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Cash For Clunkers Program is a Clunker!

Pantera 3rd&LastPantera 3rd&LastMember
Another bureaucratic mess!

I am a rep and many of my clients are new car dealerships. The new federal “Cash for Clunkers” is a nightmare for the dealers. Each dealer has 2 notebooks containing over 250 pages of procedures. The reimbursement is to the dealer not the consumer. The sale is recorded on line and scanned documents (8) are submitted for review. Dealers are waiting 5 days to receive confirmation that they will be receiving payment. If there is any error the entire transaction must be resubmitted, beginning the processes all over again. If the submission is approved payment will be made to the dealer within 2 weeks.

The dealer is required to submit a document at submission that they have rendered the clunkers engine totally un usable. This is done by running a metal cement concoction through the intake. The engine is run until seizure occurs.

One large problem with this procedure. If for any reason the dealer’s claim is rejected they are stuck with a vehicle with a salvage value of nothing. But the customer has been credited in real dollars of much more.

Because of these issues dealers are having a bailment agreement signed by the customer making them responsible for the allowance and including the possible return of the new vehicle. The dealers are also not destroying the engine until they have received approval of their claim.

Bottom line, another cumbersome poorly managed government program. The miniscule number of new cars that will be sold will do little to resuscitate the car industry. The few old “clunkers” that will be off the road will not equal the emissions of Al Gore’s jet.

And some of you want the government to manage your health care?
Good luck!
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fourwallingfourwallingMember
I think that you have to look at the bigger picture.

Is it better that the local Ford dealer move 40 new Ford Focus' off the lot with some brain damage because they have to deal with the paperwork, then have those cars still in inventory 2 months from now?

I think that any Ford dealer would answer with a resounding YES!

The dealer does not have to participate in the program if they do not want to or if they think that it is too bothersome to implement.

They should not look a $4500 gift horse in the mouth, IMHO.
Last edited by fourwalling
pantera1887pantera1887Member
Here’s some more info on the subject http://www.npr.org/templates/s...11145913&ft=1&f=1006

I would have liked the idea a bit more if the program had tighter restrictions on the gas mileage for the new vehicles purchased. Something like, cars must have 35 mpg highway, SUVs 25 mpg highway and trucks 26 mpg highway. The program is not a government mandate for the dealers and I’m sure they will get this figured out ASAP and make lots of sales from it. You as well!!!

The best news is that cars with Cleveland engines do not qualify for the program and you’ve got to give Washington some credit for that. I think Dianne must be a Pantera owner and helping us out!

Mike
D dreamer2Member
I do not agree with many (any) of the presidents bailouts but since my college age son clearly needed a new vehicle my ex and I decided to try for the cash for clunkers rebate. I figure it is my chance to get some of my tax dollars back to help my family. As luck would have it , since we switched the title from her name to mine in November I had not owned the car for a year and it was not eligible. It did not matter that she has the same last name as me and the vehicle title was transferred with no sale tax paid. The trade in was a Mazda tribute with 160k on the clock and serious NY sale body cancer. We bought a Kia Soul (hamster car) with nearly twice the fuel economy. Nice deal for my son but no rebate help from the gov. The devil is always in the details with these programs and common sense is usually left out of the equation. I have 25 + years in government service and common sense is much harder to find the higher in rank you search. I think government is ruining this country's financial future and I see evidence every day.
C comp2Member
The re-distribution of wealth is always difficult. I am not sure how great a deal it is for the consumer. You take a car you would have gotten $1000 for. You could have bargained the dealer for at least $1000 off the cost of the car and you would have gotten descent money for the car. Instead you settle for the cost of the car as stickered - $4500 and I doubt the dealer will cut you other breaks any where else. It's not pick nick for the dealer.

Did it do anything? You have a junk Impala that gets 12mpg. Your plan was to go to a used car lot and get a $6000 car that gets 28mpg figuring you would have the junk impala crushed or sold for parts. Instead you trade it for a car which is sticker for $24k, $28,500 with options out the door. - $4500 which makes it $24,000 out the door.

Now you have a loan for $24,000. The banks used to require 20% down. After regulations requiring that loans be made more accessible to those who could not afford loans now you get most of the loan up front. But now, instead of the 20% down to protect their investment they want you to pay for insurance encase you loose your job, or otherwise cannot meet your contract. This protects the bank but cost you $100/month extra!!! It's only an extra $100/month so the loans can be accessible to those who cannot afford them.

And thus we have government involvement in free enterprise blaming free enterprise for a system that doesn't work.

And after all that, all we are doing is getting people in cars which they should not be in, re-inflating a bubble as fast as we can!!

