By on August 18, 2009

It’s just a mess, an absolute mess. There is a billion dollars of dealerships’ money on the road.

Says Duke Brubaker, general sales manager of Champion Ford-Lincoln-Mercury-Mazda in Owensboro, KY, to Automotive News [sub]. Champion has ceased clunker participation, along with 89 other dealerships surveyed in AN’s survey of 710 dealers. NADA officials allege that CARS’ rejection rates have climbed as high as 80 percent in recent weeks. NHTSA claims they have fallen in the last ten days. How’s about another $3 billion?

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33 Comments on “Quote of the Day: Overstimulation Edition...”


  • avatar
    GS650G

    No Corvette deserves to die that way. This isn’t cash for clunkers, it’s a twisted form of sadistic revenge against cars and trucks that are hated by the Sierra club.

    I’m surprised someone would take a 4500 C3C deal on a vette, surely they could get that much for it on ebay?

    I bet the wheels and a few other things come off that car when the sun goes down.

  • avatar

    I used to think that like a convertible, no one ever throws a vette away. I’ve seen some $5000 vettes, and lordy lordy, any lesser car would have been recycled long ago.

    The car in the vid was probably on the eighth owner and fatally clapped out everywhere…

  • avatar
    dingram01

    I’m surprised someone would take a 4500 C3C deal on a vette, surely they could get that much for it on ebay?

    Obviously not, or that’s what the seller would surely have done.

    Why do knee-jerk CFC-haters constantly bleat that every car done in under this program would be worth more than $4500?

    As to the veracity of data from NADA, how tainted is it, given that it comes from a bunch of shady players who may well have tried to game the system rather than let a customer walk out of the showroom?

  • avatar
    gslippy

    At least it didn’t die by wrapping its driver around a telephone pole, or by bankrupting its unwitting owner with endless restoration expenses.

    Wonder what replaced the Vette?

  • avatar
    P71_CrownVic

    More proof…this country is in big trouble.

    Remember this in 2010 and 2012.

  • avatar
    ajla-

    The car in the vid was probably on the eighth owner and fatally clapped out everywhere…

    I find it kind of hard to believe that a Corvette with its original wheels, decent paint (hard to tell in the vid), a clean engine bay, headlights not purposely propped up because they are broke, and a L98 that started on its first crank is some $4200 C4 basket case. Might have HVAC or digital gauge problems though.
    _____________________________
    I’m guessing the situation is more like this:

    For one reason or another, the current owner of the Corvette isn’t interested in trying something like Craigslist or Ebay.

    Now let’s say the dealer thinks it could get $7500 for the Corvette by reselling it as a used car.

    However, to re-sell the car the dealer has to give the current owner at least $4500 trade-in value because that is the size of the CARS rebate. If the dealer offers any lower than $4500, the customer won’t do it.

    So if the dealer gives $4500 trade-in value and resells it at $7500, they make $3000 (after going through the hassle of selling it). If they just euthanize it, the government reimburses them for $4500. They get $1500 more by going with the CARS program.

    So a car worth $7500 goes to a junkyard early.
    ____________________________________________________________

    Edit: Thanks to jmo and NulloModo for setting me straight. I was totally wrong- That’s what I get for bad research and thinking.

  • avatar
    jmo

    ajla,

    Option 1: So if the dealer gives $4500 trade-in value and resells it at $7500, they make $3000

    Option 2: (after going through the hassle of selling it). If they just euthanize it, the government reimburses them for $4500.

    Option 1 the dealer makes an extra $3000. Option 2 they make $0 extra. In both cases they move the metal. They will always go with Option 1… all things being equal.

  • avatar
    NulloModo

    ajla – If the dealer really thought they could get $7500 for the car without spending any money to refurb it, they would take it as a trade in. If they give the customer $4500 clunker money for it, and then get $4500 from the government, they haven’t made anything – they gave the customer exactly what they got (well, technically they also get to keep $50 of the scrap value).

    We’ve had a few cars that customers brought in to clunk but we instead took as trades because we figured we might be able to make something on them.

  • avatar
    50merc

    The person who turned in the Corvette may have gotten only $3,500 CARS credit.

    Even so, a leaking engine, balky transmission, seized A/C compressor, etc. …. things like that could bring its wholesale market value below $3,500.

  • avatar
    Jimal

    Hell hath no fury like an ex-wife with her name still on the registration of your SPM.

