Chyrsler lots have thousands of clunkers clogging their lots as does GM due to stupid CEO mindthink and overproduction. The average person who only buys used is suddenly in a very good position to buy what most people would not. Yes, its a temporary spike in the economy, but as long as it gets dealer lots to empty the langorious Pacifica and equally dispondent Impala from their rooted positions then I’m for it.

This plan will get the 6-9 year old cars off the road. You know the ones I’m talking about. The Oldsmobile Silhoutte blowing blue smoke and riding on its spare donut, the 1996 Lumina with cancerous black paint and cracked rear view, and the desparately ugly 2004 Aztek/Rendezvous will be taken off to pasture and subsequently given a decent burial.

Owners of cars 9 years or older usually don’t buy new. They buy used.

So what does the program do?

- It creates demand for new cars from a customer segment that usually wouldn’t buy new. Incremental sales.

- It lowers demand for used cars under 9 years, making their prices sink.

- Which makes new car prices look even more attractive in comparison.

- Value of cars 9 years or older rises (however, you can’t just buy a clunker and trade it in, must have owned it for at least a year to qualify.)

- Steel prices sink (more scrap)

- Used or reconditioned parts prices sink

- Fleet gets marginally younger. Germany has 50m cars at an average age of 8.5 years. Program capped at 2m cars. Barely a dent.

- At 19% VAT, program is pretty much revenue neutral

- Most of all, it keeps the factories open until the September elections …..

- Unintended consequence: Used American cars sell better in Africa or Middle East. Used to be German clunker central. No more supply!

VW doing well there, terrible everywhere else is better than terrible everywhere all at once?

Just wondering…

And probably make it worse when it finally comes

Gosh, isn’t Prez Goodwrench terrific? Why didn’t we just think of printing more money before…

Love and bullets,

Bunter

The economy is setting up for a bigger downturn. This is the same thing that happened in the early ’30’s all over again. Like a big Groundhog Day.

All this government intervention is just gonna make the coming crash much worse.

Even helicopter Ben now realizes the US is in deep do do.
How helicopter Ben thinks he can spend trillions of dollars the US doesn’t have without causing a big problem I don’t understand. A case of CYA.

Bernanke Warns Deficits Threaten Financial Stability

“June 3 (Bloomberg) — Federal Reserve Chairman Ben S. Bernanke said large U.S. budget deficits threaten financial stability and the government can’t continue indefinitely to borrow at the current rate to finance the shortfall.

“Unless we demonstrate a strong commitment to fiscal sustainability in the longer term, we will have neither financial stability nor healthy economic growth,” Bernanke said in testimony to lawmakers today. “Maintaining the confidence of the financial markets requires that we, as a nation, begin planning now for the restoration of fiscal balance.”

Bernanke’s comments signal that the central bank sees risks of a relapse into financial turmoil even as credit markets show signs of stability. He said the Fed won’t finance government spending over the long term, while warning that the financial industry remains under stress and the credit crunch continues to limit spending. ”
snip

http://www.bloomberg.com/apps/news?pid=20601087&sid=aLGYMr_g7PSg

You can find statistics over European car sales over at the ACEA site. Numbers for May may take a week or two before they are compiled. Diesel/gas is about 50/50, with a small overweight for gas right now (53% gas).

Cash4Clunkers actually was a French idea. France operated a similar incentive program from 1994 to 1996. Yes, it was followed by a big decline in 1997 and 1998. Nevertheless, France dusted it off in December of 2008. They gave EUR 1500. Germany must have hit the sweet spot with EUR 2500.

Diesel: I don’t have any “Europe” numbers (Europe reports by country) but I can give you Germany off the top of my head. In 2007, Diesel had a market share of 50% in Germany. In 2008, that share eroded, mainly because the price of diesel caught up with the price of gasoline. Cash4clunkers is bad for diesels: It moves small cars, small cars mostly have gasoline engines. Last I looked, diesel had a market share below 30% in Germany.

The program is limited to cars 9 years and older. In Germany, people who own cars 9 years or older usually don’t buy new, they usually buy used.

This program doesn’t bring 2010 sales into 2009. It mostly prods people who would have never bought new to buy a new small car.

Of course, when the program expires by the end of the year, sales will go down. The gamble in Berlin is that come 2010, the worst is over and the usual new car buyers will stop refraining from buying new cars. BMW, Daimler et al can’t wait.

This whole world economy crisis is suposed to have hit Germany as well.
And they started the whole cash for clunkers idea awhile back.
I cannot remember if that was government sponsored or not.
Can you remind me?

Also, if you have the data of auto sales break down in Europe, please help with the number of diesel vs gas.
I heard that although diesel had sold more, in recent times the gas car had begun to overtake in sales.
I would like to know if this is still so.
Thanks…

Katie: Ford has always been regarded as a “German” brand by the Germans. After all, they have been in Germany since 1925, and in Cologne since 1929. As we all know, Henry was a fan …

Moving the Ford HQ to the U.K. in 1967 caused a rebellion amongst Ford Germany execs. Many deserted to VW, where they were known as “the Ford Mafia”

1998, Cologne became the seat of Ford Europe again.

Any idea what those 62 GM cars are? Chevrolet is listed separately, so I’m confused. Cadillacs?

Except not only is the cash for clunkers bringing forward car sales it will end with a big thud and sales will drop off a cliff. Then kaput.

All this cash4clunkers scheme is doing is bringing forward sales. Car sales are going to slump again, all this scheme has done is delay it.

Look at the economy, we’re going through a recession, because the market needs to contract, in order to correct itself. But by giving “stimulus packages” or whatever spin you care to give it, all one is doing is delaying that contraction. You’re trying to sustain unnatural growth.

On a side note, I didn’t realise Ford was such a popular make in Germany. I thought Germans only considered German marques and nothing else, hence small market share for the Koreans, Japanese, Italians, etc.

P.S. GREAT choice of picture!

“I’m Johnny Knoxville and welcome to TTAC!”