Automotive Blog

First, the vehicle that you are trading-in must be less than 25 years old.

So they're admitting that the 25yr old cars are better than the 10year old ones???
Confuse a cat
Del

Wow, very good points. I liked how you did the math, very well thought out!

Hi Hero,

I agree with you. Mostly benefit will go to Japanese and Korean mfrs. It would have been better if this benefit would haven been given to persons who purchase American Mfd. cars.

Suresh Sharma.

Speaking from a personal standpoint (owning a 14 year old car and a 21 year old car), I can say that there is no way $4,500 towards a new one would be enough incentive for me to take part in this program.

While I'd like to help out the environment and all, I don't have any problem saying that, like many other old car owners most likely are, I'm attached to my cars. Not only that, but buying a new car brings in all kinds of financial headaches like depreciation and interest that you never really have to worry about with a cheap, old, already mostly depreciated vehicle.

You raise an excellent point!

Buying new is fun, but the depreciation curve is a pretty steep drop once you leave the dealer's lot.

I agree. My car is a mere 9 years old, but I would never give her up for a pitiful $4,500. Then again, if she had low mileage and was more of a financial burden at the pump, it may be more incentive to get a better car with better mileage.

Do your cars get good mileage? Does that effect your decision (aka would you be more inclined to partake in this program if your car was a gas guzzler?)?

Strangely, both of my cars get good enough gas mileage where neither one would qualify for the program. However, even if they were gas guzzlers (within reason) I think the emotional attachment and new car purchase issues would still keep me from buying new. To some extent I think that's how a good number people with really old cars wind up owning them in the first place.

If I were in the market for a new car it would be a good incentive for me to trade in my low mileage vehicle for something more efficient. However, I wonder how this program is impacting dealers' other incentives? Are you as likely to get money off for other reasons? For example, when I purchased my last car, I got:

• Recent graduate discount
• Last year's model rebate
• Current offer rebate

If I had qualified, I could have also received:

• Military discount
• Loyalty discount (if I or a family member owned a vehicle of the same make)

Are dealers still offering so many incentives and discounts while cash for clunkers is going on, or will it work out to be about the same savings? I saved about $3,000 with the incentives I qualified for. I did not have a vehicle to trade in because my poor previous car had been damaged in an accident.

From what I read, it seemed like cash for clunkers gives you money in addition to money that you would normally get for the scrap value of the trade-in. I don't know if this extends to other promotional deals.

I agree.

However, there is another point to be made here, that being the current upswing in the economy (ie: Mr. Obama suggests the recession may be over - see Yahoo) is at least partially being fueled by the the CARS program and the money given away to those who made bad decisions on housing purchases.

The steel mills are currently targeting restart followed by the associated ore/coal mines etc. However, when the CARS program is shut off and some of the building programs for new housing and associated new appliances fall by the way, I fear we may be back into the same situation. We shall see.

Yale Economist Robert Shiller agrees with me stating that "Once stocks fell real estate became the primary outlet for the speculative frenzy.." (Partial quote from Wikipedia Dot Com Bubble query.)

It sure did seem to me from knowing where money was coming from, and where it was going that many who were profiting from Dot Com speculation were fully aware that it was a Chimera, and were buying up every square foot of Manhattan raising prices in general, as well as rents in anticipation of the bust that came.

Once Real Estate became the only game in town this trend spread throughout the entire economy dwarfing whatever influence the CRA may have had.

The movement of middle class, and working class sources of income to other nations along with the turn to dependence on speculative investment in real estate and an unprecedented break with prudent and traditional financial instruments crashed the system.

The influence of foreign investment in the Real Estate Bubble, Sub Prime Lending Crisis, or whatever you want to call it, as the US continued to gut the opportunities of the middle classes, has bearing as well.

The US is between a rock and a hard place for it has put itself in the position of needing to maintain untenable real estate valuations in order to borrow internationally, while continuing to diminish opportunities for the majority to pay inflated by speculation mortgages.

The bail out of the banks and AIG was done specifically to prevent devaluation of the debt associated with inflation of property values since there is no economic engine in the US economy capable of taking up the slack.

Essentially China is a Company as much as it might be a Country.

It will probably be a cold day in hell when US Auto companies get much out of that huge market.

I am afraid they seem to be coming to the realization that now that they have all our money, and so many of our jobs, that they can have an internally sustaining economy independent of our desire for cheap toasters and whatnot from Wal Mart.

