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Aug 21 2009, 11:00 am by Derek Thompson

Was Cash for Clunkers a Success?

Cash for Clunkers is set to end on Monday after burning through $3 billion in less than a month. The government's auto-revitalization program, which gave buyers up to $4500 after trading in their old cars, has moved more than 450,000 cars in the last few weeks. My colleague Conor Clarke, writing at the Daily Dish, says this is a testament to its success. He's right that "good stimulus is timely stimulus," but I think it's wrong to call C4C a success at this point, for a couple reasons.

Leaving aside the program's dubious environmentalist claims (you didn't qualify for a rebate if your old car's mpg was too high, and so on), I think it's likely that we'll look back on Cash for Clunkers as at best, unnecessary, and at worst, a bad idea. Conor writes that the speed with which the money was spent makes this an effective stimulus. From the standpoint of basic Keynesian economics, you certainly don't want your stimulus money spent in a relaxed manner. But the speed with which the C4C money was spent could also be evidence of its needlessness.

As I wrote here, there is overwhelming evidenceof an historic pent-up demand for car purchases -- the average age of our current fleet is at an all-time high -- and it's really quite likely that all we've done is spend $3 billion to make thousands of buyers to move their third/fourth quarter purchases into two weeks. Jeremy Anwyl, CEO of auto information site Edmunds.com, wrote that it's not clear that Cash for Clunkers will increase 2009 sales at all.

Then there's all the unintended consequences of destroying working capital in used cars, which in the halcyon days before C4C, had real value in their twilight years. Used car dealerships watching their potential inventory be gutted by the government. Charities witnessing a 12 percent dip in auto donations. Morgan Stanley economists actually think C4C is hurting hurting non-auto consumption, which fell 0.6 percent in July after rising in June.

What happens to auto demand now? Truly, nobody knows. But from the evidence it seems possible that in six months we'll look back at Cash for Clunkers as a poorly designed program that hurt used car dealerships and charities, suppressed this summer's non-auto retail market and failed to dramatically increase 2009 car sales. The stimulus ended in a flash. Whether it truly stimulated remains to be seen.

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Comments (36)

Pittz

C4C:

Talk about some wimpy reasons for calling the C4C not successful.

First, have you ever done business with a Used Car Dealer? These are not people who deserve any sympathy. When you go onto a Used Car Dealer lot, sew your wallet pocket closed. The only used cars I purchase are from private parties.

And the poor charities! Are you aware this is a big ripoff of both the people who donate and the governments who allow a tax deduction?

And the comment of 'destroying working capital in used cars, which in the halcyon days before C4C, had real value in their twilight years'! In English what does this mean?

I did not participate in the C4C because I was too lazy and my auto still looks pretty good. But for those people who needed a new car, it was a hell-of-a-deal.

If Jesus walked on water right in front of the News Media, they would fine three things to complain about.

Sincerely,

Pittz

Derek Thompson (Replying to: Pittz)

Pittz thanks for the comment. And you're right. That sentence was really just awful! What I was trying to say was that used cars aren't trash, even if C4C treats them that way. They're real capital that can be sold or donated, and then other Americans can use those older cars, or clunkers, and get real value for them. By paying money to destroy the cars, we're wasting both taxes and product utility. And whether or not it was a heck-of-a-deal isn't really the issue, right? If we evaluated government programs exclusively by the amount of money they gave consumers, that would be a really good way to advocate for infinite government spending. If we're operating under the assumption that the money pot is finite, then the question is whether we're spending $3 billion in the best way. I don't think we are.

MadAnthony (Replying to: Pittz)

Donating cars is no longer the tax dodge it used to be. In recent years, the IRS has made it so you can only deduct what the vehicle actually sold for at auction - it used to allow you to pretty much take the retail value of what a vehicle in perfect condition would sell for.

ed (Replying to: MadAnthony)

That would be interesting because the person who donated the car would have no way of knowing what it sold for at auction. Or what if the car was not sold at auction? I knew one person who donated a van to our local church.

I did it once a number of years ago and the charity gave me a written appraisal before they took it. After they took it, I had no idea what became of it.

