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Cash For Clunkers Debacle (10 Years Old)

Discussion in 'Off Topic & Everything Else' started by Alexander Lau, Mar 25, 2019.

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  1. Alex Snyder

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    I don't mean this to :poke: at you. People will frame things to get the best reaction out of the person they're talking to. You do like some negativity.
     
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  3. Alexander Lau

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    :rofl: I definitely don't shy from it, poke away.

    I'm more interested in hypocrisies and lies (especially products in auto, which have been heavily exposed on this forum, which actually turns out to be a positive for dealers), as opposed to negativity. I'm not saying C4C was any of that, from the looks of it, it worked for some but not everyone.

    You may be right, it could have been the piss poor marketing efforts of the dealers that should have taken better advantage of it. We've seen that before...
     
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  4. AdamMurray

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    My experience with Cash For Clunkers aligns almost exactly with @Alex Snyder@Alex Snyder. We were starting to feel some real pain at our dealerships and I ended up making almost as much money as I'd ever made in that short time period. Stayed pretty solid after that as well. Embracing some new digital strategies and refining our processes gave us a huge advantage over other dealers in the market and we got more than our fair share of clunker deals, but I don't know of one dealership in the area that complained about the program. I might have bitched about a few of the 2am data entry sessions we endured but I was all smiles when that washout check hit my account!
     
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  5. john.quinn

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    I skipped a few replies here after someone asked to see success stories regarding Cash for Clunkers.

    If I google my name, I still see articles about my dealership and cash for clunkers. I'd be shocked if there were not posts here on DR that discuss those times...but again, I am old :)

    CFC was one of many "shots-in-the-arm" intended to jump-start the economy and get people out again spending money. OEM's rebounded, Dealers rebounded, all was well. I'm wondering about the possible intended facetiousness in claiming calamity... :)
     
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  6. Ralph Ebersole

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    Is probably partly that. But it is dependent on where they are located and how forward thinking they were at that time. But it did take unsold inventory off the lots.
     
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  7. Alexander Lau

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    Hmmm... must have helped some dealers initially and then jacked them from the looks of it.

    Study: Cash For Clunkers Was A Wash
    https://www.npr.org/sections/money/2010/09/02/129608251/cash-for-clunkers

    The Effects of Fiscal Stimulus: Evidence from the 2009 ‘Cash for Clunkers’ Program
    https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1670759
    A key rationale for fiscal stimulus is to boost consumption when aggregate demand is perceived to be inefficiently low. We examine the ability of the government to increase consumption by evaluating the impact of the 2009 “Cash for Clunkers” program on short and medium run auto purchases. Our empirical strategy exploits variation across U.S. cities in ex-ante exposure to the program as measured by the number of “clunkers” in the city as of the summer of 2008. We find that the program induced the purchase of an additional 360,000 cars in July and August of 2009. However, almost all of the additional purchases under the program were pulled forward from the very near future; the effect of the program on auto purchases is almost completely reversed by as early as March 2010 – only seven months after the program ended. The effect of the program on auto purchases was significantly more short-lived than previously suggested. We also find no evidence of an effect on employment, house prices, or household default rates in cities with higher exposure to the program.
     
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  8. john.quinn

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    Holy cow! What a load of revisionist economic mumbo-jumshit! Ha!

    Employment? Ask the assembly-line employees who had to replace all those cars on dealers' lots... they didn't get laid-off. Those employees kept their jobs.. and paid their mortgages, the same as the salespeople, managers, etc. who were also getting no checks or draw checks on Friday afternoons.... Their houses didn't hit the market.

    That's like saying the paddles that jump-started the non-beating heart had no effect on the future performance of the heart. Yeah -- after v-fib, IF you get the ticker pumping again, it pretty much goes back to pumping to same way it did before it went into arrest... but it's still pumping, and that's the whole point.
     
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  9. Alexander Lau

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    Yeah that part is mumbo-jumbo. I'm not sure how they declared that, I'd agree with you, but I'll still stick to my guns on its initial positive injection and then failing for most.

    https://qz.com/1042742/why-did-cash...xplains-how-obamas-stimulus-program-backfired
    The program did boost short-term spending—but not much. Under the plan, only gas-guzzling clunkers were eligible for the program; the cutoff was cars that got 18 miles per gallon (about 7.7 kilometers per liter). Using data from sales in Texas—where about 6% of the program’s purchases took place—the researchers compared the car-buying behavior of households just within the cutoff with that of households whose cars fell just beyond it (so that they acted as a kind of control). Around 60% of the subsidies were claimed by consumers who would have bought a new car during the Cash for Clunkers window anyway, they found. Within eight months of the end of the program, there remained no difference in new car ownership between those eligible for Cash for Clunkers and those not.

    The authors estimate that households forked over an average of $7,600 less per subsidy for a new set of wheels than they would have otherwise. Add all that up, and even under conservative assumptions, argue the authors, the program cut new vehicle spending by about $2 billion (and it could be as much as $5 billion). The authors also find that the de-clunking helped cut environmental damages by $253 per vehicle. That’s surely not nothing, but it’s also not a lot of bang for fiscal buck.
     
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    #18 Alexander Lau, Mar 26, 2019
    Last edited: Mar 26, 2019
  10. Ralph Ebersole

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    Well the bottom line on all this is something had to be done. OEM incentives were not working and inventory was at a high level.

    The car biz was deep into the dumpster at the time. GM and Chrysler almost went under. There was a lot of unsettling news about them that helped keep consumers out of the market.

    The economy was in deep recession as well. This was never designed to be a permanent program. I believe most of us who were in and around the business at the time would say it was a very good short term fix. But to say it was a failure is also short sighted. This was and still is a monthly/quarterly business. C for C didn't have a long term impact, but it sure brought consumers into the showroom at a time they were empty.

    It may be time for you to stop trying to prove your thesis correct and start listening to those of us who were there.
     
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  11. Alexander Lau

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    Excellent points, I can appreciate the idea behind it. As for the U.S. OEMs, hell who's fault is that? I say their own. We the tax payers have bailed them out how many times?

    Don't assume anything, I was working for a Top 50 dealership group (close to 25 tops) near the end of that program and they weren't happy with it at all, so there are some verifiable components here. Plus, a bunch of the groups I now support saw issues with it.
     
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