Automotive Cooling
Looks like the government’s clunker stimulus plan really didn’t jumpstart the automotive business in any lasting fashion any more than other magnanimous money drops or bountiful bailouts have accomplished. After a sales spike in July and August, driven by outsized rewards for trading “guzzlers” for thrifty transportation choices, September sales set a 28-year record that redefines abysmal.
So why didn’t new car sales pick up any momentum from the cash-for-clunkers jumpstart? Bill Clinton might suggest, “It’s the economy, stupid.” Sure, there’s still pent-up demand for cars and trucks, but our recession continues to degrade consumer confidence and too few buyers are ready to make costly commitments.
There are other factors at work as well. The auto industry had quite a bit of overcapacity before last year’s sudden gasoline price increase and tumble. The reorganization of both GM and Chrysler and retraction by other major automakers dramatically reduced that capacity. Now most popular models are in very short supply, keeping prices higher, and low lease rates are hard to find.
For both car buyers and many dealers, especially those who lost new car franchises, good used cars are usually a viable option. However, the clunkers program managed to take a lot of used cars out of the marketplace, creating an inventory shortfall. So now there are fewer new and used cars and higher prices during a recession because of government meddling in the marketplace.
Since the cash-for-clunkers program didn’t succeed in stimulating the auto business, even moments after it ended, didn’t it at least help sell more fuel-efficient cars and retire gas gobblers? It did indeed, for two short months. Take the case of Ford, a major beneficiary of clunker money. Its Focus and Escape models nearly sold out and the clunker trades were heavily represented by Ford Explorer SUVs. But Ford’s F-150 and Chevy’s Silverado pickups also made the government’s revised, final top-ten list, since they were eligible under the program’s truck rules.
Gee, car sales went down after that government bailout “cash for clunkers” (which destroyed perfectly good cars that could have been sold to the used car market – you know the one for buyers who can’t afford a new one. I thought obeyme was supposed to be the champion of the little guy who can’t afford the American dream?)
but with the economy in the tank (oh, forgive me, the won says it’s improving – don’t know where he’s getting his numbers), unemployment approaching 10% nationwide (and much higher in some places.), foreclosures still happening (yeah, those dems in congress demanded the banks make loans to people who couldn’t otherwise qualify and are now defaulting. Imagine that.)
of course the government takeover of two car companies and giving them to their union’s has had an impact. I know I’ve bought my last American, as well as, new car.
No figures to back this up, but I would guess that the “cash for clunkers” deal was a lot more harm than hellp to Government Motors (i.e. GM and Chrysler). Just at a time when the public was very much opposed to the government takeover of a major sector of the American auto industry, and so very disinclined to buy from either of these companies, we get free money dropped in our lap to buy pretty much any economical new car we want, as long as we have a clunker to turn in. As predicted, this really bumped auto sales for a couple of months. But people bought Toyotas, Fords, Kias, and a host of other manufacturers products. Because of the distrust of Government Motors, neither GM nor Chrysler achieved a jump in sales comparable to their competitors. And now that the surge of “pushed-forward” buying has passed, GM and Chrysler are in a very bad place with no buyers for their product. Yes, the other companies face the same problem with new sales, but at least they had a big surge in cash-flow to help get them through the dip in sales.
If Team Obama had waited until the public’s distaste for the takeover of GM and Chrysler to die down, they might have actually achieved what they wanted… to save those two companies (if only temporarily) from their own bad business plans. Instead, it was, to twist a phrase…too much, too early. Or, in Happy Days terms, they jumped the shark.
Who’d'a thunk?
Next year, we should trade in our clunker members of Congress, the ones who get us the least value per tax dollar. Rather than treat them as the auto-clunkers were treated, we can be merciful and let them ease into a well-deserved retirement, far away from us.
Speaking of federally-funded fiascos…
…or would that be fiasci</i?
Car sales went down? Gee who woulda thought. (Hint) Not Obambi and his crew of slavishly drooling boot heel licking acolytes!!!!!!!!!!!!!!
WOW, Car sales down… Who would have guessed that would happen??? Maybe the US Gvmt should run Cash-for-Clunkers in Europe? Or, better yet, Asia? The tag line could be, “Toast your buns in a new Beemer.” That’s what I call passing the money around.
Don’t worry …. wait until the bailout kicks in for those people who took on car payments they couldn’t afford.
8. A.M. Mallett:
Thinking the same thing. What happens when a bunch of the buyers of all those vehicles can’t make their payments?? Will it still be a success?
#8 and #9. Perfect!