Study: Cash For Clunkers Was A Wash

[alp227]

Source: NPR

The government's "cash for clunkers" program boosted auto sales by 360,000 during the two months it was in place, according to a new study.

But in the seven months that followed, sales were down by 360,000 compared with what they would have been without the program, the study found.

The implication: The program didn't bring new buyers into the market. But it encouraged people who would have bought a car anyway to make their purchase a few months sooner.

Under the program, the government paid people about $4,000 to trade in old cars for newer, more fuel efficient ones.

Read more: http://www.npr.org/blogs/money/2010/09/02/129608251/cash-for-clunkers

[AndyA]

1. Not quite a wash.

It was an environmental nightmare, as millions of gallons of fuel for tow trucks was used to haul the disabled vehicles around once they were disabled. Tow trucks get really lousy gas mileage, and all those miles wouldn't have been necessary without the disabled vehicles.

And more people bought Toyotas than any other make. Since it was American taxpayer money funding this, I think foreign corporations should have not been able to profit from it. We've already sacrificed enough as a country so other countries can do well. Enough is enough.

[dixiegrrrrl]

3. Plus, the trade ins were destroyed, so fewer used cars for people who need them now.

[AndyA]

6. Yeah. I saw a "Death List" published of the cars turned in under this program.

A 2005 Thunderbird? Really? Unless it was severely wrecked, it was worth well more than they got for it through the program.

And classic cars, too.

And the foreign CEOs over at Toyota are laughing all the way to the bank because of it. I think it was a good idea, poorly implemented.

The people who are out of work, driving around in unsafe, smoking, polluting cars should have been given one of the vehicles turned in, after it passed a safety inspection. That would have gotten one really bad, polluting, dangerous vehicle off the road and saved another one that may not get 50 miles per gallon, but was better and safer than what they had before.

The whole thing could have been a win-win for the American car companies, and for those who really need a better car, but apparently that wasn't the motivation for it.

[Morning Dew]

34. My '94 Sable didn't qualify cuz the gas mileage was too good.

What a joke.

Plus, all of a sudden the price for any used cars got jacked up.

That old 600 buck beater was now selling for at least 1500 dollars.

Cash for clunkers was a clunker of a program.

[AngryOldDem]

39. Mine didn't count because it was too much of a clunker.

Wound up donating it to charity.

[JVS]

16. From a GDP perspective that's good. Used cars don't count in GDP.

Less used cars means more people need to go with a new car.

[Psephos]

17. Brilliant.

With a touch of the magic wand, people who could only afford a used car suddenly flock showrooms with their newfound purchasing power.

The reality is that when you cut the supply of any good, the price on what's left goes up. So used-car shoppers are worse off, those who repair their cars with junkyard parts are worse off, and people who could afford a new car got free money from a lot of people who couldn't.

[JVS]

19. It worked for me. Instead of spending $8k on a used car, I went with a new car valued at $12K

[Psephos]

21. Awesome. Other people who couldn't afford a car paid you free money so that you could.

It sounds harsh, but that's what it gets down to.

On edit: what make of car did you buy?

[AngryAmish]

33. And it stuck it up my ass

I bought a car at the same time - but I did not have a clunker to trade-in. Our trade-in got too good of mileage. So my taxes go to finance your new car. hurray.

Want to know how the first-time home-buyer's credit was also shoved up my ass? I bought a house but already owned a home.

This stimulus did no good for me but I get to pay for it for the next thirty years. I got fucked over but good.

[Lost4words]

30. spot on!

:hi:

[joeglow3]

37. I tried to buy a used car and there was not crap

My car was destroyed by someone. I got the insurance check and tried to buy an older car (2000-2005). There was not shit on any of the lots and what they had was way overpriced. Every place I asked why, they gave me the same answer - Cash for Clunkers. Basically, they fucked over every low income person that relies on older cars that are affordable.