Anyone got a pin?
Pantera 3rd&LastPantera 3rd&LastMember
From an article on Edmunds


The Inconvenient Truth About "Cash for Clunkers" Is $20K Per Sale In Taxpayer Cash

July 27, 2009

Much has been written - both pro and con - about the so-called Cash for Clunkers program that officially launched Monday.

Complexity, limited eligibility and minimal funding are common criticisms, but a chief filing of the program, according to Edmunds.com CEO Jeremy Anwyl is the cost to taxpayers. Even if Cash for Clunkers reaches its budgeted cap of $1 billion, the program will only help drive about 50,000 incremental new car sales, each of which will cost taxpayers a whopping $20,000, according to Edmunds.com's research.



Typically 200,000 vehicles worth less than $4,500 are traded in for new vehicles every three months. At best, the current Cash for Clunkers program - officially called the Car Allowance Rebate System (CARS) - will fund 250,000 such transactions in the same time period - a gain of only 50,000 vehicles. Given that this program is budgeted to cost $1 billion, this increase will come at the cost of $20,000 per extra sale.

"The incremental sales will be limited and at a considerable cost. In effect, we are paying consumers to do something most would do anyway," said Anwyl. "So as a stimulus, the program fails. One could make a slightly stronger argument about the environmental benefits, but even there, the program could have been better designed.

"Really, the best consequence is that many consumers are getting interested in the idea of a new vehicle after hearing about Cash for Clunkers; we have to hope that even if they don't qualify, they will buy a vehicle anyway," added Anwyl. "But, how long-lived will that be? Once the program reaches its cap, interest will die down, and sales volume will fall as quickly as it rose. What will motivate shoppers to brave the marketplace in the months following Cash for Clunkers?"

Automakers must step up to continue the momentum. Anwyl points to the current Chrysler incentive program as an example of a creative marketing message that uses the Cash for Clunkers buzz to generate sales and to arm Chrysler dealers with a useful tool when working with Cash for Clunkers "rejects."

Still, for the savvy shopper who qualifes for a $3,500 or $4,500 Cash for Clunkers voucher, good deals are available. Tips for getting a good deal on available on the Cash for Clunkers section of Edmunds.com. Lively discussions about Cash for Clunkers are talking place on Edmunds' CarSpace.com message boards.
pantera1887pantera1887Member
quote:
Originally posted by Pantera 4134:
From an article on Edmunds


The Inconvenient Truth About "Cash for Clunkers" Is $20K Per Sale In Taxpayer Cash

July 27, 2009

Much has been written - both pro and con - about the so-called Cash for Clunkers program that officially launched Monday.

Complexity, limited eligibility and minimal funding are common criticisms, but a chief filing of the program, according to Edmunds.com CEO Jeremy Anwyl is the cost to taxpayers. Even if Cash for Clunkers reaches its budgeted cap of $1 billion, the program will only help drive about 50,000 incremental new car sales, each of which will cost taxpayers a whopping $20,000, according to Edmunds.com's research.



Typically 200,000 vehicles worth less than $4,500 are traded in for new vehicles every three months. At best, the current Cash for Clunkers program - officially called the Car Allowance Rebate System (CARS) - will fund 250,000 such transactions in the same time period - a gain of only 50,000 vehicles. Given that this program is budgeted to cost $1 billion, this increase will come at the cost of $20,000 per extra sale.

"The incremental sales will be limited and at a considerable cost. In effect, we are paying consumers to do something most would do anyway," said Anwyl. "So as a stimulus, the program fails. One could make a slightly stronger argument about the environmental benefits, but even there, the program could have been better designed.

"Really, the best consequence is that many consumers are getting interested in the idea of a new vehicle after hearing about Cash for Clunkers; we have to hope that even if they don't qualify, they will buy a vehicle anyway," added Anwyl. "But, how long-lived will that be? Once the program reaches its cap, interest will die down, and sales volume will fall as quickly as it rose. What will motivate shoppers to brave the marketplace in the months following Cash for Clunkers?"

Automakers must step up to continue the momentum. Anwyl points to the current Chrysler incentive program as an example of a creative marketing message that uses the Cash for Clunkers buzz to generate sales and to arm Chrysler dealers with a useful tool when working with Cash for Clunkers "rejects."

Still, for the savvy shopper who qualifes for a $3,500 or $4,500 Cash for Clunkers voucher, good deals are available. Tips for getting a good deal on available on the Cash for Clunkers section of Edmunds.com. Lively discussions about Cash for Clunkers are talking place on Edmunds' CarSpace.com message boards.


I guess the part they missed is it only took a week to sell 250,000 vehicles. Wish I had a clunker to trade!!!

