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Cash for Klunkers, Obamakare, and "Big" Government
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Harrison
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autonation cash for clunkers Debt defense spending deficit Democrats Liberals Obama obamacare Spending
Government program at work!
I have been watching the Cash for Clunkers program unfold from my job in the automotive industry and, although I didn’t personally do any deal because of the program it wasn’t from lack of effort on my part. As with any program, there will always be confusion with the public. My issue is not so much with the entire “big confusing government program” part of it, my concern is with the “inefficient, disorganized big goverment” portion. Let me explain…
We are in the midst of a recession and automotive sales are down as are profits (what are those?!?). Obviously anybody in a job related to the car industry would support people buying more cars. Why then did one of the biggest automotive retailers pull out of Cash for Clunkers three days early (over a weekend no less)?
AutoNation Inc, the largest U.S. chain of auto dealers, decided to end its “cash for clunkers” rebates as of Friday night, three days ahead of the government’s Monday deadline, The Wall Street Journal reported.
AutoNation, which has sold more than 10,500 cars and trucks with clunker rebates, wanted to make sure it could process all of its sales by the time the program officially ends at 8 p.m. EDT on Monday, according to the report, which cited an AutoNation spokesman.
Car dealers sell the majority of their vehicles on Friday, Saturday, and Sunday and this percentage rises on the last weekend of the month or on the final weekend a special program ends. Obviously AutoNation lost a lot of potential sales by ending the program early and thus lost a lot of potential profits and the chance to reduce their inventories. On the face of it this seems like they were shooting themselves in the foot. Au contraire. Dealers are reporting many problems in their dealings with the government (surprise!) and don’t want to get stuck with a lot of cars worth $500-$1,000 when the Cash for Clunkers program gave them $3,500-$4,500 vouchers. You can bet that private industry is a lot more efficient in collecting paperwork and following the guidelines for this program than the government is so rather than have a government screw up cost them big they ended the program early.
This unease with the efficiency of the U.S. government was echoed by another dealership:
“We’re being very cautious,” said Edward Tonkin, the vice president of Ron Tonkin Dealerships in Portland, Ore., which expects to stop Clunkers participation among the company’s 14 dealerships by today. Tonkin wants to be sure that the dealerships will have enough time to submit Clunkers applications before the government’s deadline.
Just wait till they help with healthcare!
You can bet that before a dealership approves any deal under Cash for Clunkers they are going to make sure they have all of the necessary and required paperwork. The “extra” time is to allow for the U.S. government to do a bad job covering their promises.
These dealerships have good reason to be worried as many are going broke as they haven’t even been paid for submitted deals!
Hundreds of auto dealers in the New York area have withdrawn from the government’s Cash for Clunkers program, citing delays in getting reimbursed by the government, a dealership group said Wednesday. The Greater New York Automobile Dealers Association, which represents dealerships in the New York metro area, cannot afford to offer more rebates. They’re also worried about getting repaid. said about half its 425 members have left the program because they
Schienberg said the group’s dealers have been repaid for only about 2 percent of the clunkers deals they’ve made so far.
Many dealers have said they are worried they won’t get repaid at all, while others have waited so long to get reimbursed they don’t have the cash to fund any more rebates, Schienberg said.
This just goes to show how the government can’t do anything well. In all, nearly $3 billion was allotted for this program. The criteria eventually was clear which vehicles qualified, the amount that would be paid out was known in advance, and everybody knew demand would be high (particularly after the first $1 billion was burned through so quickly). And yet the government hasn’t held its end of the bargin. Despite all of these common sense things our government still managed to screw it up!
Does this sound familiar?
“UPS and Fed Ex are doing just fine. It’s the Post Office that’s always having problems.”
Government, always the weakest link.
That was President Obama trying to reassure people about Obamakare! Cash for Clunkers is yet another example of what happens when the government gets involved in private industry. Imagine if something so clear as this program involved other things like back surgery, ear specialists, MRIs or PET scans, presciption drugs, or “alternative” therapy how much worse it would be!
And just who did Cash for Clunkers (paid for by the U.S. taxpayer) benefit?