[sofa king]

50. A word of advice.

If driving is an expense that you can barely afford, do not go to a dealership. Instead, look for privately advertised cars for sale. Familiarize yourself with the process of buying a car or bring along someone who knows, and always have the vehicle looked over by a mechanic first. Dealerships are an unnecessary middle-man between you and the person who wants to get rid of a cheap car, and they are often ruthless in extracting as much as possible from you for imaginary services and inapplicable guarantees. Both you and the seller can benefit by dealing directly.

I know this because I used to work for a used car department at a car dealership.

[roamer65]

58. Bingo.

Most dealerships won't even bother with used cars now anyway. Prices at the auctions are insane, so they just avoid them. Here is how to find a used car more affordably right now. Get away from urban areas and go to used car dealers in lower income rural areas. I just did that and got a LOT better deal. Even in these areas, though, selection is way down as the dealers are having problems affording the high prices in the used car auctions.

[azmesa207]

13. Toyota corporation

employer's nearly as many people in the US as GM and make a better car besides the last 5 cars I bought from GM 5 were made in Canada and the last one In Korea . the toyota I bought this time may have been made in Japan but I bought it from a US Citizen and I have it serviced by one as well So spare me the Foreign corporation crap








s

[Owl]

23. I agree with you that foreign-based corporations should not have been able to profit from this.

[outerSanctum]

2. Is that a wash?!

If we paid people $4000 for something that they were going to do anyway - isn't that a BIG friggin' loss???

[Lightning Count]

4. "You screwed me again Costanza!" nt

[abelenkpe]

5. BS

Why do I call BS you might ask. Here's why:

Cash for Clunkers saved thousands of dealerships unprepared for the economic downturn from going out of business altogether. By pulling those consumers forward a few months they were able to clear the huge backlog of cars sitting on their lots, on overflow lots and even in ports and hastily rented out parking structures everywhere. The car makers would not take the cars back and the dealers could not move the cars. Because cash for clunkers helped pull those buyers in earlier it literally saved the jobs of several people I know. The dealerships have adapted to the continuing economic crisis and my friends are able to pay their mortgage and care for their families. They've been given a chance to adapt and downsize. But no, do you ever hear that shit in these stupid F ing articles?
It was a success. It wasn't meant to be a permanent solution. F NPR.

[Nuclear Unicorn]

32. But now that the program ended but the economic climate is the same

What happens?

If you have enough staff to move a certain number of cars as soon as the program ends you either need have demand stay high enough to continue supporting that staff or else the you only manage to postpone layoffs.

If the solution is to cut back on supply/inventory then the layoffs shift to car manufacturers and it's only a matter of time until they feel the pinch.

[skids]

42. The economic climate is not quite the same.

If you were about to come up short $20 on your checking account and get whacked by $300 of bank fees, and someone gave you $20, you'd probably be pretty grateful.

Then you'd cancel your premium cable service so you could make your bills.

That's about analogous to what cash for clunkers did.

[Hawkowl]

48. Yes. It worked as planned

It pulled existing demand forward and saved thousands of jobs by keeping the cash flow going. Much better than not selling any cars for 3 months, having businesses fold, workers laid off and generating a negative feedback loop.

NPR is about on the same level as the old PRAVDA anymore. They get so much corporate donation money they are no longer credible as neutral reporters.

[Exilednight]

60. Now that post is some serious BS.........

Take a look around the nation at how many auto dealerships are left. Here in Port Jefferson, NY on Long Island, we have a stretch of dealerships and nearly 3/4 of them are out of business. I went back home to Chicago and noticed the same thing.

I would be willing to stake my life that we would of had the same outcome if cash for clunkers hadn't been approved.

And to be perfectly honest, if the White House would of put this much effort behind HCR, we probably would have a public option.