Mike
O osofastMember
quote:
each of which will cost taxpayers a whopping $20,000, according to Edmunds.com's research.

Funny they never justified how they came about this figure. So to me it is just some reporter trying to get his copy published. From the figures they have published the $96,000,000 that was spent on the 22,000 "clunkers" that have been traded in equates to $4363.63 average per trade in. So how do you think it cost the government $20,000.00 per vehicle??? You can only recieve $3500 or $4500 for your trade in. With one billion dollars set up to fund this program at $20,000 they would have already spent $440,000,000
The numbers in these articles just dont add up.
Jeff
garth66garth66"When speed is the only thing that counts"
quote:
Typically 200,000 vehicles worth less than $4,500 are traded in for new vehicles every three months. At best, the current Cash for Clunkers program - officially called the Car Allowance Rebate System (CARS) - will fund 250,000 such transactions in the same time period - a gain of only 50,000 vehicles. Given that this program is budgeted to cost $1 billion, this increase will come at the cost of $20,000 per extra sale.

"The incremental sales will be limited and at a considerable cost. In effect, we are paying consumers to do something most would do anyway," said Anwyl. "So as a stimulus, the program fails.


How they calculated the cost...
250,000 - # cars expected to qualify for the clunker stimulus before funds run out
200,000 - # cars that would be traded in on new cars anyway within same 3 month period
----------
  50,000 - # net (additional) new cars sold

(stimulus budget)/(# net new sales) = taxpayer cost per net new sale (stimulated)
$1,000,000,000/50,000=$20,000 cost per additional vehicle sale program "stimulated."
lmguylmguyMember
This program has two goals, 1 stimulate car sales and the economy and 2 remove old less efficient cars from the road. The 200,000 cars that "would be traded on new cars anyway" are now no longer on the road. So it is 50,000 in new business and 250,000 cars off the road. That changes the math a bit.

Ed....
fahrenheit351fahrenheit351Member
The math is more screwed up than that....This is comparing 3 mos of 'typical" trade ins to 1 week of the "stimulus". If you put it on an even field its even more interesting.

200,000 "typical" trade ins (3 mos)divided by 12 weeks = 16,666 units per week

250,000 "stimilus" trade ins (1 week)divided by 1 week = 250,000 units in a week

A surplus of 233,334 units NOT the 50,000 as claimed in the opening thread (and thats just in the first week).

Since there are people who are still going to be "typical", even in this ecomony, you still have to add back in the 16,666 potential units per week that still may be traded in over the remaining 11 weeks.....

16,666 X 11 weeks = 183,326 units
+ 250,000 first week units
= 433,326 total units for three months

Again not the paltry numbers first reported. This is over a 200% improvement not 25%.

Bottom line is a lot of people took advantage of this program and wether you love it or hate it the impact has yet to be seen. But there will be an impact.....
O osofastMember
Germany has a "clunkers" program to that was infused with 5 Billion euros($7 Billion dollars). Program was destined to run until the end of the year and support the sale of upto 2 million vehicles, as of now 1.7 million vehicles vouchers have been redeemed.
Germany Cash for Clunkers

The US House of Representives voted yesterday to boost the $1 Billion slated to the CARS program, the Senate is expected to vote on the bill on Monday the House approved another $2 Billion for the program.
Us approves more money
That is something almost 250,000 vehicles in less then a week, something that was planned on lasting for three months. I say it is stimulating sales.
My wife wants to get a G8, maybe the Suburban will get a clunker status.
Jeff
lmguylmguyMember
quote:
Originally posted by Panther:
Too bad I'm not in the US to take advantage of this program.
The "dealers" have to read over 250 pages of procedures???
Yeah, I feel real sorry for those buffoons.. nice try.


It isnt the work load. I have yet to record my first deal on the government web site and it is not for a lack of trying and I read that the program is out of funds. It is about me fronting the 4500 per deal and wondering if I will see the reimbursement.The Feds want the paperwork one way and the State wants it another way - I get stuck in the middle.

Ed...
pantherpantherMember
quote:
Originally posted by Lmguy:
quote:
Originally posted by Panther:
Too bad I'm not in the US to take advantage of this program.
The "dealers" have to read over 250 pages of procedures???
Yeah, I feel real sorry for those buffoons.. nice try.



It isnt the work load. I have yet to record my first deal on the government web site and it is not for a lack of trying and I read that the program is out of funds. It is about me fronting the 4500 per deal and wondering if I will see the reimbursement.The Feds want the paperwork one way and the State wants it another way - I get stuck in the middle.

Ed...


If the program isn't forced on you and you're confused with the process, then don't participate.

I wouldn't.
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