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A 'cash for clunkers' frenzy

Posted Jul 31 2009, 12:00 PM by Kim Peterson
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Photo credit: Trekphiler, Creative Commons attribution 3.0 unported license  One stimulus package that worked, perhaps a little too well, was the government's "cash for clunkers" program. Congress set aside $1 billion to fund the project for several months.

But now, just a week old, cash for clunkers has used up nearly all that money. Washington was shocked by the news Thursday night, and is scrambling to figure out what to do next.

Here's how the program works: People who trade in their gas guzzlers for more environmentally-friendly cars get rebates worth as much as $4,500. Trade-in cars have to get 18 miles per gallon or less to qualify. (More info on the program is here).

Cash for clunkers was designed to give the auto industry a boost through Nov. 1, or until the money ran out. But the program was too popular; tens of thousands of people have already used it to buy new cars. 

"It was an absolute success,"  the chief executive of auto dealership company AutoNation told The Wall Street Journal. "There's a very compelling case the government should put more money into it. It's a great stimulus to the economy."

The House approved an emergency vote Friday on funneling another $2 billion into the program. The money will come from stimulus funds that were supposed to go to energy loan guarantees, The Washington Post reports. But even if the money comes through, car buyers will blow through that amount at a pretty rapid pace.

One New York Honda dealership stayed open until the wee hours of the morning Friday, making sales past midnight as people worried cash for clunkers would soon be suspended.

One down side to the buying frenzy is that it could hurt sales at auto parts dealers like AutoZone (AZO). The parts seller has been doing a killer business in the downturn as people held on to their cars for longer, choosing to fix them up instead of trading them in for a new model.

At the time of this writing, Kim Peterson did not own shares of AutoZone in personal or client portfolios.

Photo credit: Trekphiler, Creative Commons attribution 3.0 unported license 

Related reading:

'Cash for clunkers' off to a hot start

Could your clunker bring you $4,500?

Cash in on the ‘clunker' bill

Keep your old clunker or buy a new car?

 

 

Comments

 

I find it funny calling any program "sucessful" when the government is just allowing some people to use other peoples money / savings at no cost.

The program is for cars from 1984 and newer. the car in your photo is a 1958 Chevy, 51 years old and obviously not running.If you are writing stories about cars you should get someone who knows about cars to write it.

I wonder how many low milage repos will be on the market soon, hmmm.  Even funnier though if the repo's come before one year Uncle Sam gets his money back from future tax refunds and of course the banks will need another trillion because they were forced to lend to people.

I miss the boat on every thing.  ARC, SBA loan not available because my debt to low for my business even though I could expand right now but I cannot get a loan at a rate that makes economic sense.  I never made babies to collect EIC, child tax credits or general welfare.  My car gets 18 MPG and the big one I paid of my house 7 years ago.  But I have plenty of neighbors 15-24 who have never held a job, been sober more then a week since turning 15 are breeding so I have children to support.

Again, the govt open their mouth before engaging their brain. The idea was to help struggling GM and Chyrsler. They didn't intend on people buying Kia's, Honda's, Toyoto's...When they found that the tax payers money was going overseas they pulled the program, then realized that wasn't politically correct either.

Of course saying we're out of money sound better than "Oops!"

I HOPE WE DON'T DESTROY THIS TYPE OF STIMILUS WITH OUR RHETORIC, because it's seems to be working extremely well and it is putting money directly into the hands of consumers....WHICH BY THE WAY,was what we were all  bitchin' about.

QUIT GIVING IT to the big boys,for bad behavior and give it to the little people's to help get a recovery going.

I think* cal * might be right about REPO's down the road (i will consider that as a second opportunity to get a good deal). Sorry,but I will not feel sorry for" some that may make bad choices."

Also like *cal* we have trouble qualifying for the "goodies". When going in to check on something new to trade my '98 clunker on, my choices were limited and I had to have another SUV type, because of the snow where we live. The bottom line was going to be about $22-24,000 difference with every discount and/or incentive we and salesman could apply..too much for us!

Our other trade vechicle is the best MPG car on the road today..so we were screwed again. And my old PU that i sold  a few weeks ago was 3 years too old to qualify for" clunker." ($500 dollar truck for $4500 discount, you bet your sweet A$$.)

