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Jim Motavalli

Cash for Clunkers: The long goodbye

The program ends Monday night. Was it good for the car industry, good for America? I think so, but beware the warning signs.
Fri, Aug 21 2009 at 4:15 PM EST
Read more: CASH FOR CLUNKERS, FUEL EFFICIENCY & MILEAGE, OBAMA

CRASH COURSE: Last chance to junk that clunker. (Photo: Flickr)
If you have any intention of taking advantage of Cash for Clunkers, better get a move on. The program is in its final days, scheduled to end Monday at 8 p.m. Time to get that gas-guzzler in gear and on its way to your local dealer.
 
After riding a rollercoaster on this program -- first it was going to flop, then it took off, then the bureaucrats couldn’t accommodate demand and got behind on the paperwork, then it ran out of money, then they refunded it, then the bureaucrats got behind again, then it ran it ran out of money again -- maybe it’s time for some reflection.
 
Cash for Clunkers was good for the industry, and it got people not only buying cars again, but thinking green. Most of the bestselling cars in the program were small and fuel efficient — and four of them (Fords Escape and Focus, Dodge Caliber and Chevy Cobalt) were even American. Auto dealers pushed through at least $1.9 billion in deals, sold more than 457,000 cars.
 
The program requires that the engines in all clunkers be DESTROYED, and this video documents the process: Car lovers and small children should avert their eyes:
 
 
Sure, the program is a mess. Only 40 percent of the transactions have been processed, and some dealers pulled out earlier this week (hundreds in New York alone) because they didn’t have any more cash to advance while waiting to be reimbursed.
 
Another caveat: The program could have blowback. We may see months of auto industry famine after the feast of Cash for Clunkers. According to Joseph D. Blackburn, James A. Speyer Professor of Production Management at the Vanderbilt Owen Graduate School of Management, we might see what he calls “the bullwhip effect.” He describes it as “false euphoria” — the automakers are pushing up production volumes (GM by 20 percent in the third and fourth quarters) in anticipation of demand that might not materialize.
 
Blackburn thinks a lot of clunker deals may have been “forward buying” — people going ahead with purchases they might have made next month. “It’s dangerous,” he said. “If the automakers overact on volume, it could be feast and famine. It’s pretty expensive for everybody in the supply chain.”
 
On the other hand, economic recovery could return auto sales to a more normal level. Automakers, used to 16 million sales a year, will have to contend with less than 10 million in 2009 — and that’s with Cash for Clunkers.
 
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Comments(4)

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Posted By qingimiss - Fri, Mar 19 2010 at 3:19 AM EST

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Posted By Cars4Charities - Mon, Aug 24 2009 at 2:04 PM EST

Other Consequences

Another consequence of cash for clunkers is its nagative impact on car donation charities.
http://www.cars4charities.org/

Posted By Bryant - Mon, Aug 24 2009 at 9:51 AM EST

Other Drawbacks

The program had other shortcomings, too. Manufacturers and sellers of replacement parts for classic cars lobbied Congress to exclude vehicles made before 1984, meaning that many who don't consider their old car a "classic" were unable to benefit from the program. The cars that were turned in had to be destroyed, which is bad for both the used car market and buyers who rely on older used cars which are still completely roadworthy - not to mention the wasteful nature of destroying vehicles which.... More

Posted By jimwhenry - Mon, Aug 24 2009 at 6:28 AM EST

cash for clunkers

so if you have two or more clunkers at your house you cannot trade both of them for one car. The program is for one per
person.

Henry
Blogger
www.cashforclunkersfacts.info
.... More

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