Cash for Clunkers Gets $2B, Back on Track
 

It’s certainly a mixed bag of news for many of us, but the government’s “cash for clunks” rebate program has gotten an infusion of new cash and will be up and running through at least the end of the month. As we recently posted, the program ran out of its first billion after its first week [...] Related posts:

1. Cash for Clunkers Says Goodbye Tonight
2. 5 Cash for Clunkers Values on which to Spend your $4,500
3. Canada Kills ecoAUTO Program, Rebates to End for Fuel Efficient Vehicles

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Stimulating the economy, but not as much as it seems.

http://www.nhtsa.gov/About+NHTSA/Pre...cessful”

Meanwhile, we want to go from 31.6 MPG to 49.8.

One more govt program subsidizing irresponsible people who make bad decisions.

I think it is still affecting used car prices here (much too high) thus one reason I bought new.

regards
mech

I did not hear about it while I was in Germany. When I came home and saw 1997 Altimas going for $5,500 when I bought one four years previous for $3,800, I just thought it was a sign of the economy.

Then I ended up with my Subaru...

I don't think so. I believe it was more to help out the auto industry with a little fuel economy/economy improvement mixed in. It is neither irresponsible nor a bad decision that leads one to owning an aging vehicle. If you think about it people that drive clunkers do so because they either can't afford a new car (making bad decisions) or they refuse to buy (a good decision). This program motivated good decision makers to upgrade. It didn't subsidize to the point that irresponsible people could make that leap.

As for me, when it came out my aging vehicles were still worth more than the government's offer. I kept driving them, still have 1 of the 2.

Meanwhile, five years later....lol

woah man that went badly lol

I don't think anyone was claiming that owning an aging vehicle is "irresponsible" or "a bad decision", but rather the whole Cash for Clunkers program is.

The people that can't afford new cars were harmed by this program, as it drove up prices in the used car markets by reducing the supply of used cars.

The people that could afford to buy a new car likely didn't drive true "Clunkers" anyways. The people I personally know that used the program had decent, perfectly functional vehicles that had trade in values a little lower than the payout. They could have sold private party for more than they got out of the program.

In the end, it was just an auto industry subsidy done in such a way as to make it more palatable to the general public.

I liked that program. I offered to give my boss $4500 for his old gas guzzling 2003 Z06. He said no. :confused:

I pretty much always think needless destruction is wasteful and ignorant. A lot of perfectly good equipment was destroyed.

I was responding to Old Mechanic who felt the program was a handout to the poor. At least that's how I interpreted his post.

As you said it was designed to get people to buy cars from the struggling auto industry. It worked on your friends, they may not have purchased had the incentive not been there. Many of us were holding tight on to our wallets waiting for the other shoe to drop.

you read that out of this.
AMAZING

Poor people don't have the credit to buy new cars.

I tend to interpret things differently than others. It was a blessing throughout my career, unfortunately it can also lead to some confusion. When you said another "program subsidizing irresponsible people who make bad decisions" I thought you were saying poor people. To me they are typically who government subsidies go to. They are widely considered financially irresponsible as well as poor decision makers. What did I miss?

Were you going for corporate subsidies? There were definitely some bad decisions being made at GM.

https://en.wikipedia.org/wiki/Car_Al..._Rebate_System

normal trade in Ford Explorer
normal purchase Toyota Corolla

regards
mech

I guess that is technically progress.

Except, how many Corollas were traded-in? Maybe they bought a Prius instead.

Government subsidies that go to poor people are really giveaways to the companies that poor people have to buy from. A subsidy for new cars (or electric cars or home solar installations) is a giveaway to companies that rich people (or simply people with good credit, which effectively counts as rich) buy from. We pretend it's better policy because it helps a "good" industry get established... and people with trust funds and home equity get nice new toys that they can feel good about. That's much better policy than just shoveling money into Walmart's pockets via food stamps.

By making new cars artificially cheap (by $4500) and reducing the available pool of used cars (raising the price of the remaining supply and thus narrowing the difference between new and used cars, again distorting the market to make new cars more attractive), the progam was a direct subsidy to new car manufacturers and dealers. So direct, in fact, that it was paid to the new car dealers.

While it was a direct subsidy to the car industry, it encouraged the public to make the bad decision to scrap low value cars and buy brand new ones.

Most cars I've ditched were at the end of their usable lives, while the ones that didn't deserve scrapping went on to new homes. The most economical car is the one that doesn't need to be built.

Charlie

Without a doubt the money all goes up. People get caught up in the "I need it" trap and they spend themselves into a lifetime of work.

A family member showed me a picture of his new giant travel trailer. I accidently let it slip that I hated those things. They can make sense for some, but this guy is a preacher and he has a full time job. His wife is a school teacher and they have 2 kids. That $30K+ trailer attached to the new Ford F-150 4X4 he purchased to tow it, add insurance and property taxes and fuel will run him an easy $1K per month. He works so much that I don't know when he is supposed to use that thing. When he finally pays all that stuff off it will be worth a fraction of it's original cost.

He's trading time for money to buy things he can't afford to own.

"Worked" may be a bit of a stretch. :)

Both were starting to plan for a new vehicle anyways. One worked out fine, but still would have been better off selling private party.

The other rushed into buying a new car without doing enough research first. They let their Durango get crushed to buy a new Dodge Caravan that had problem after problem until they couldn't deal with it breaking down all the time. They ended up buying a used Ford Freestyle instead, and had to buy a '90's Chevy truck (another common "clunker") to take over the hauling duties that the Durango used to do. They would have been far better off to not use the program and just pick up the used Freestyle and keep the Durango.

Yes, there was a boost to the auto industry, but at a large cost both in taxes and in increased cost in the used car market, with little to no benefit to the person buying the car. That marks it as a huge failure in my book.

[QUOTE=darcane;486833Yes, there was a boost to the auto industry, but at a large cost both in taxes and in increased cost in the used car market, with little to no benefit to the person buying the car. That marks it as a huge failure in my book.[/QUOTE]

You say that like its intent was ever to help regular Joes.

Unions and various industry lobbying groups loved it.

Exactly.

Poor people have many, many more barriers to deal with. Those barriers are often times not their own doing or a result of their own choices.

Isn't that the truth! So many good classic parts got needlessly destroyed. They could have very easily made this into a boon for the used parts dealers. Ended up being a boon for the scrappers. :rolleyes:

Rich folks buying gas guzzling toys. Is that a "bad" decision on their part ?? :confused:

If you have the money you can buy whatever you want.

I feel like the bad decisions come into play when you trade too much of your time for money paying for things you can't really afford.