So, I'm really hoping that the C.A.R.S. program will be approved($2 BIL more) again next week by the Senate and we can keep this ball rolling. It's been a great help to car dealers and the US auto manufacturing in general. And also a very cheap stimilus program that is supposedly NOT adding to the deficit. The money is coming from set aside dollars that are already there in the pot.

And KIM, nice picture of an old clunker the "1958 Chebby Station Wagon." NO, IT IS NOT MIS-SPELLED; THAT'S CAR GUY TALK for CHEVROLET'S.And I always had a soft spot for the '57's and '58's......too bad some people can not understand the articles and only look at the pictures..like me and Playboy.

The one fact that they don't like talking about is if your trade in value is higher than $4500, you lose out in that deal.  Its a good program if you really have an actual clunker.  Be careful and know the real trade in value of your car before you commit to it.

What I don't understand is, if your paid for car is working fine why in the world ( in this economy) would you want to trade  in your car for one you are going to have monthly payments on.  I wish like crazy mine was paid for.  Also, I saw the Cash for Clunkers program mentioned on the Today show Sarturday morning.  I thought the whole idea of the program was to get an economical/fuel efficent car for your trade in and to get this credit.  They showed a woman driving off a lot with a rather large gas guzzling SUV. How is that efficent and money saving???

NO TRUER WORDS, Truth; My '98 4WD was worth about 3000-3500$ (trade value) would retail at about 4000-4500$, because of mileage.

PLUS: I know what problems or maintenace that's been done, so we have an idea of what cost will be, going forward.

PLUS: Value of my existing(used) SUV may go up, with the LACK of this model being available in the future. (mid-size).

PLUS: 18-22 mpg. Vechicles available of this type do not get much better mileage.

PLUS: We do not take a $20,000+ hit to our savings or payments to make for 4-6 years.

AND THE LAST PLUS: (not that I would take advantage of??) There are apt to be many REPO'S out in the market 12-24 months out. That probably will be selling for a 40-60% discount to the "drive off the lot price today."

For us, at this time, there are just too many pluses to take advantage of this STIMULUS ( finally spelled correctly) program; But, I think it is about the best idea that has come out of D.C. for 2 years to help spur the economy and get the USA back in recovery mode.

The downside would be people buying that really can't or shouldn't, unless they can REALLY afford to do so.

Cal is totally right.  And as far as I am concerned, we will be paying off this mess for the next 300 years.  The current administration AND the current Senate and House have all lost their minds.  And the average citizens that they look down on and despise and believe are not intelligent?  You guessed it, that's who'll be paying off their stupidity for years to come.

The Cash for Clunkers Program is a failure. It sounded like a seemingly good idea until I attempted to trade in a nice car worth 4500 if you sold it outright - but wanted to swap up for a 32 mpg Vibe.  Well - the dealership didnt have any paperwork YET - but they were advertising the deal. They got me into the dealership - messed around with the plethura of rules to get cash for my clunker- and waited until I was ready to sign the papers to tell me it didnt qualify - It wasn't on the list - wait it is, no it isn't - I went throught this for a week before the program officially started.

Then they still werent certain because the mileage on my car was actually 15 but listing at 18 or 19 (somewhere in the middle of "if we dont get enough buyers, we will add these to our list vehicles) ... Then the vehicle title and insurance were in two different names, my husband and myself....NO DEAL - all 3 - title, insurance and registration MUST be in the same persons name, for one year prior to qualify. Well, they were on the road and insured, registered, Just a different name from the card to the title (spouses dont count).

It was ridiculous. I purchased the new car anyway - and find it ridiculous to save the Big 3 - buy new foreign cars?   If someone had a brain functioning properly - you should of had to purchase from the "Big Three"  . One  mile more a gallon should not count. All new purchases should of been over 10 mpg.  Each dealership should of been allocated a minimal amount of money - As long as the car was on the road and one of those 3 in your name for a year - does that really matter?  The list should of been actual - not sticker the year you bought the car.  Everything doesn't make sense - This was another waste of money. Let the government scramble - I boosted the economy - paid almost full sticker for my new car - and Im selling my clunker for more than the government was going to give me anyway.

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