Of course, nothing would surprise me when it comes to the IRS making things harder.

Cars4Charities (Replying to: ed)

If the car sells for more than $500, the charity has to send you IRS Form 1098-c.

SeeTheBigPicture (Replying to: Pittz)

People are so short sighted.
This is no different than government getting involved in housing with sub-prime loans to enable people to buy a home. So many could not afford them that it was the catalyst for this massive downturn. This Cash for Clunkers can't be truly evaluated until we first see:

1. How many people will not be able to keep up with the loan payments.
2. What this will do over the next few months in new cars sales.
3. What the impact is to the rest of the industry now that 450,000 people are paying $300 per month that they would have ordinarily spent on other goods and services.

How many of these people took out loans to buy these cars? I would think that a % of these people bought now to take advantage of the program who may have planned to buy later. I suspect that car sales will take a hit over the next coming months.

C4what (Replying to: Pittz)

Thank you Pitz! You made it worthwhile reading the comments! For I guarantee, that if Obama worked a miracle and went to the Communist China (they seem to be the only ones with lots of money to loan) and get them to donate enough money to pay all our debts (forgive our loans), there would be a high percentage of people who would complain and find all sorts of faults and reasons why it was a bad idea.
Derek. I am trying to do my homework here and read a little in the mean time. You are not helping me at all.
“Morgan Stanley economists actually think C4C is hurting non-auto consumption, which fell 0.6 percent in July after rising in June. Where is the Proof?”
“I think it's likely that we'll look back on Cash for Clunkers as at best, unnecessary, and at worst, a bad idea. Give a logical explanation why you believe that will be the case!”
“But the speed with which the C4C money was spent could also be evidence of its needlessness. - I am beginning to think you that your writing here has some ulterior motive.” Oh lord! What do we have here?? When Wal-Mart announces a sale and people line up at 12AM and the goods are sold off in I hour, does the speed at which it is gobbled up means it was unnecessary?…you know what, you make my brain hurt!
From the first time I saw it, I fell in love with the Lincoln Navigator. A friend of mine owned one. He said to me, these are nice, but they drink gas badly. I had an old car which was not any better..In fact mine was leaking gas, so I did not think the cost of gas would matter one bit. Last year, I decided to help boost the economy and just had to get one. With price of gas sky high, the cost dropped significantly; I bought one. It is nice! Wood grain and all, leather seats-heated and cooled, 6 disc CD/MP3 player, the truck rocks. But I am having regrets. It drinks gas badly. So if I want to suggest that purchasing a Linc is a bad idea, I have the proof. Where in your entire writing have you provided any, even an iota of justification for suggesting that C4C is a bad idea and a failure? I would not even go into why it has been a success. You certainly need a course in Critical thinking skills – for writers and journalists!

Anything that can have unintended effects, will. Just like creating guns. Just like making rat poison-people use it poison other people, a knife-people use it to murder people, a machete, a Trojan (it was intended for good purposes- to fix computers without actually going to the physical device), computers/technology, cars. What is one of the leading causes of death next to Cancer and Hypertension? Accidents from cars! Michael died, possibly from an overdose of a legal drug. It was an unintended consequence.
So what if we burrow money to boost the economy and bring it back from a crash? We are spending nearly 2 trillion dollars of burrowed money on two senseless and useless wars. I swear, if we had decided to rebuild the twin towers and add two more floors to boot, our economy would be kicking a$$ right now. That money would be here, instead of killing people, destroying properties, and lining the pockets of unscrupulous people like KBR, Black water, and the same evil people we are supposed to be fighting.
Shortsighted- you, are not only shortsighted but…..
The points you mentioned, happened, are happening and will continue to happen, no matter the source of the money. Those are features of any economy or business. The problem I see here is that you people are moving the carrot/goal. The goal of the program was to boost spending in the car industry, hence the global economy, since the car industry is dependent on global suppliers. It accomplished its goal.