[david_vincent]

7. There's a huge flaw in this assessment

and that is that they somehow know how many cars would have been sold in the subsequent months anyway.
To state that people who took advantage of the cash for clunkers program "would have bought a car anyway" is wrong. I got a new car through the cash for clunkers program, and I would not have bought a new car within the next five years without it. Instead, my wife and I would have had to share her car, which is difficult to do because we live in a rural area without public transportation.
A blanket conclusiong that CFC "didn't bring new buyers into the market" is insupportable. In fact, I'm living proof that it's wrong.
As for having fewer used cars on the market for other folks to buy and drive, my old truck was unsafe to operate and would not have passed its next inspection; in fact, there's no way it should've passed its last one. It needed a LOT of work due to rustout in the front end. Even though it was still running great, there's no way anyone could have just bought it and put it on the road. The entire inner wheel well was missing -- as in GONE -- due to rust.
I got $4500 trade-in value for a truck that I paid $1300 for in early 2001. The dealer where I traded it in both knocked significant money off the price of my new car and gave me zero percent financing. There's no way that I would have been able to swing a deal like that without the support of CFC.
No matter how disappointed I am in Obama's efforts on other fronts, I'm driving around in a still-pretty-new car with less than 14K miles on it thanks to him. This is the first new car I've ever bought in my life, and it'll probably be the last.

Conclusion: this is just an attempt to try to paint one of Obama's victories as "another stupid idea that anyone (read: Rethugs) could've predicted wouldn't work".

THANKS, OBAMA !!

[Kolesar]

11. I bought a car one or two years before I would have otherwise

So, yes, this program did create new sales.
I don't miss that minivan.

[Psephos]

18. You are thanking Obama? Why don't you thank the people who actually paid your free $4500?

Most of them did not get anything for their money, so that a few could.

[grantcart]

27. The Chinese?

[Psephos]

28. no, you, me, and the next generation

US citizens will be working for the Chinese moneylenders long after the new cars the Chinese financed have been crushed at the scrapyard.

[Igel]

25. That's the problem with lots of statements.

"It's better than it would have been" or "worse than it would have been" all require some idea of "what it would have been."

In this case, they compared--IIRC--some areas of the country that had very limited CFC buy-in. They tracked vehicle sales in those areas and assumed that would be the pattern everywhere. They looked at the area on the graph from when CFC started to some time sufficiently after it ended: That's the total sales volume over that time period.

Then they looked at the sales curve for areas with significant CFC buy-in and took the area under the curve for the same time period. When adjusted for population, voila, they were essentially the same.

The conclusion was that the number of buyers that bought cars was unchanged; demand was shifted. It says little about individuals. We'll have to see how it stands up to critiques. I haven't seen any yet. I've just heard people what they would certainly have done if things had been different as if this were some kind of verifiable fact.

Most of "Obama's victories" rely on the same kind of thing--except that instead of having a current model that's essentially just one part of the country the models of "what it would have been" are based on what went before or what theory says should happen (often theory is just a model of what went before, so these are often the same thing). After all, we don't actually get to see "what it would have been," so we have to have *some* way of estimating or modeling things. This isn't a new problem; it's a problem that's been around for a long time, it's just that we recognize the problem sometimes and are anosognosic-like blind to it at others.

There's a funny asymmetry: When the predictions of what the stimulus, CFC, etc., etc., turn out better than what is predicted "what it would have been" without them we assume that the models are true. When the predictions of what the stimulus, etc., would do turn out not to meet raelity, we're told the models were inexplicably wrong and people try to figure out why the predictions were wrong. In other words, if a model makes "us" look good, it's true; if it makes "us" look bad, it's false. They always find an excuse for the one, but have no reason to look for a flaw in the other. That's not good critical thinking. That's politicking.

[joeglow3]

38. So, every agency that has analyzed this and came to the same conclusion is full of shit???

Edmunds did a similar analysis and came to the same conclusion. Additionally, it is only common sense that this would happen.

[skids]

41. Most of them, yes.

Letting people read an article that confirms their pre-conceived beliefs that the government can never do anything right sells magazines. People like to read things that confirm their biases.

[joeglow3]

45. So, where is your evidence that it worked?

[skids]

40. Don't try to talk sense, it gets in the way of all the juicy griping.

The article is flawed on its face. C4C was designed to inject cash into the automobile industry during the credit crunch when it was critical to do so. Their financial situation is less critical now.

