The Truth About Cash for Clunkers (Again, Still): Buyers Paid More
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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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.
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.
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.