The CARS Program

[Drunkonjack]

The government sponsered cash for clunkers has been expanded for another 2 Billion dollors . Or is it just another 1 Bil for a total of 2 ?

Any way why are forien car makers eligble for this? It should be just for Ford Products . If Toyota wants take advantage of the program then Japan needs to anty up. WTF !

[James1005]

I don't know if it's another $2B added to the $1B or what, but I do have a different take on this.

I thought the program didn't make sense. First, why exclude vehicles older than 1984 (most of which are sure to be clunkers, unless they're pristine classics that are worth more than $4,500 anyway, and/or poor emissions controls that get bad fuel mileage) from the program? It's pretty safe bet that any pre-1984 vehicle with 6 or more cylinders weighing more than 3,000 pounds is going to get less than 18 combined mpg. Second, the original intent was to increase fuel mileage, but with such low fuel efficiency requirements for the new vehicle, the legislation was whittled down in Congress and designed to put more emphasis to moving vehicles off the dealer lots. Third, there were no exceptions to the 18 mpg and 1984 rules for diesel powered vehicles of the past, which emitted plenty of particulates, NOx, etc. Fourth, the program as a whole penalizes those who made more fuel efficient purchases in the past.

Clearly, the fact that funds were depleted in just 1 week means that the opportunity was (and still is) there to put more stringent fuel efficiency/emissions requirements in place for any program extension while still moving vehicles off of lots.

[dvenardos]

The government sponsered cash for clunkers has been expanded for another 2 Billion dollors . Or is it just another 1 Bil for a total of 2 ?

Any way why are forien car makers eligble for this? It should be just for Ford Products . If Toyota wants take advantage of the program then Japan needs to anty up. WTF !

More than likely that Toyota was built in the U.S. If the 7% profit (or whatever) goes back to Japan or more likely gets reinvested here in the U.S., who cares?

and not many Toyotas get 18 mpg or less anyway.

[Daryl RL]

Seems like a very short-term, short-sighted fix.

Car sales were way down before this program? Wait until this program is over.

[Sandbagger]

Seems like a very short-term, short-sighted fix.

Car sales were way down before this program? Wait until this program is over.

YEP

glad I am no longer in the auto industry, but it would also be nice to be in some industry other than mattress tester, or state employee, or gainfully unemployed

[TomS]

I just don't get this at all. So, you go to a dealer with your car ("clunker") worth, say $4500 that fits the bill in terms of the program constraints (registered for the past year to you, <18mpg, etc.). You hand the car with title to the dealer. I believe the requirement is that vehicle must then be scrapped, as in crushed and recycled (hopefully), never re-sold. So you get essentially $0 for your "trade-in" because the dealer only gets maximum of scrap value for it. Even if you're car is worth $10k, you still don't get any trade value because the car is scrapped, netting the dealer $0 to pass back to you as credit (from the car itself), so you're actually losing money. The government then hands the dealer $4500 to give back to you as a credit? So what's the difference in just trading in your $4500 car any old time? If it just helps bring in traffic in the showroom (apparently) I totally get that, but does it make any other economic sense unless your car is initially worth much less than the $4500, in which case you're still only getting the net difference between it's value and the $4500 cap? In other words, if it's worth $3500 you're actually gaining the difference of about $1000.

So it is quite possible that some (certainly not all) people, who for whatever reasons may be forced to drive or choose to drive "worthless" clunkers, are suddenly candidates for shiny new cars more than likely with big car loans. And by giving them a $4500 "incentive" (from taxpayer $) they now drive away in a car they thought previously they couldn't afford, which is why they weren't buying before. I guess if you have a totally worthless car that qualifies, can actually afford the payments on a new one or pay cash, then knock yourself out, take a good deal on the "free" government cheese... but it sounds like similar thinking to what helped fuel the free and easy housing loan mess to get more people into that market.

C'mon Craig, you're in the finance/car bidness, help me out here... Surely I have my facts fouled up on this.

[BobJoe123]

Tom - most of the clunkers aren't worth anywhere near $4500. If it's worth 10K you trade it in for 10k (unless you are stupid).