Here are the top selling models (as of 08/21/09):
1. Toyota Corolla
2. Honda Civic
3. Ford Focus
4. Toyota Camry
5. Hyundai Elantra
6. Toyota Prius
7. Nissan Versa
8. Ford Escape
9. Honda Fit
10. Honda CR-V
So we have two American makes in there (none from Government Motors). Of these cars, the Elantra, Prius, Versa, and Fit are not built in the United States (some of the remaining models are built in the U.S. and Japan).
So not only was the program very badly implimented, not only did many companies leave the program early even though they desperately need to sell cars, but 80% of the top selling models are not even American and 40% of all of them are not even built in this country! So we transfered a large percentage of $3 billion to Japan and Korea!
And people are still in favor of the government controlling all of our healthcare needs as well as regulating other aspects of our lives?
Better see a doctor!
Oh, and by the way… the CARS website was down ALL DAY so we could not submit any deals to it!
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12:35
It would also help US Auto sales if the Big US companies made cars people actually wanted to buy, notice the Focus is #3, and which company did not need government assistance?
Imagine that.
Troy´s last blog ..How to Reform Insurance
13:21
Your point regarding Ford is well put and correct.
15:13
“Cash For Clunkers” proves that politicians giving away other people’s money still remains popular; Americans are no dummies as “free” $4,500 vouchers were nabbed in record time.
vulcanhammer´s last blog ..White House, Congress projects record deficits
15:25
Yeah my $4,500.00 helped some schmuck buy a new car!
15:45
BTW, if you wanna see some perfectly good assets being destroyed, here’s a video for you. I’m still amazed that some people, mostly enviro’s and the politicians that pander to them, think this is actually doing some good.
vulcanhammer´s last blog ..White House, Congress projects record deficits
20:12
I saw a similar video at Beers for Demo and I think it is just wrong to do that. Think about all the people who need a car to go to work or get a better job… these would have been perfect for them.
10:41
Very timely stuff here. Landers Toyota in Little Rock put an end to the program early, too. Why? They sold about 200 cars under the program and had received payment for three of the clunkers they collected.
I can’t blame them a bit, really.
The Hawg!´s last blog ..Well, at least I don’t have to buy a new amplifier yet
02:48
Frankly I’m glad it was big failure…It’s testimony on why we shouldn’t let the government fix our problems..i.e. Health care, the economy…They can’t even wage war correctly..
00:02
The Cash for Clunkers program at first sounded “too good,” an immediate warning sign for Americans to look further into it before rushing off to the nearest car dealership. Most dealers already take a few thousand dollars off the sales price, and with the Cash for Clunkers program in effect they most definitely did not follow their usual protocol. Obviously, the government did not plan on transferring a large percentage of $3 billion to Japan and Korea, but it’s not surprising considering the lack of reliability associated with most American made cars and the unpleasing aesthetics of many of the models that qualified. The ultimate failure of the program is just another blemish on the Obama administration to be used by the critics.
05:42
Cash for Clunkers had its advantages and drawbacks. A definite advantage was that many people got to work because of the Cash for Clunkers program. Since the automotive industries had work, the employees were able make more money and have more purchasing power. I know of a certain individual who broke his 21 month streak of not working on a Saturday this past weekend because of the Cash for Clunkers program. His exact words: “This month has been the best month for me money-wise”. However, some major drawbacks are the ‘clunkers’ effect on the environment. While many clunkers are taken off the road, they did not disappear from the face of the earth. There is the issue of dealing with the transmission fluid, break fluid, mercury, etc. Surely some parts of the car can be recycled, but clearly not all of them.
13:42
Both GM and Chrysler make small fuel efficient cars. Why weren’t they in the top ten list? Could it be because of Obama’s forced bankruptcy that closed plants for 30 days and the GM and Chrysler dealers had no inventory to sell. Personally I don’t think much of the idea that my taxes helped someone else purchase a car. Particularly when it was a foreign car. I laugh when I hear people comment that the public wants small fuel efficient cars. Unless there is a financial incentive like this or last summers gas prices a dealer can’t give them away. That why large SUV’s and pickup trucks sell so well. Even the imports got into that lucrative market.