XgenX

I the goal was to satisfy "basic Keynesian economics" then the program was a resounding success. The government established a plan and then it spent a lot of money. Problems solved. The credo of "spend during crisis to stimulate growth" has been achieved.
But is anyone concerned that the Keynesian model does not work? Spending on government make-work programs has unintended consequences.
If they don't grasp this concept then the solution failing will only encourage them to do it again, and bigger. More stimulus again.
The problem with pumping the economy with government spending is not just that it is fabulously expensive. The problem is that it doesn't work. It doesn't do what you want it to do. But just because it doesn't work the first couple of times doesn't mean they will stop. It actually means they will do it again.

Elliott

Yes, but we're talking about people with cars worth less than $4,500, or even $3,500. These people are *much* less likely to be buying new cars. Yes, some of these people would buy a new car sometime, but most new car buyers are trading in more valuable cars.

They seem like different buyers to me.

newfer58

How many of the 450,000 cars sold required financing? It will be interesting to see what percentage of these loans end up in default and repossession. My guess is that we'll be reading about this a year or two from now.

C4what (Replying to: newfer58)

So banks get a cut and a boost by financing these car purchases. See now, the fear of the colapse of the banking industry was the major cause for the stimulus. Now that could be a very good thing, dont you think? Defaults may happen. I am hoping that people will start getting jobs again and not default. It would be interesting if they are paid of in the next 2-3 years and not a signle one defaults. I say, one of my concerns with the program, though, is that people may exploit it (anything that can be exploited, will eventually be). I dont know if the owners would have to have owned the car for at least 5 years or so, otherwise rich people could go quickly buy an old clunker for a couple hundred bucks and use it in exchange.

qbla

If you divide $3,000,000,000 by $4500 (the max possible) you get 666,666 cars. Where are the other 216,000 cars at?

Figgy (Replying to: qbla)

Administration of the program?

C4what (Replying to: qbla)

See how easily one could be misled for incorrect disinformation. A simply Google search on cash for clunkers could have made you look really smart or stu...depending on waht you find and report. it is not even at its end as yet. Based on the estimates of the number of cars sold under the program, it is perfectly right on the money. So far only $1.9 billion has been accounted for and has resulted in 457,000 new car sales
GM has placed 1,350 idled employees back to work.
>>>Although $1.9 billion has been requested, the Transportation Department had paid out only $147 million, or 7 percent of the rebates as of Thursday. Dealers blame the complicated paperwork for the rejections, as well as slow processing by the government.

http://www.bloomberg.com/apps/news?pid=20601087&sid=akjL3wiDVfnU
GM sold 18.7%
Toyota Motor Corp sold 17.9%
Ford Motor Co., sold 16%
Miscl -balance%

singlewideslim

We all know car dealers, desperate for a sale, will do, or say whatever neccessary to get one. Includeing falseifying peoples income levels and the stability of their employment history. Couple that with whatever # of people purchased cars that they can make the payments on now, but won't have jobs in 6 months, and this could be a major boon for those in the repo business. Also, this was intended as a stimulus for American manufacturers; how many of these cars sold under C4C were,in fact, foreign? Heres another one for you; what about people, not used car dealers, but those whose professions revolve around serviceing and maintaining these used cars? Mechanics, collision repair guys, etc..? I am in this group, and C4C has had a profound impact on my business. Granted, these new cars will eventualy require my attention, but it will be a while... In short, I think the program was well intentioned, and probably looked like a "win/win/win" in theory, but in execution, I think it will have unintended consequences.

C4what (Replying to: singlewideslim)

See my comment above. I do understand your concern too. I feel your pain. And it is true what you mentioned in your first two sentences. But remember, our economy affects the Global economy. We seem to be kind of a Spoke and wheel with the major economies and so wehn we fall, the others suffer. When we rise, so do they. Lets hope we can get it back to at least the pre-bush years and build on what we have. I have every confidence, that we can rebuild it to be better than it was before, if we do not have the Republicans destroying the very foundations we are digging.

singlewideslim (Replying to: C4what)