  • avatar
    Areitu

    P71_CrownVic : I’m sure we’re all in trouble over the loss of hundreds of 1999 Ford Explorers lost to the cash 4 clunkers program.

  • avatar
    golden2husky

    No Corvette deserves to die that way. This isn’t cash for clunkers, it’s a twisted form of sadistic revenge against cars and trucks that are hated by the Sierra club.…

    The Sierra Club has nothing against ‘Vettes..they actually have good mileage compared to pick em ups…You are falling for the folly of the program thinking it is for environmental reasons…this is greenwashing…this is just to move cars, period.

    Killing this Vette makes no sense…even with a bad drivetrain, the bodywork alone is worth more that $4500

  • avatar
    CyCarConsulting

    Nope, you would be surprised what a rat Vette is worth today. I’ve taken in several for $3,000, way before this program started.

  • avatar
    Dave M.

    Killing this Vette makes no sense…even with a bad drivetrain, the bodywork alone is worth more that $4500.

    I’m guessing it will easily get parted out.

  • avatar
    blue adidas

    C4C is going to go down as one of the dumbest moves in history. It’s shameful the amount of waste and destruction of perfectly good vehicles to save a couple MPGs and prop up the auto industry. It just doesn’t add up and it’s costing a fortune. And then you have the automakers ramping up production for demand that will only last as long as daddy-O keeps handing out money. It’s going to create a huge auto industry bubble that’s going to eventually pop.

  • avatar
    tigeraid

    Your country is insane.

    That’s a perfectly good TPI 350 that could be used by any number of enthusiasts for a great project.

    Most importantly, what douchebag decided to trade in a classic Corvette for an econobox? And have the balls to junk the thing? How was he NOT able to sell the car for $4000?

  • avatar
    mikey

    Seeing that Vette die and a perfectly good pick up getting crushed,makes the “car guy” in me cringe.

    The “retired auto worker”part of me though, rejoices at the news of 1350 of my former brothers and sisters getting a recall.Not to mention the scheduled OT on the flex line.

    Question for my American friends. Why do some cars/trucks get crushed,while others get engine killing juice? What is that liquid they pour in anyway?

  • avatar
    Bearadise

    The BIG problem that you don’t hear mentioned much is that in most states dealers have X number of days to pay off a trade-in AND, if the new car was floorplanned (money borrowed from bank or manufacturer to buy new car inventory) , they usually have 3 to 5 business days from when it was sold to pay it off.

    Granted, most clunkers probably didn’t have loans against them (surely some did) but dealers are not only waiting weeks for their $3,500 or $4,500 from Washington but are also either in violation of the laws for not paying off the trade and the floorplan, or are floating all that cash themselves (not even counting any manufacturer rebate money that they are waiting on). Waiting to see the list of new car dealers who end up going out of business because of big government again foolishly meddling in the free-market economy (think government-forced home loans to people with no income).

  • avatar
    Bearadise

    They all get the engine-killing treatment …. it’s mandatory before the clunker can be moved off the dealer’s lot. Then hauled away and crushed. No more driving the car to the junk yard. Probably a favor to the unions that control the car haulers.

  • avatar
    Airhen

    I am also shocked… What a waste.

  • avatar
    Carzzi

    Now that the tractor-mill L98 is bricked, the car is ready for an LT1 or LS1 transplant.

  • avatar
    YotaCarFan

    “They all get the engine-killing treatment …. it’s mandatory before the clunker can be moved off the dealer’s lot. Then hauled away and crushed. No more driving the car to the junk yard. Probably a favor to the unions that control the car haulers.”

    It must be very labor-intensive to transport these disabled cars. They cannot be driven onto car carrier trucks and taken away in batches, so presumably each car has to be taken away one at a time by tow-truck? It would make more sense to either disable them at the scrap yard or simply drop them into the crusher to “disable” them.

  • avatar
    fincar1

    YotaCarFan, this program is not about sense. Sense or rationality in any form does not even enter into it. It is a stupid effing government program to misuse taxpayer money and give a temporary boost to the automobile market.

    I saw a newspaper article; a town near me, heavily dependent on sales tax for cars, is planning its next year’s budget. They are planning for the same dismally low level of sales tax receipts next year as this year.

  • avatar
    fincar1

    “What is that liquid they pour in anyway?”

    Mikey, it is a concentrated solution of sodium silicate. When it gets hot enough it essentially turns to glass, or sand, or some combination thereof.