We do have in the US some cards left in the Poker Economy.

Russia, our old enemy has strong need as well of a fix up and has long desired markets for its goods in India.

If I was a US Auto Executive I'd be doing all I could to get Russians to build my cars for the market in India.

(I have long advocated Statehood for Russia as the perfect resolution to the Cold War.) - I have no illusions about the difficulties. This Cash for Clunkers program does bother me for it seems to me to be similar to the Bank Bailout as aimed to keep prices of automobiles high, and create more universal debt that US banks can point to as assets, so they can continue to borrow. I agree with you Anonymous Hero that the Cash for Clunkers program is like throwing gas on the fire, but disagree with you as far as the impact on the US situation regarding The Community Reinvestment Act.

In the big picture I simply do not see the CRA as a primary cause for the crisis.

To go one step further I must say that from my overview and study, for the US to regain strength massive infrastructure spending is the wisest move.

First there I would concentrate spending on the Grid infrastructure so as to enable alternative feeding of that vital infrastructure, since excess energy is vital to civilization, and distribution of energy is more important than how you make it. P.S. I'm in this case marking this on topic, for though I have addressed a number of factors I have not done so without putting the Cash for Clunkers program in context.

"In the big picture I simply do not see the CRA as a primary cause for the crisis."

The short answer is:

1. the CRA set the stage for economic collapse by forcing banks to make more and more loans that had a very high probability of failure and guaranteed by Fannie and Freddie.

2. This pushed the public into a buying frenzy borrowing, in many cases, > 100% of the home value. The banks speculated (as did buyers) that the rise in property value would make it a safe bet if the loan defaulted.

The market saturated and a correction was now ready to take place. Property values started to fall, putting many people instantly upside down with their mortgages.

Banks started calling in their loans in a desperate attempt to stay solvent, but accrued losses beyond their scope to pay since banks were overextended by government design.

All that needed to happen was a mild recession and the snow ball effect took over driving us to where we are today. The housing and banking fiasco is the primary ingredient why this recession is as bad as it is. If the banks and lending institutions had not failed this recession would be behind us by now and that would be without government intervention!

Even though the stock market tanked in the middle of 2003, causing a shift to property loan speculation, the lending banks' ticking time bomb was already in place and waiting to blow. This was documented in Congress numerous times. The CRA set everything up for the collapse. All that was needed was a small reversal in home prices for a few months and the house of cards fell.

This is an excellent example of social engineering by the government run amok.

Even if the CRA "set the stage" I'd posit there was a more powerful Playwrite.

Ask yourself who the buyers were, and where did they get their money to buy up all of lower East side Manhattan?

I ask you if you are for the government doing all it can to prevent the correction?

Further if the government really wanted the Banks to be desperate, how come they bailed them out? I see more evidence that the government loves bankers, than evidence that they want them to be desperate.

In fact it would appear that the government wants working class people to be desperate, if not simply die before their time.

(Though I am generally pro-union I am very critical of the Teamsters since they used pension funds unethically cynically depending on the expected early deaths of their members. I consider it a betrayal of my own, not to be ignored.)

You're a smart guy Anonymous Hero. Follow the money and see where it leads, and get back to me.

I will allow that the CRA may have "set the stage", but I maintain that the "Play" was not written or performed by that institution to the destruction of the integrity of this nation.

not in canada it only $300

Dealers are doing everything that they can to move cars, including, but not limited to, steep discounts on new and used.

I have heard some adds that will virtually double the CARS discount and others that will extend that to used cars, which I assume comes out of the dealer's pocket.

Sales are in the tank and all dealers are desperate to move stock, some more than others.

Our local high-end car dealer that sells Porsche, Mercedes Benz, Audi, and others, said that they are doing well enough in spite of the down turn. From what I can tell that seems to be true in this area where I live with the Lexis and BMW dealers as well. BMW offers no-charge maintenance on new vehicles. Lexis is moving into a new place, too.

However, I expect that even the high-end dealers would be happy to make a sale and are willing to wheel and deal a little more than they did a few years ago.

Just looking at Porsche, for example, the manufacture's North American sales figures are something like 30% off of last year's sales, so everyone must be feeling pain.

Replying to Anonymous Hero since I consider him an expert in these areas.

As a cynic I would expect a lot of playing around with the price of the car.

