Cash-for-clunkers program "Bankrupt"

In less than two weeks of a program that was expected to last over three months, the "cash-for-clunkers" program has used up all of it's allotted $1 Billion ($1,000,000,000) !
Another total miscalculation by the government economists in charge.

$1,000,000,000 at $4,000 on average per vehicle is 250,000 vehicle sales in two weeks. According to motorintelligence.com total US light vehicle sales (i.e cars, vans, SUVs, light trucks) in June 2009 were 859,847 so even if only half of the cash-for-clunkers deals would not have occurred anyway, that's about a 15% spike in sales.

I'm planning to buy a vehicle in October and was weighing the alternatives of trading in one of my current vehicles at about a $5,000 trade-in allowance or getting rid of my "beater" pickup truck (value less than $1,000) on a cash-for-clunkers deal.

I doubt if the cash-for-clunkers program will be around in October.

The program did empty a lot of the lots around here. However the dealers now have a lot of cars sold based on the program and they won't be able to get their money from the government. Who is screwed here, the end user or the dealer?

thcri said:

Who is screwed here, the end user or the dealer?

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You the Tax payer.

Same happened here...Tax payers money put into a pot...pot dried up in no time at all and car sales have declined further...waste of money.

Would have been better off just helping the poor guys in the car industry that are out of work buy sending them money to help see them through the slump.

PS...i forgot to mention Car prices increased here so the money off ended up nothing for most yet it still cost me the Tax payer...yep it pisses me off.

Seems to me that this is a total screwing all the way around. The car dealerships and the manufacturers were sitting on EXCESS inventory so that has moved off the display and the storage lots but it does not mean that people have been put back to work actually producing cars. This is a 1 time blip in sales. So we, the tax payers, paid to unload the excess inventory but didn't create any jobs. Further the government has to borrow the money to pay for the incentive. Further, most of the clunkers would likely have been sold over the next year or so anyway, so all it did was accelerate their sale while the program existed, the net effect is that the people who drove rolling wrecks got a special form of welfare. Yup, we all got screwed on this deal. And now the dealers, who are hurting for cash anyway, have to wait for Obama to write the checks . . . I'm sure many will go out of business before the checks arrive.

The House just voted another $2B funding for the program. That bill still has to pass the Senate. Bloomberg

Where's Dargo? He probably has the best window into what the dealers are saying. Seems to me this in effect extends the bailout to help the dealers and their employees, while the previous automotive bailout benefited only the manufacturing segment.

If this gets a lot of the fat-city commuters (single occupant Suburbans, etc) off the road, that makes it safer for smaller cars, and reduces the tendency to go out and buy a 6,500 lb tank because all the other commuters are in big tanks too. I don't know how cost-effective all this is, but it unmistakeably is putting money out into the communities, instead of just bailing out Wall Street.

California said:

The House just voted another $2B funding for the program.
. . .
If this gets a lot of the fat-city commuters (single occupant Suburbans, etc) off the road, that makes it safer for smaller cars, and reduces the tendency to go out and buy a 6,500 lb tank because all the other commuters are in big tanks too. I don't know how cost-effective all this is, but it unmistakeably is putting money out into the communities, instead of just bailing out Wall Street.

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I don't see this as getting a lot of large SUVs off the road at all.

It strikes me that what it is doing is getting a lot of old Buick Roadmasters and similar older cars off the road. In my frequent trips into Chicago I don't see a lot of fat-city commuters driving large SUVs. I do see many of them driving SMALL and reasonably efficient SUVs. Its out in the rural and suburban areas where I see the SUVs that are on the large end of the spectrum and many of those are equipped with trailer hitches for hauling whatever behind them, so I presume they need them to tow equipment/trailers/horses/etc.

I do agree this is better than the wall street or bank bailout, but it still is a waste of money.