Don't get me wrong, I support Obama, and still approve of his performance in general. I also think, as I said before, that this program was concieved with the very best intentions, and in theory, it is a great program; it helps car buyers,car dealers,car manufacturers, and removes older, polluteing cars from the fleet....In theory. In practice, a lot of these "clunkers" were very nice,very serviceable,used vehicles, that were paid off. Granted, a lot were probably junk too, but I have seen some very nice, older cars hauled off to the scrapper. Also, I don't think all of the possible consequences got considered here. This is pretty evident when you ask what was the number one car sold under C4C? The Toyota Corrolla. That dosn't exactly help the "Big Three" or the laid off auto workers in Michigan. Lets face it, we all should be tightening our belts a bit, and we know it. We need less payments, not more. We need to restrict irresponsible spending, and thats not what C4C inspires. Some people, a great many apparently, bought reasonabley priced, fuel efficient cars. That is good. Another group of people, who knows how many, bought new fullsized pickups, and SUVs that they probably can't (or won't) be able to pay for. A certain percentage, who knows how many?, will get repossessed. In short, some of these folks were driving older, paid off cars because they couldn't afford another payment, and guess what! They still can't. Nearly ten percent of all mortgages are delinquent right now, was this realy a good time for this program? I appreciate that the democrats are trying to stimulate the economy, I didn't vote for them to preserve the status quo, I just don't want to see this thing turn into a big disaster 12 months from now, and then watch Hanity and the other right-wing, Fox news parasites, use this to kick the president all around the floor.

obetwo

What we learned from from Cash for Clunkers was that the government was willing to take borrowed money from our kids to buy cars for ourselves today.

If you really think $4500 C4C was a huge success just think how much better of a success it could of been if the trade in was $10,000 or how about $15,000.

We learned when the government gives away free money the US people will take it.

This program which was supposed to last til November ends on monday.

Too bad the people who will have to pay the taxes for this free money to our new car owners didn't get to vote on it.

MadAnthony

Last year, Wired magazine had an article about unconventional facts about saving the environment - one of which was that you are better off keeping your Hummer than trading it in for a Prius, because of the amount of energy it takes to build a new vehicle. By destroying a number of perfectly good vehicles, we've probably created more pollution than the few mpg's saved.

And while one may not be sympathetic to car dealers or charities that get a fraction of what the car sells for, we are also making it harder for the working poor to get a reasonably priced used vehicle - and in the US, where car ownership is often necessary to be able to drive to a decent job, that's probably more hurtful than anything else.

Opus One (Replying to: MadAnthony)

MadAnthony, I am with you. Although I would find it a much more interesting program to test if it forced significantly higher mileage vehicles — not relative to the traded vehicle, but rather a fixed MPG number like 27-28 — and if they required the cars to be fully re-purposed as replacement parts for the remaining hundreds of thousands of those who had enough common sense to take their vehicles through their lifespan.

I priced out my '97 Audi A8 (bluebook just about $4,450) as parts and was able to see around $20k in parts if disassembled. Think of the multiplier effect of revenues through the system that would bring? I know it is not so simple, but I think there would be a huge advantage the consumer if we encouraged more rebuilt and used parts suppliers — and yes, this screws car manufactures "replacement parts" bonanza, but it certainly conserves both resources and energy to not just scrap things.

By year end, I think we will be looking at a continuation of, or even an increase in, poor auto sales regardless of the short-term bump this may produce

Figgy

Certainly we may never know how effective this program was. However, I tend to agree that much was lost.

My understanding is that the engines of "clunkers" were destroyed, a real tragedy. But used car dealers did not "miss out", sure they lost some potential stock, but it was not taken from them in any real way. But someone surely did miss out. Perfectly functional car engines that had much utility were ruined. This is foolish and amazingly wasteful, how perfectly American right?

I don't really think that we could justify the destruction on any environmental basis either. I.E., a fuel inefficient car was taken off the road, and we're all better for that now that it has been replaced with this "relatively" more efficient car is in its place. Fine, take it off the road, dismantle it so it cannot be used (which could have easily been done by destroying body panels or breaking all glass in the vehicle) but leave the mechanical parts intact to be "recycled" and put into service in other cars.

