no proof of that yet.

    No, there is no proof, and there won’t be.

    It makes no economic sense to argue that price reductions don’t increase sales. Unless you want to burn all the textbooks and ignore the basics, there is no reason to believe that.

    Undoubtedly, there were more sales than there would have been otherwise. The questions are how many, and whether they were worth the cost. Those points are certainly debatable.

    But to build an argument completely on this “pull forward” theory is frankly ridiculous and betrays a complete ignorance of basic economics. Nobody with any knowledge of economics believes that the price elasticity of demand for cars is zero, but that’s what you’d have to think in order to hang on to this claim.

  • avatar
    WildBill

    I got my ’10 Forester just at the Edmunds TMV (True Market Value) price the first week of the program (about $900 off). I noticed lately the TMV price off of sticker is now just about half of that.

    I’m not sure why some of the B&B keep going on about “stealing future sales”. Isn’t any sale now “stealing” the sale tomorrow or the next day? The logic of the problem with that escapes me. Seems to me that any sale is a good one no matter when it’s made.

    dingram01, same here, without the program there would have been no sale from our household, probably not for at least a year or more. Would my cash be better now or a year from now…. I think now was better for the economy.

  • avatar
    dingram01

    All CFC did was steal future sales.

    I keep saying this: I bought a car because of CFC. Without it, I would NEVER have bought one (a $1500 jalopy doesn’t count in this argument).

    So I was not a sale “pulled forward.” I was a sale, at all, period. CFC made it happen whereas it wouldn’t have otherwise. Believe me, I’m not the only one.

  • avatar
    jkross22

    Undoubtedly, there were more sales than there would have been otherwise. The questions are how many, and whether they were worth the cost. Those points are certainly debatable.

    Of course. My point is that if the government is going to spend $3B, it should be done in the most effective, least wasteful, most impactful way. That’s a tough argument to use in favor of C4C, but I guess that’s what you’re implying.

    It makes no economic sense to argue that price reductions don’t increase sales.

    Never said otherwise. I said sales will fall off a cliff without Uncle Sugar leaving money on the hood, because just like mfg sponsored and paid for incentives, people will now expect them.

    Essentially, C4C was a taxpayer sponsored car buying incentive program that took the place of the same programs the mfgs had been offering (look at how mfgs reduced incentives during the program and how likely they are to return). It shifted the burden of paying for car incentives away from those directly benefitting (the mfgs) to those representing the brunt of the tax base: the middle class.

    No, there is no proof, and there won’t be.

    Let’s talk in October, November and December. To your point, if prices decrease, sales go up. Of course, the opposite is true and will be true for some time to come.

  • avatar
    Pch101

    I said sales will fall off a cliff without Uncle Sugar leaving money on the hood

    That doesn’t matter. That was never the point of the program.

    It isn’t about cars, it’s about consumption. Whether people spent more cash on cars, candles or contraceptives didn’t matter much, just so long as they spent the money on something.

    The feds picked cars because it was a relatively easy to channel large chunks of consumer money into consumption. The cars were a means to an end, not an end unto themselves.

  • avatar
    jkross22

    I’ll put it more simply… C4C was an astoundingly successful marketing program that cost taxpayers $3B. Or how about this: 150 million tax payers subsidized roughly 700,000 people to buy new cars.

    Subsidies distort market demand with the invoice handed to taxpayers. I wonder how many C4C defenders also defend E85 subsidies. Just like E85, we’ll soon see what happens when those incentives go away.

  • avatar
    Geotpf

    ohsnapback :
    August 27th, 2009 at 10:21 pm

    All CFC did was steal future sales.

    I dunno. I think it did steal some future sales, but I think it also took people who weren’t in the market, or, more likely, were in the market for a late-model used car and caused them to buy a new car.

    In any case, it put money into the economy, one way or the other. That’s why government stimulous plans work-it creates extra spending and jobs out of thin air. Doesn’t really matter the specifics of what is purchased.

