Unless you’ve been in a monastery, you’ve got to have heard about the US Government’s C.A.R.S. or Cash for Clunkers program. It seems like every commercial break on TV has three commercials for car dealers desperate to make the most of it while it lasts. But, now that it’s almost over, we’re hearing about problems the dealers have getting their money and customers having to wait for their cars.
We all saw how they have to destroy the trade-in’s engine by running it with the oil drained and replaced by a mixture that quickly destroys the engine. We also know that the program is only for new cars that get at least a certain number of miles per gallon more than the trade-in.
So, I’m surprised at how little fuss this has received from Joe Public. Let’s look at who this multi-billion dollar program benefits…
The car dealers, of course, is the obvious first beneficiary. But with all the money they are spending on advertising, the over-extension of their finances while they wait for reimbursement, are they really gaining that much? I guess when they are desperate to sell cars as they have been, they’ll take it.
The car manufacturers are getting a real shot in the arm and production has been increased, bringing people back to work in their factories and helping them out when they really needed it. But couldn’t it have been done better? Couldn’t the program have targeted cars made in the US? I don’t care if it’s a Toyota or a VW, but they should be made in a US factory by US workers. The money generated by the pay to the workers will help out all through the communities where they live.
And the consumer. The car-buying public. Does it help them? It only does if you are in the market for a new car. Who is buying new cars in a economic downturn? The laid off workers? The working poor? The guy who hasn’t had overtime in months? No, only the rich and upper class are able to buy new cars. Oh sure, there is the odd single guy who works a minimum wage job and puts every penny into his new car, but a fool and his money is soon parted. Let’s face it, Cash for Clunkers, for Joe Average is a clunker.
And it’s a double-edged sword. The program is destroying trade-ins that normally would become either used cars for sale or parts to keep your old car running. Again, something that effects the people who can’t afford a new car. It also effects the used car market and salvage parts industries, which incidentally are usually not full of rich people working in them.
Even those on the borderline are effected. If you were wavering between buying a new car, or a nice used car, would $3500-$4500 make a difference in your decision? Probably. But let’s look at what it’s done to buying a car. It’s removed used cars from the market as well as used parts to refurbish them. Used cars are scarcer and cost more. Plus, there is no more dickering on price in buying a new car. It’s pretty much take it or leave it on the sticker price. Oh, they give you the illusion of savings, with incentives, “Employee Pricing” and the like, but let’s face it, those are available to everyone. You’re not special, you’re the next rube in line. The real place where most dealers were convincing buyers that they were getting a “good deal” was on their trade-in. You could negotiate a little there. But when the C.A.R.S. program dictates what you’re going to get for your trade-in, there goes that wiggle room. Not only that, now it’s coming from the government, not the dealer, so they win twice. The only downside for the dealer is getting rid of the clunker after they’ve destroyed it’s engine and it’s lost all it’s salvage value. They might as well sell it by the pound.
The program is almost over. It remains to be seen how many jobs have been saved in the assembly plants, or even how many car companies have been saved. The people who got a big chunk of money in exchange for buying a new car, are pretty much the same people who would have bought new cars all along. And it’s still a toss up whether it even helped the car dealers or not.
It’s another government program that started out as a good idea, but by the time it got out of Washington and to the people, it got all screwed up, as usual.