Moreover, I agree, that likely most consumers were sitting and delaying their purchases given the volatile "new" economy we find ourselves in. And that C4C was enough to push them over the precipice. But in the long run, I suspect it will have had little effect on purchases. It simply accelerated sales by a few months.

We'll all know more in a year...

C4what (Replying to: Figgy )

It is the engine that was the problemn in the first place. Whay on earth would you put that engine back in another vehicle?? Would you remove a bad lung from a patient and reuse it in another? Would you remove a bad battery from one car and put it in another? It will be recycled into iron, aluminim or what ever the original material was. The body panels were not at issue. If they can be used, then re-use them. Now if you wanted to suggest the Government could add another program to develop and use more fuel efficient engines in these clunkers, then thats a brilliant idea. In fact they could start one like that, which would help all kinds of people and boost employment.A program that helps to replace the engines in these guzlers (like mine)with more efficient engines instead of destroying the whole vehicle.

SRS000001

I used the C4C program to buy a 2009 Honda Element SC. I drove a 1987 Chevy Astro Van I purchased new in 1988. I had been looking at the Element and saving for two years, to purchase the middle of the line EX model and was planning to sell my van to a local scrap yard for $150. When C4C came into being, I went to the dealer and was driven around by the Honda salesman in the top of the line SC model, and I then requested to drive the EX model. The SC was reduced $2500 as a year-end close-out. After mulling it over for a week or so (in late June), I went back and drove the SC model, put down a $1000 deposit for it to be held until C4C was initiated. I bought it the morning of July 24, the first C4C day.

Would I have bought a new car without C4C? Yes, it was already in the works. Would I have bought the nicer, top-of-the-line SC? No. I qualified for the $4500, and that made me purchase the car when the "window of opportunity" opened, rather than waiting a few more months and building up my bank account. I bought the car outright, so there was no financing. I am 59, and have paid my taxes like a good little boy all of my life (as most of us have), all the while seeing others benefit from the fruits of my labors . Was this a chance to get a fraction of that money back? Hell, yes. I know I didn't "get somethin' for nothin'", I just took money out of one pocket and put it in the other. But I look at the C4C program as a "everybody lost" scenario.

C4what (Replying to: SRS000001)

>>>I am 59, and have paid my taxes like a good little boy all of my life (as most of us have), all the while seeing others benefit from the fruits of my labors . Was this a chance to get a fraction of that money back? Hell, yes. I know I didn't "get somethin' for nothin'", I just took money out of one pocket and put it in the other. But I look at the C4C program as a "everybody lost" scenario..
How did you figure that out?? Now I am totally confused!
You are the perfect example of why the program was a success. It accomplished everything thing it should have done and more. Now let's imagine if all the 600,000 people were able to pay off their cars cash. They would be able to purchase houses and make the payments and not default because they have only one major payment. They would not be a burden on the banks if they defaulted on loans. They would have saved millions of dollars in taxes and finance charges, that would otherwise keep them in debt for years to come. Oh boy. I am closing this page now and return about two hours later to see if we can find some more people who make sense.

MadAnthony (Replying to: C4what)

Huh? If you ask me, he's a perfect example of why the program was a waste of money. He got $4500 of taxpayer money for doing something he would have done anyway - his Astro would have been off the road and he would have bought a new element with or without c4c.

Now, I don't blame srs for using the program - if I qualified for it and was in the market for a new car, I would have too. But few things strike me as a bigger waste of money than giving people a bunch of money to do something they would have done anyway. And I suspect that the OP is an exception as far as paying cash - and if your car payment and your house payment exceed your monthly income, you should have bought a smaller house or a used car.

SeeTheBigPicture

This is the same ignorant actions that prolonged the Roosevelt did back in the 30s that extended the time to recovery. The government got involved by taking money for some to give to others. The results of this is proven time and again. Except our pupil president is too novice and ideologically blinded to realize it.