  • avatar
    fincar1

    …and while I’m going on about this disgusting government program, I may as well add that I have not heard or read one word concerning the c4c program’s effect on scrap iron prices, or prices paid by auto wreckers for cars.

    Can you say downward?

  • avatar
    John Horner

    If you are worried about the effect of government actions on scrap metal prices, how about this:

    5 Million Pounds Steel Auction For Sale Hooks Texas: http://scrapmetalpricesandauctions.com/2009/08/5-million-pounds-steel-auction-for-sale-hooks-texas/

    According to this data, the July price of scrap steel was up slightly from the June price and equal to the February price:
    http://www.eurofer.org/index.php/eng/Facts-Figures/Figures/Scrap-price-index

    Do you have any data showing that the C4C program is depressing steel prices? How about the fact that the ramping back up of auto assembly plants is increasing demand for finished steel, which in turn normally increases the price for scrap steel?

  • avatar
    colin42

    One Question. What happens to the vehicles that have been rejected by CARS? Have they already been destroyed or are there going to be plenty of cars in the sub $4500 hitting the used lots soon?

  • avatar
    WildBill

    Anyone have any idea how many of the “clunked” cars/trucks/vans will parted out once the engines and transmissions are removed? As I understand it those are the critical parts, the rest can be removed and used on other vehicles. I know the body shop had a terrible time finding a passenger side door for my ’89 Ford Club Wagon van that wasn’t all rusted out and useless. Aftermarket doors weren’t punched for the electric windows and locks and the speaker. They found one eventually but had to do extensive work to get it right. Maybe the salvage yard will see a shiny new door on it and save it for the next guy before it hits the crusher.

  • avatar
    Adub

    I pity the Corvette despite its god-awful transmission tunnel. However, I truly feel sorry for anybody who has kids that are going to be stuck with all this debt someday down the road.

    Maybe we need a bumper sticker that reads: “Honk if I paid for your clunker!”

  • avatar
    agenthex

    Waiting to see the list of new car dealers who end up going out of business because of big government again foolishly meddling in the free-market economy (think government-forced home loans to people with no income).

    The old misinformation trick never gets old, does it?

    The difference is about $4k, across what, a dozen or so cars? Anyone think a CAR DEALER doesn’t have that sitting around in cash?

    It’s really kind of sad the depths the whiners have to plunge these days.

  • avatar
    Bearadise

    Agenthex – you’re kidding, right?

    I have dealer clients who have done 100+ C4C deals and plenty who have done 40 to 60 of them. That’s a HUGE amount of money to be waiting on in a very cash flow dependent business. We’re talking hundreds of thousands of dollars. PLUS, the dealers have to wait on the factory rebate/incentive money that almost all new cars have today, which is also usually in the thousands(2010 Pontiac Vibe – $2,500 rebate, 2009 Kia Spectra – $3,500 rebate). Multiply that times 40-50 or 100 cars and see what you get. The dealer needs that cash RIGHT NOW to pay off the floorplan loan on the the new cars he has sold and pay off the loans on any trade-ins. (Remember the movie Fargo?.. the dealer was in deep sh*t for not paying off GMAC floorplanning for the new cars that he had already sold.)

    Tomorrow, stop by your nearest decent-sized new car dealer, the one with the row of 25 or 30 clunkers out back with big X’s on the windshields. Find the dealership owner and ask him what’s the big deal about a measly $4,000 on a dozen or so cars and see what he tells you.

    We’ll be waiting for your report.

  • avatar
    Bearadise

    Agenthex – Here’s someone you can call and ask what they’re whining about. Good luck with that.

    August 19, 2009. The U.S. government owes AutoNation, the country’s largest auto retailer, about $45 million in rebates for the popular but backlogged “Cash for Clunkers” program, the Fort Lauderdale company said Wednesday.

    http://www.sun-sentinel.com/business/sfl-autonation-clunker-081909,0,1331669.story

  • avatar
    Bearadise

    Agenthex – Maybe you can lend this guy $225,000 so he’ll stop whining about the inefficiencies of our Federal Government.

    “But the backlog already has pushed some dealers, including several hundred in the New York area, to refuse any more trade-ins under the program.

    “I’m a small store,” said Ron Morehead Jr., general manager of a Honda dealership in Kingston, N.Y. “The well runs dry.”

    Mr. Morehead said he had paid out some $225,000 in rebates since the program began last month, but had only been reimbursed for one deal, which he filed with the government on July 28. Meanwhile, he said, he still had to pay his 30 employees, pay his bills and repay the bank when he sold a car.”

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