  • avatar
    WildBill

    Another benefit from the program, the Ins. Information Institue estimates that American auto insurance firms will likely gain about $375M in new premium. Since I work in that industry that makes me smile, even if it is a small blip.

  • avatar
    jkross22

    That doesn’t matter. That was never the point of the program.

    Sure it was. C4C was born from the fear that the D3 was facing a mortal threat and would soon go bankrupt – something Obama and the MI representatives played up – that the billions already given to the D3 wasn’t quite enough. Enter C4C, a program that wound up doing more to help Toyota, Nissan and Honda than GM, Chrysler and to a lesser extent Ford.

    If it wasn’t about cars, that $3B would have been MUCH better spent replacing the pizza, french fry and coke school lunch specials in the poorest school districts with lunches that didn’t spike blood sugar, contribute to obesity and diabetes and might have helped increase graduation numbers as kids wouldn’t be walking (or hobbling) around like sugared up zombies through class.

    C4C was about moving iron. Let’s call a duck a duck.

  • avatar
    ChristyGarwood

    @ Robstar :
    “hasn’t C4C left a lot of SUV’s/larger vehicles on dealers lots? Can we still snap up deals on say, a 3 row people carrier that can tow a boat?”

    My nephew bought a Cadillac Escalade two weeks ago because his lease on his Chevy Suburban was due. He gets the GM Employee discount through my B-I-L and he used a 0% loan plus a few rebates. He is happy as a clam getting essentially the same vehicle but all tricked out for only $100 more a month, with which he was delighted.

  • avatar
    bozwood

    dingram01 :
    August 28th, 2009 at 1:25 pm

    “All CFC did was steal future sales.

    I keep saying this: I bought a car because of CFC. Without it, I would NEVER have bought one (a $1500 jalopy doesn’t count in this argument).

    So I was not a sale “pulled forward.” I was a sale, at all, period. CFC made it happen whereas it wouldn’t have otherwise. Believe me, I’m not the only one.”

    And now you have a payment where you otherwise wouldn’t. So, it would be safe to assume, that something will go lacking in the purchase department for you in the future because of it.

  • avatar
    Bearadise

    Bearadise,

    nj1266@”The $3 billion dollar in waste is NOTHING compared to the $766 billion in waste on the Iraq war. Do you complain about that as well?”

    Yes, I did.

    “Is it the govt’s job to bail out the financial sector to the tune of $700 billion? Did you complain about that too?”

    Yes, I did.

  • avatar
    gslippy

    So I ask again, how will CFC spark future demand and prosperity?

    I agree with bozwood: the money consumers are now spending on new cars won’t be spent elsewhere, like on houses or [old] car repairs, or 401k deposits.

    Increasing personal debt – or national debt – via spending does not lead to greater prosperity, especially when the items purchased are depreciating assets. CFC is merely a wealth transfer from the future to the present.

  • avatar
    Pch101

    C4C was about moving iron.

    It most likely had a lot more to do with the overall economic need for consumption than with the automakers.

    If the economy was in this bad of a shape but the automakers were treading water, this program would have still been created, just as the Germans created theirs. In contrast, if this was just a mild recession but Detroit was in deep you-know-what, it’s highly unlikely that this program would have been created.

    Again, I understand on this website, the audience is going to tend to be car-focused. But the politicos and economists who conceive of these policies are more interested in macroeconomic issues, not so much about all of the stuff that car enthusiasts spend a lot of time thinking about.

    It just so happens that cars are a very useful tool in boosting GDP, given their high cost and their use of debt. Between the absolute amount of money shelled out by the consumer and the lending activity that results from many car purchases, there should be a consumption multiplier, plus an effective increase in the money supply due to the lending, the latter of which helps to put a dent into deflation.

    the money consumers are now spending on new cars won’t be spent elsewhere, like on houses or [old] car repairs, or 401k deposits.

    The data says otherwise. Consumers have clearly been hoarding cash by dumping it into savings. This is one of those times when what may be logical for the individual (hunker down and save) is exactly the opposite of what the economy needs (spending and money velocity.) Until that savings gets converted into consumption, it slows down the recovery.


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