This is no different than government getting involved in housing with sub-prime loans to enable people to buy a home. So many could not afford them that it was the catalyst for this massive downturn. This Cash for Clunkers can't be truly evaluated until we first see:
1. How many people will not be able to keep up with the loan payments.
2. What this will do over the next few months in new cars sales.
3. What the impact is to the rest of the economy now that 450,000 people are paying $300 per month that they would have ordinarily spent on other goods and services.
How many of these people took out loans to buy these cars? I would think that a % of these people bought now to take advantage of the program who may have planned to buy later. I suspect that car sales will take a hit over the next coming months. The overall impact to the economy will just lengthen the time to recovery.

The Government can't run anything. It was not designed to.

Cars4Charities

Cash for clunkers will not end soon enough for all the industries hurt by it, including auto repair shops, auto parts stores, used car dealers and car donation charities.
http://www.cars4charities.org

Pat A.

Has anybody noticed that all we are trying to do is re-inflate our economic bubble?

We keep being told that the only way to fix the economy is to spend, spend, spend. If you can't spend, borrow. Buy a house, buy a car, buy something. Buy anything. Just buy.

What did we do here? We took people who had functional cars (because that was part of the requirement) that they probably owned free and clear and got them to trade in on another car that they now have a loan of at least $10,000. How exactly did that improve their situation? It didn't, but it improved the banks' situations. You know. The same banks that are reporting 2 and 3 BILLION dollar profits? They were obviously hurting.

They took $3billion of taxpayer money and spent it on increasing the personal debt of a number of Americans who participated in the program while causing a significant decrease in charitable donations, and stock for used car dealers. All this for a modest increase in new car sales (most of which went to foreign car companies) and a modest improvement in gas mileage.

Please let the government manage my health care too.

Shine

Wow,

So, so many just outright wrong and ignorant assumptions. Does anyone commenting really understand the auto industry in it's entirety?

Derek, have you seen the inventory being destroyed? Some of it looks like the cars are OK, some of it are older SUV's that essentially have no market value (late 80's Ford Explorers, the death traps that roll over and get, in actuality, less than 10 mpg), some of it are complete rusty buckets of bolts, accidents waiting to happen.

Derek, there are also two humbling jobs out there: the tramua center near a busy Interstate and a p&c adjuster for an auto insurance company. The least safe cars are late 80's early 90's cars. Lots of needless injuries and deaths would have been avoided if people would have driven in new cars made with current safety standards. But since things like safety rarely fit within libertarian analysis, there are usually avoided, like you do in this post.

I also don't understand your taxes/capital argument. I believe that the vast majority of used car sales are private party sales, and in many states all that is due to the state is a transfer fee (as in California). New cars sales come with sales taxes and title/license fees, and, in California, the more expensive the car, the greater the taxes and fees. Hooray state general revenue funds!

And do you, or the curious capitalist blog you site to really understand the used car industry? At least the Curious Capitalist doesn’t pretend it does. Have you read the list of eligible clunkers? You are rarely, if ever, going to see many cars older than five years old on a used car lot, and certainly no more than 10 years old, and almost certainly less than $5000.00. The vast majority of clunkers car are worth far less than $5,000.00. There might be an anecdotal story here and there, but I doubt that commercial, taxes generating used car lot are going to see there inventory squeezed (and, if so, wouldn’t that mean higher prices). And less used car customers? Again, used cars have a host of problems, like much higher repo rates, more safety problems. I don’t see a problem here.

As for the commenters above, don’t know where to start. Comparing auto loans to sub prime loans? So wrong on every level (except the most superficial, banal level) I’m not even going to address that, because, I fear, it will be like arguing with a dining room table.

MadAnthony (Replying to: Shine)

If the used car dealers near you have no cars under $5000, you must live in a very nice neigborhood - there are plenty of dealers that sell lots of cars for under 5k. And keep in mind that the $4500 figure is trade-in value - a car that is worth $4000 trade in is probably going to sell for $6000 or more from a dealer.