In other words I would expect the price of the car you buy to go up to satisfy cash flow of the the maker demands.

For the banks and Finance companies this new debt will show up as assets on the books, regardless of whether or not loans generated are actually possible to repay.

So really from where I sit, this program looks like more of the same sort of machinations that got us into this mess.

How come they don't just give me 45 hundred bucks to give to my mechanic to fix my '95 Honda Acura, and 99 Kia Sephia?

Both probably get 23 mpg.

I need car payments and increased insurance payments like I need a hole in the head.

P.S. I got the Kia Sephia up to 115 miles per hour once soon after I got it. The 1999 model that my wife drives is considered one of the worst cars ever made.

"The 1999 model that my wife drives is considered one of the worst cars ever made."

Only because the reviewer did not test drive a Yugo first.

Okay, now the government is cleverly skewing the numbers:

Cash for Clunkers

It looks like trucks and SUVs still rule.

I would have much rather had them spend the $3 billion on figuring out how the foreign vehicles meet and exceed American emissions standards and still mop the floor with our American fuel mileage numbers.

My diving buddy's new Toyota Tundra is as big and heavy as my F-250 super duty and he gets double the fuel mileage and has more power than mine ever could hope to have.

Answer that question with the tax payer money and I will happily participate in its funding!

No need to have the government spend money on a study to answer this one. Oil Lobbyists! They and the American Car Manufacturers are to blame! They damn well could have built more fuel efficient technology but chose not too. In my humble opinion. And the problem isn't new. We had an energy crisis in the 70's! That's when the American auto manufacturers should have really gotten down to business and if they had they could be right in the running with the best of the foreign made cars! I personally think the whole American Auto Industry should have been allowed to go bankrupt because they have not been on our side in a long time! Small auto companies like the one in California, Tesla Motors, should be the ones getting help if any help is to be given. Since Ford chose not to accept any of the stimulus money I say fine let Ford move forward under their own steam and land where it may. The others should be liquidated at the auction block to the highest bidder and shouldn't be in existence any more. I'm a passionate red blooded American like the rest of you and I'm all for buying American. But when the American company is more concerned with keeping the Oil Industry happy and not worrying about whether they are delivering their very best to me the American Consumer. Well that's when they lose my trust as a consumer and my business! They can all go to Hell as far as I'm concerned over the gas mileage issue. They haven't tried to do better. They deserve to fail! O.K. now I feel better. I'm for developing technology such as the air car. See this link. http://www.popularmechanics.com/automotive/new_cars/4251491.html While I realize compressed air is not the fuel but only the medium through which the energy is being delivered it allows us to use "clean" forms of energy to compress the air therefore possibly making the car cleaner. I realize if we use belching coal fired energy to compress the air than we're probably not running any cleaner but those issues can be worked on also. And maybe compressed air is not the way to go. I'm good with Electric too such as the Tesla motors. I'm also good with cycling to work which I do on occasion. Unfortunately I don't get treated well on the road and whether I'm in the right or not it won't matter if I get run over. So I haven't been real avid in that form of transportation although I enjoy cycling.

OK.. so you can get up to $4,500 so called "trade - in" (READ = your giving them your vehicle) toward a $30,000 + vehicle that you probably can't afford.... or you wouldn't own the clunker to start with......isn't this like when the housing market got people into mortgages that they couldn't afford....and Ding, Ding, Ding the tax payers that are being FORCED to put them into this situation will also HAVE TO bail them out when they don't make the payments on these vehicles they cant afford.

I'm driving a used 5 speed 1997 F-150 because I can't afford the new vehicle payments that are equal to where a house was 10 years ago and I don't really need a new vehicle although if the purchase price and interest rate were where they should actually be...... I'd at least consider it.......you know save the planet and everything.

Those who qualify for getting $3,500 or $4500 should wait till Tata Nano car is introduced in U.S. They can buy new car @ $4000 approx.

If it cant pull 14000 #'s of trailer while carrying another 2500 #'s on its back and still do interstate speed I don't want it! I have to work for a living and so do my vehicles.

At least with the nano if it gets stuck in the snow I can pick it up and carry it.

My 7 year old niece would think a nano is a great kids car toy though! To bad the go cart I built for her would win in a head on collision with a nano!

