Cash-for-Clunkers: $68,923,000 Down, $931,077,000 to Go (Minus Handling Fee)
Published: July 29th, 2009
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Our good friends at The Department of Transportation report the latest C.A.R.S. (Cars Allowance Rebate System) or Cash-for-Clunkers clunker stats as of right . . . now.
Total Vehicles Sold: 16,351
Meanwhile, we intercepted this communication from a dealer: “I wish you would let us opt out of the cash for clunkers deal. Three dealers on the conference call stated that they were not fucking with this bullshit. You wouldn’t believe the bullshit involved in this. I don’t see this costing us any significant sales. We will waste more time fucking with this than it will ever be worth. The rebates are in place to subsidize the deal. Collecting our money will be a full time job.”
More by Robert Farago
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rudiger: "Imagine if a ‘clunker’ is in pristine shape with low mileage and it’s worth more than $4500. I guess the dealer can allow more than $4500, but this ‘clunker’ is still going to get the lethal injection and be sent to the scrap yard. Now that’s messed up." No, no, and no. Only a complete moron (both dealer and customer) would do that. Dealers make money on trades by re-selling or auctioning them for a price close to what they give the customer. Occasionally they'll take a big hit to move a new car, but they can't do that much and stay in business. There may be some weird calculus where a dealer will "overpay" for a trade, get his guaranteed $4500 from the govt, and take a hit on the difference just to make the sale. But if the car is worth $4501 at auction, given all the grief a dealer has to go through to clunker it, he's probably going to auction it. This program will not in any way result in valuable, "pristine" classic or collectible cars being scrapped. So let's just stop talking about that, OK?
I still don't get it. You're taking a segment of the population who are either 1) frugal or 2) don't have lots of cash to spend. Let's assume #2 is the majority of people who would take advantage of this program. Now assume that they also don't have 700+ FICO scores. You dangle an incentive in front of them to get them to buy a car. It "stimulates" the economy. It also straps that person to a monthly car payment at 6%+ interest. A goverment may be able to spend their way out of debt, because they can manufacture ways to push expenses out 10,20,30 years. People cannot spend their way out of debt. Encouraging them to spend what they don't have is what got us into this mess to begin with.