I have a couple of coworkers who's clunker trade-in value is $1000 or less. For them this program is quite a bit of "free" money that might make them purchase a car (they are both unsure if they still want to commit to a payment right now).

If someone can't afford a car I'd hope they aren't handing out loans like they were for housing. If they are this will be another mess.

[TomS]

Tom - most of the clunkers aren't worth anywhere near $4500. If it's worth 10K you trade it in for 10k (unless you are stupid).

I have a couple of coworkers who's clunker trade-in value is $1000 or less. For them this program is quite a bit of "free" money that might make them purchase a car (they are both unsure if they still want to commit to a payment right now).

If someone can't afford a car I'd hope they aren't handing out loans like they were for housing. If they are this will be another mess.

Yeah, that's the group I was thinking of for whom it probably makes good sense. Unfortunately I can't count the number of otherwise intelligent well informed people I've talked to lately that think this is just like a rebate (except from the government, er taxpayers) and that they still get some kind of trade value. Dealers certainly are pitching it that way, though more by what they don't say not any claims as such. And on the financing front, yes let's hope not...

[Drunkonjack]

The program is at least getting people in the show rooms. I nkow a couple people that were interested in trading in their work cars only to find out the car didn't qualify . They purchased a new car anyway .

[Sandbagger]

If someone can't afford a car I'd hope they aren't handing out loans like they were for housing. If they are this will be another mess.

But that is what is happening, its making people that cant/shouldnt take on that car payment do it, its the cheese to step into the mouse trap, and its working like crazy heck it might even be better than crack

[TomS]

But that is what is happening, its making people that cant/shouldnt take on that car payment do it, its the cheese to step into the mouse trap, and its working like crazy heck it might even be better than crack

Yes, I was dancing around that notion, so very well said... What irks me is that I'm subsidizing it to boot which wasn't so much true in the real estate loan crisis until it went bust and the bail outs to risky and greedy lenders began flowing too :ufo:.

[nhpm510]

I believe they added 2B more, to the 1B that has been spent. Oh, and my beastly beauty gets 19 MPG (combined), so I wouldn't qualify. Shizzle sticks.

Edit: 2 Billion would be added based on the Senate vote: http://www.bloomberg.com/apps/news?p...d=a1HW9CtfwJkg

Wayne, I feel your pain.
All military and gov't folks serving overseas are also excluded. I wanted to upgrade my 97 Ford Explorer...bull****e.
:tanks alot:

[Stereodude]

The program will not help the people it's supposed for the simple reason that the people who are driving "clunkers" are not driving them because they like bad getting gas mileage or because they think their clunker is a sweet ride. They drive them because that's all they can afford. If that's all they can afford even with a $4500 credit there is no way they can afford a new car and the insurance to go with it.

[fanuminski]

Here is what I find amusing (not really though!).
I had my eyes set on trading in my son's 99 mitsubishi Diamante
with 170k miles and dents in the front and rear fenders and trunk.
Basically, it's a p.o.s. Maybe worth $500 or so. It qualified (18mg)
and I was looking to get the cheapest Ford Focus (manual -28mpg)I could find.

Here is the funny part. several months ago I saw advertised in the paper
by a local Ford dealership an 09 Focus base model for
around $12,800 - which included incentives - rebates, whatever.
That same car was going for $17,500 less $1500 dealer incentives
which put it around 16K- subtract the 4500 and you are at 11,500.
I could have had that car for 12.800 less my 500 trade in value
which puts it around 12,300 vs the 11,500 now (IF you could find
a manual -which they did not have in stock last I called)
what this means to me is that the dealerships have either raised
their pricing on qualifying cars - and/or reduced rebates/incentives.
imo, the people rushing out to get these "deals" are sadly mistaken
as to what kind of deal they really are getting.
ymmv -
M
PS> I made the mistake of transferring the title of my son's car
into his name several months ago -thus disqualifying the vehicle
because of the "same owner for a year" rule.

[Mep]

Like most free government money programs, they don't expect too many people to qualify for them or to take advantage of them. Yet they always seemed surprised when far more people than expected do use it and drain all the funds. There always seems more than enough people when free money is given out.