If you trade in your gas guzzling (GM? Chrysler?) vehicle for a new one with better mileage (Honda? Toyota? Kia?), the government (your grandchildren) will give you $4500. The trade-in vehicle must be destroyed. If you are poor and need a car, but you have less than $4500 to buy one, suddenly you are going to find it difficult to find an affordable car. It will take a long time (2 years was one estimate) to save enough gas to pay back the energy and pollution used to make the new car and melt down the old one. People who can afford to buy a new car now could probably afford one next month. Will the total number of new cars sold, annually, be affected? Or is it just a spurt of sales? Bastiat, a particularly perceptive Frenchman, pointed out that smashing the baker's window, providing employment for the glazier, does not improve the economy. If it did, we could improve the economy by sending the National Guard around to break windows, or sabotage the New Orleans levees, thereby "stimulating" the economy and getting us out of our depression. Most people (not FDR) understand that wanton destruction does not improve one's standard of living. So explain to me how destroying automobiles helps the economy. If, as I expect, Cash for Clunkers was a bad idea, how is it all those lawyers in congress and the white house were in such a hurry to pass the law?

Because it is not about the economy.

It's about politics and the relentless pursuit of power. Almost like a Lexis sport coupe.

Here's something EVERYONE should be wary of.

I have seen that and have now heard about it on several other news sources.

Apparently CFC is a big brother snooping exercises aimed at getting to the supposedly protected by law personal privacy stuff.

Government cant legally snoop in your computer while your on line normally but if the can legally claim your computer as their property while your connected to their web sites they have full legal right and access to every hing you have on your system.

Spending $3 billion on snooping though their own peoples information is nothing for the government.

As far as I know I don't keep anything on my system thats illegal or even bad by any reasonable standard so they can snoop me all they want. It just pisses me off they are going about it in this manner.

And I cant afford and never would buy a new vehical so their website is not of any use to me in the first place!

I have nothing to hide either, but I think a person should have a right to privacy. What does the government need this information for, and why do they increasingly feel the need to encroach on our lives? Are they going to start declaring people enemies of the state and start the persecution? It seems to be leaning that way based on Obama's statements that TEA (taxed enough already) parties are violent demonstrations, and Polosey's comments that people are carrying swaschtikas at these rallies. The government is buying up the big players in the private sector (banks, automotive companies, next is health care) and is looking to usher in socialism. Soon the people will be ground under the heel of these wacko's. Are we sure Stalin didn't get elected last November?

There is a bad side effect of this program no one is talking about.

A lot of people cannot afford a new car. They have to repair their cars or walk. This program is getting rid of spare parts for older cars by destroying the entire car. A few years down the road this program is going to put poorer people out of their cars and on foot because used parts will become too expensive for them to afford.

This program will hurt the poorest people in the states. That is just wrong.

Kind of ironic:

Asia Profits from Clunker Sales

ya my car is eligible but here in canada i only get $300 and that is not a good reson to do it.

i have about 4 car that are eligible. but not happening till it goes up to a lest $2500

As a former car guy, this program was designed to keep Detroit moving, or the dealers anyway. Before the program sales were down 45 to 60 percent are these are real numbers.

It does not matter what car company is making the sale, it is a sale and taxes paid and people get to keep their job. Engineers stay on the job.

What happens to the price of scrap metal now that you have an extra 500,000 or so junk cars in the recycling yards?

Who is responsible for collecting the waste oil? I have seen them on the television putting something into the motor to destroy it, it has got to leak waste oil out, and what about the other hazardous materials.

EPA and DEP should be having a field day with the fines.

Overall this is a good thing for the economy, most of the people that are or were driving these trade - ins ,, wanted to because they were still good cars

"It does not matter what car company is making the sale, it is a sale and taxes paid and people get to keep their job. Engineers stay on the job."

Not going to happen. The program is only 3 months long at best.

Taxes paid? That is like giving someone $300 so you can get $50 back. The money for the program is your tax dollars at work!

How many engineers will you hire for 3 months worth of work?

After the 3 months have past, sales are going to drop even more than they were before the program because everyone that was holding out to buy a car at the year's end dived in early. That means less customers later.

This is why I called it a sugar high.

./agree

They pour sodium silicate into the engine while it's running. It sets up like glass and prevents salvaging engine parts. Yes, how do they dispose of the oil? What about the Freon in the air conditioning? They have a limited time to salvage wheels, body parts, etc. before the clunker is crushed.