REPORT: Cash For Clunkers ending Monday
by Sebastian Blanco on Aug 20th 2009 at 5:05PM 
This year, Labor Day in the U.S. will be celebrated on September 7. That's over two weeks away, and not that long ago, the government had said the C.A.R.S. (Cash for Clunkers) program would be funded through that date. Looks like the rebate system is once again a victim of its own success once again: a new report says that C.A.R.S. will be shut down Monday. Transportation Secretary Ray LaHood assured auto dealers yesterday that "there will be no car dealer that won't be reimbursed." GM has stepped up to the plate and will reimburse dealers directly while they wait for the government to send out the checks. The Auto Alliance says that almost 750,000 new vehicle sales were generated by C.A.R.S. in the last six weeks and "gives NHTSA credit for working closely with manufacturers and dealers to insure consumers could benefit from one of the most economically stimulative programs this country has ever seen." More details after the break.
[Source: AP, Auto Alliance, Automotive News]
Photo by AndYaDontStop. Licensed under Creative Commons license 2.0.
PRESS RELEASE:
Statement of Auto Alliance President and CEO Dave McCurdy in response to the announcement that the CARS program is winding down:
"Automakers congratulate Congress, the Obama administration and NHTSA for developing and implementing a successful program. In less than 6 weeks the CARS program will have generated close to 750,000 new vehicle sales. With an average fuel economy increase of almost 10mpg the program has achieved its goals of stimulating the economy, enhancing energy security and reducing greenhouse gas emissions. Consumers and communities across the country will reap the benefits of CARS for years to come.
The Alliance recognizes the challenge of developing and administering an innovative program of this magnitude on such short notice and gives NHTSA credit for working closely with manufacturers and dealers to insure consumers could benefit from one of the most economically stimulative programs this country has ever seen.
On behalf of the Auto Alliance we applaud this successful initiative."
GM Statement Regarding CARS Program Rebates
In order to meet high customer demand for new fuel-efficient GM cars, crossovers and trucks under the Federal CARS (Cash for Clunkers) Program, the company will today begin providing cash advances to dealers which are equivalent to the amount of federal rebates which are being processed for that dealership's qualifying new vehicle sales. As a result, dealers will have the liquidity to run their businesses effectively in the midst of this extremely successful program, and to continue immediately delivering new vehicles to GM customers.
"Our sales performance in the past two months has exceeded our internal forecast by over 60,000 vehicles, largely driven by the CARS stimulus program," said Mark LaNeve, VP of U.S. Sales. "We want to do all we can to provide customers with timely new vehicle deliveries and dealers the liquidity they need to run their businesses. This will continue the sales momentum of our new fuel-efficient vehicles such as the Chevrolet Cobalt, Equinox and Buick Enclave."
GM intends to provide these advances for qualifying new vehicle sales already transacted under the CARS program, and will provide advances going forward as long as the CARS program is in effect.
About General Motors: General Motors Company, one of the world's largest automakers, traces its roots back to 1908. With its global headquarters in Detroit, GM employs 219,000 people in every major region of the world and does business in some 140 countries. GM and its strategic partners produce cars and trucks in 34 countries, and sell and service these vehicles through the following brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, Opel, Vauxhall and Wuling. GM's largest national market is the United States, followed by China, Brazil, the United Kingdom, Canada, Russia and Germany. GM's OnStar subsidiary is the industry leader in vehicle safety, security and information services. General Motors Company acquired operations from General Motors Corporation on July 10, 2009, and references to prior periods in this and other press materials refer to operations of the old General Motors Corporation. More information on the new General Motors Company can be found at www.gm.com.
Reader Comments (Page 1 of 1)
Brad 5:54PM (8/20/2009)
3 billion and how many jobs did it create to be the "most economically stimulative programs this country has ever seen"
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Ghen 11:03AM (8/21/2009)
It's creating jobs right now for factories that have to produce more cars, junkyards that are swimming in spare parts for next to nothing, insurance companies that get free collision on 750,000 new cars (the ones that are still owned by the bank at least), and service technicians that get 750,000 cars to do routine maintenance for at least the next 3 years not to mention warranty repairs.