On top of that almost none of the dealers have received payments because of the governments screwups. If they get a hold of our health care we can’t afford to get sick.
14:13
I think you are correct. Chrysler was maybe more hurt by lack of inventory than GM was but also Japanese brands are seen as more reliable too. I drive a Japanese car and have had no issues with it ever.
14:39
But that is only perceived qualty. As an example The Mitsubishi Raider is built on the same assembly line as Dodge Dakota. The only difference is front and rear trim. The Volkswagen Routan is built on the same line as the Dodge Caravan and Chrysler Town and Country mini-vans. Again the only difference is trim. Yet both of these vehicles score higher on quality surveys. The quality of american built automobile has improved so drastically in the past few years there is no quality difference any more. I know American car owners that have driven hundreds of thousands of mile with no issues and Japanese owners that have experienced nothing but problems. That proves nothing. Statisically there is no difference. American car purchases put more dollars into our econome by far than any import purchase can. If the cash for klunkers was intended to stimulate the economy there should have been a buy American clause. As it is it only benefited the imports and drove buyers away from the showroom this fall when our dealers will have inventory. So it really hurts the economy overall.
15:07
Yes there are many re-badged cars… some domestic re-badged as foreign some foreign re-badged as domestic. Having worked in the car industry for over 6 years I can tell you, at least in Kalifornia, people think a Honda/Toyota/Subaru have better quality and reliability than an American car. There are more great American cars now than ever but decades of abuse by the Big Three have created a trust deficit I think. My Acura was built in Ohio by non-Union American workers but some “American” cars are built in Canada, Mexico, even Australia in the case of some Pontiacs.
When it comes time for trade-in values American cars get hammered more than their foreign competitors.
06:36
I have also worked in the automotive field for over 35 years now for a domestic auto manufaturer. I for one will never buy a foreign made automobile. When you spend that kind of money and the majority of it goes to a company based in another country it does nothing to help our own economy. I feel foreign car buyers are part of the problem not part of the solution.
I am not sure what abuses by the domestic manufaturers you are referring to but don’t forget the manipulation of the dollar to yen ration by the Japanese government to make their prices lower. Lets also not forget about the left wing media reporting on domestic manufaturers product recalls as if it were a great sin and ignoring the fact that imports have just as many recalls.
The bottom line to my previous comments is the cash for klunkers program did nothing to boost American economy, specifically the two manufaturers that were forced into bankruptcy by the current administration even though both had viable recovery plans. And remember the downturn was not caused by the auto companies but by the mortgage fiasco that dried up all of the credit. Difficult to sell cars without credit being available. And where does Obama get off firing two CEO’s?
08:58
I agree with you on Cash for Clunkers and the same objections were raised in Germany where the program first happened. As far as domestic manufacturers go there were many bad products from Chrysler, Ford, and GM over the years where they lost market share. Designs such as the 3rd generation Taurus, or cars like the Dodge Neon, Chrysler Concorde, or Chevy Malibu were either bloated, filled with cheap plastic parts, or just didn’t work as a design (Aztek anyone?). Let’s also not forget the 80s that had such wonderful cars as the Chevette and Citation. And maybe the press rode Ford too heavily for problems in the Focus and not Honda for transmission issues in the Acura TL/CL/MDX/Honda Pilot/Odyssey but I’d say Honda had a better reputation going in.
My father bought one of the first Chrysler minivans in 1984 or something… a revolutionary product. Chrysler sat on their laurels and allowed foreign brands to take their market share away with more efficient engines, new features like seats that folded into the floor, etc. And just when you had some good American cars like the Pontiac G5 the brand is killed or when Saturn came out they stopped designing new cars for years until finally they were done (how many years was the LS1 or LS2 built unchanged?
I bought Japanese because I worked for Acura at the time, liked their products, they were a good value, very durable, cheap to maintain, and were loaded with advanced features (Xenons, leather, LSD, BOSE sound, etc…). That’s the free market for you.