Now, environmentally, it was about a wash (maybe just a moderate boon) -- the carbon footprint of chucking some of the newer trade-ins offset a lot of the gas savings/pollution reduction.

[DesertFlower]

8. i'm sure it helped some people who

really did have clunkers. hubby's 2001 toyota tundra would have qualified. it gets about 15 mpg. the thought of destroying that truck or any other vehicle that was still in good running condition bothered me.

[Javaman]

9. I few issues I had with it...

I was going to trade in my jeep. 1996 2 door with 200K on it. I still have it and it's on its last legs.

At the time, I couldn't afford a new car, let alone a better used car.

in the first month it was offered, my car was eligible for the trade in, but due to various family issues, I couldn't take advantage of it.

Well, because life interfered and I had to wait a month, the government "recalculated" the MPG chart, my car was no longer eligible. Funny how that works.

That aside, the other issue I had with that crappy ass trade in deal was it was based solely on MPG.

Suppose someone such as myself whose vehicle falls 1 mile outside the accepted MPG requirement, but has 200k+ miles on the car? Well, then I'm still shit out of luck.

There should have been a sliding scale based not only on MPG but also on high mileage.

As ones MPG goes up according to the government ratings, it should also be reflected against how many miles are on the car.

Many people in the lower tier of society can't afford new cars, let alone good used cars, they take what they can get.

So someone such as myself who, once upon a time was able to by a "good" used car (I got my jeep with 100K on it for 5 grand) will probably keep driving that same "good" used car into the ground because saving up for another "good" used car becomes almost impossible.

Today, my luck isn't so bad and times aren't nearly as tough as one year ago, but the point remains the same.

[Canuckistanian]

10. The best thing about Cash For Clunkers was it's TIMING

It came at a time when automakers needed a boost. And they got it.

I'm not saying it saved the American auto industry by itself, but it was a psychological boost that helped both car makers and consumers alike.

It's too bad it didn't last longer.

[Blue_Tires]

46. +1000

This is also the part where the far-right, teabaggy National Auto Dealers Association is supposed to grovel on the ground in gratitude since that influx of cash during those months kept a LOT of their doors open...

And true to their nature, many dealer owners have amnesia about it now, cry socialism and write checks to Sarah Palin's campaign fund...

[boomerbust]

12. Of course it was a big failure

It was Obamas idea.:sarcasm:

[divideandconquer]

14. America's auto fleet got safer cars that get better gas mileage

Any factoring for savings in lives, insurance claims and gas mileage?

[alcibiades_mystery]

26. You teased out the key point of the post

The so-called analysis is nonsense of the highest order, but as long as we know that Obama "failed again," that's fine for the trolls, so-called progressives, and bitter primary holdovers. Complete shit OP.

[Lost4words]

31. weak

[underpants]

15. It worked exactly as designed just like it had in other countries

.

[grantcart]

20. I listened to the broadcast and the other side

of the story is that indepth interviews with buyers established that a large percentage of the buyers did not anticipate being in the market for another car for 2 years.


The statistical conclusions are based on a few counties.


The fact is that no one knows what would have happened without the CFC program but it is reasonable to assume that the 'pump priming' excitement caused by the program increased the number of people who seriously thought about buying a car.

[unkachuck]

22. "The program didn't bring new buyers into the market."

....of course not, you need enough employed people with disposable income who can afford to buy a NEW car....

....most people are repairing their clunkers because they can't afford to buy a good USED car....

[golfguru]

24. So was the first time home buyers rebate

All it did was temporarily boost demand for houses but after the
rebate period expired, home sales dived.

When will the brains in DC realize the only real solution is
improving jobs picture? And I am not talking about government jobs,
but rather jobs in productive sectors of economy.

[boppers]

29. "productive sectors of economy"

Please define what these are.

[w4rma]

36. non-Wall Street, non-financial con-artistry, non-do-nothing jobs that actually produce a tangible

product in the end.