People take care of new cars better than old cars, so see small increases in windex, armor-all, halogen headlights, etc etc..
Stop me when you start to understand how economies work.
Byron Thomas 6:01PM (8/20/2009)
Ok, good enough. Perhaps a more environmentally friendly, common sense CFC program could be started soon:
1. $1000 for the clunkiest of the clunky cars, like those with smoking exhausts, bald tires, etc. NO NEED TO BUY A NEW CAR!
2. ok, $2000 for those if you do buy a new car rated 30mpg hiway or more.
3. Let junkyards pick these up and reuse parts as practical.
4. Net result hopefully is (say $1B available) is 1million crappy cars off the road! And few more new ones. That's how you stop global warming, traffic congestion, obesity, and encourage Alt Transpo.
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Trent 11:50PM (8/20/2009)
I am glad it's over. I wish it would have never started. It was a waste of tax payers money.
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FitFan 4:56AM (8/21/2009)
I don't know that it was all that terrible. $3B buys us 100 million fewer gallons of gas burned every year. It also got a lot of people to pull money out of their wallets (or finance new loans). If you figure that the average car costs about $20,000, this program resulted in consumers spending and borrowing about $12B.
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Chris 9:26AM (8/21/2009)
That's an interesting point. What IS the tax revenue (from the dealers, manufacturers and/or new owners) on $12B in sales? What about those states that charge sales tax too? I wonder if it would add up to be 10%. That would be $1.2B back into government on a $3B project.
lne937s 10:40AM (8/21/2009)
In reality, for every dollar spent, about 27% of it eventually ends up going back to the government- mostly though income taxes of people employed by that spending. The Wall Street Journal estimated that between the buying the car, insurance, junk yard revenue, etc. that on average this program stimulates 6 dollars of spending for every dollar spent. If 27% that goes back to the government, we will get more money in taxes from the stimulated spending than what we paid.
Then you have to add in the trade deficit impact. Petroleum makes up the majority of the trade deficit- more than all other foriegn goods and services combined. That is shipping money out of the country that will not end up being spent in this country, thus not ending up in taxes from that spending. (and that .16 per gallon gas tax does not even come close to covering it).
Compare all this to the $288 Billion tax cut that went into effect in April and was the largest portion of the stimulus- this program cost less than 4 days worth of the tax cut (which most people hardly noticed). That tax cut gives money to people now that is borrowed from future generations. Much of that tax cut was saved and did not stimulate spending to any significant degree. Politics aside, if we had spent the money from the tax cut in a more targeted manner to stimulate the economy (like in Cash for Clunkers), our economy would probably be doing much better now, leading to more income, leading to more income tax...
Luis 11:08AM (8/21/2009)
In some states sales tax alone is close to 10%, so on a $20,000 car that's $2000 in sales tax.
JasonN 12:19PM (8/22/2009)
And nothing went towards switching to electric because they aren't out yet. BIG FAIL!
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Ben Kaun 10:27PM (8/24/2009)
I can't wait until we burn all those big inefficient houses down in a much big Cash for Clunker Houses program, and we rebuild them. Some idiots will probably say they should be converted into flats or otherwise retrofitted for pennies on the dollar of building new houses, but we could really stimulate the housing industry if we demolish them, right? Oh, and think of the taxation windfall that could give our government so they can create new departments and hire new management that will further stimulate the economy by their spending... lulz.
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ivor.pdx 1:16AM (8/25/2009)
This cash for clunker deal has been a little frustrating for me. I do have a heck of a clunker that easily qualifies... a V6 4.0L 4x4 Mazda B3000 (pretty much worst-in-class for mileage). The Call of the Clunker had me seriously looking, but there just isn't a pickup with good mileage available in the USA anymore That's just crap. We USED to make them. I and a friend both had Ford Courier models made in the late 70s that would get about 30mpg and go up the Waldo grade (Marin County, CA) at 60mph with two guys, two dirtbikes, tools and gear. These trucks were a hell of a lot more efficient than anything available now, and I'd buy another in a heartbeat if I could. I suppose I'll keep an eye out for the diesel pickup coming out of India... that one reminds me a lot of the small pickups of past decades.
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