Yes, used cars are less safe and get repo'ed more. But for a lot of the people who buy used cars, especially sub-$6k used cars, the choice isn't between a new car and a used car, but between a used car and no car - and when jobs often require driving, a poor person without a car is a poor person who is going to stay poor.

and fwiw, I suspect that not a single "late 80's explorer" has been turned in, since Ford didn't introduce the Explorer until 1991.

bones

I'd just like to point out that restricting eligibility for c4c to cars with low mpg is actually a help to its environmental effectiveness. Moving from a car that gets 15 mpg to 20 mpg saves more gas than moving from 20 to 25. While it might strike some people as wrong to reward those that bought gas guzzlers while leaving those that bought gas-sippers out in the cold, the public has less interest in moving someone from their Camry to a Prius than from a Hummer to a Camry.

jwhenry2108

That is correct, Only purchase or lease of new vehicles qualify

Henry
Blogger
www.cashforclunkersfacts.info
http://www.cashforclunkersfacts.info

CAMP

The program's designer did a pretty good job at setting the line on what cars could claim the subsidy. An old volvo wagon didn't make the mileage cut-off, I know, so you can't say they were trying to pay off their own blue-state voters. The cars that got traded were fully depreciated, old and ugly. This bunch of drivers is in no way related to the folks who normally populate dealer showrooms when the new model year rolls around. So I think the argument that they stole future sales is wrong.

They also gave these discounts to the most frugal among us. Hooray. We actually rewarded the folks who show common sense and drive cars until they die. I have so much less problem with this than buying out the home-equity loans of my neighbors who had to have a new model Mercedes every other year. The snark about the "cash for clunkers" started with the Money Honeys on CNBC who would not be seen in an old jeep Grand Cherokee. They learned their economics at Harvard. What do they know? Tax the endowment.

geezer34nh

As an life long insider in automobile business doing everything from washing cars in the family garage to owning a dealership and everything in between including writing and teaching about cars, I find your comments valid. It was always said that the used car side of a dealership was the second franchise and a very important profit center. Under C4C new cars went out the front door without used cars coming in to supply the used car lot. Next, used car sales make up 60% or more of the total sales in the US each year. For every new car sold about 3 used cars are sold. Right now 450,000 used cars have been taken off the market and scrapped. Forgetting about the tax implications of donated cars, consider the good that older donated cars did to a pooper or less fortunate segment of our society, providing them with a means of getting to jobs and keeping families together. Those cars are now religated to the scrap heap. And true, the program has opened the flood gate of pent up demand due to the sluggish economy. In all likelyhood then next three months of sales will be dismal to say the least. The program is designed to make the rich richer and the poor poorer. Just my view, the views of a Geezer.
Brad Sears

icemanchi

A car purchase helped the following people. Sales, manufacturing, bank loan processors, paperwork filers for the registration, down the road the service desk with the new car issues. Yes - it stimulated a lot of people. But I feel left out because I don't have a clunker. It's an 8-year old Honda Accord and runs great. Not fair. One thing I liked about the Bush era, is the stimulus money we ALL received. Even though Bush took it from us with high gas prices at least I finally got some money in my pocket. Spent it on my kids and other necessary items.

Is it truly that necessary to depend on vehicle sales for our economy to be functioning properly? NO. Sales went down, some car companies did bad things and lost all customer loyalty, and they didn't change production to meet demand in a fashionable time.

So, in the end the stimulus, helped the poor who couldn't really afford the new car price, so purchase a used vehicle. Helped the sleazy sales person and the dumb car manufacturer. Supposedly, we are saving on oil usage because the new car gets better MPG. But, I think a person with a new car tends to drive more because they enjoy that new car ride. Need to show it off to friends and family. So in the end you are still using up a lot of oil because now you are driving more. I guess at least we can all breath easier cause the new car has better emissions right? but then what is the job of EPA? Weren't they making sure cars on the road are clean cars? Have you seen the black smoke from city buses lately. They are horrible and should be taken off the road.

Next big business, will be repo man. Repossessing all those brand new cars from people who can't make the payment.

Cars4Charities

Cash for clunkers resulted in the destruction of 700,000 running cars, many of them in good shape. As a result there are less used cars on the market and the price has increased for those that are left.