Rather than a new way to con hard-working Americans out of more of our money.

[boppers]

43. Teachers, Doctors, Lawyers, and Preachers...

What is their tangible product?

[Devil_Fish]

59. Teachers, Doctors, Lawyers and Preachers....

Teachers---> educated populus

Doctors----> Healthy populus

Lawyers----> Safe populus

Preachers--> Extreamist wack jobs

(just my oppinion)

[slackmaster]

35. WWGPS?

[Cal Carpenter]

44. If the gov't used the same strict standards, auditing and accountability

for funding its own programs as it does for nonprofits, local governments, schools, etc, none of these programs would get off the ground.

What a sad joke. The Making Home Affordable program was pathetic too - I'd love to see the breakdown of that program. I know I am counted in the numbers of those whose homes were 'saved' because I was put in that program when I refinanced last winter despite the fact that my credit was great, I was not underwater on my mortgage, and I was never at risk of missing payments.

This Clunkers program worked just the way many here predicted - some people got cars earlier than they otherwise would have, or maybe got slightly nicer cars, but as far as getting gas guzzlers off the road, well, given how much waste there was in the discarding of the 'old' cars, whatever shape they were in, it caused more damage than it helped. It certainly did nothing in the big picture to help the economy, the environment, or whatever it's claims were.

And don't get me started on how those who need help the MOST got NOTHING.

More superficial crumbs for the so-called middle class while those who are totally disenfranchised are still screwed.

[Doctor_J]

47. Big Media trying to trash Obama a little more before November

there will be more.

[TheWebHead]

49. sales chart seems to back that up

http://online.wsj.com/mdc/public/page/2_3022-autosales.html



The issue I had with it was in trying to do a social engineering project, the program became very cost prohibitive. Remember the WH got in a dispute w/ Edmunds.com because they calculated the added vehicle sales in the summer of '09 determining the difference had they done nothing put the cost at $24,000 per vehicle, though that ignores an economic stimulus given to the 690k sold and the extra $4,000 buyers were able to pocket. But there was huge administrative costs that could have been greatly reduced had it simply been a one-time tax deduction.

[jmowreader]

51. I think they really only made one mistake in Cash for Clunkers

They should have opened the program to owners of any old running shitbox. Other than that, the program was fine.

[Omaha Steve]

52. Not here it wasn't

I'd still have my 1991 Chevy Caprice without the clunker program. It was our extra for emergencies car. Bad mileage and a polluter. Also traded in the Nissan we bought at the same time. Glad to get rid of it. Still miss the Caprice.

My Cobalt gets better mileage than both the Nissan Altima and Caprice.

[snooper2]

53. from reading the posts seems like a case of "I didn't get mine"

nt

[Romulox]

54. C4C transferred (borrowed) US taxpayer money to Toyota and Honda, primarily. Not a wash. nt

[roamer65]

55. It sure is driving used car prices upward.

My truck is worth the same amount I paid for it 3 years ago.

I have been told competition for cars in the lower price range 1k-3k is getting really intense. A friend of the family experienced it firsthand.

Nothing like having to make the working poor pay more for vehicles. About American as apple pie.

:sarcasm:

[uncle ray]

56. the cars taken off the road would have been of no benefit to the poor you speak of.

used trucks and SUVs in that price range are worn out junk that get crappy mileage and would have nickle and dimed the unfortunate owners to death if major failure doesn't come first. the poor would be much better served by a fuel efficient car in the same price range, which were not the vehicles targeted by C4C.

FAIL at trying to blame Obama for your friend not being able to buy a car, and digging up a 3 week old topic in the process.

[roamer65]

57. The price range of those fuel effecient cars has now increased greatly.

I had a two hour chat with a used car dealer the other day. It was quite an eye-opener. He has more experience in the used car market and with used car auctions than you or I.

This topic is as relevant now as it was 3 weeks ago.

Hey, at least my 18 mpg truck is worth a LOT more now. :thumbsup: