California town giving away $500 gift cards to buy cars
If we knew of a place where you can get a car cheaper than anywhere else, you'd want us to tell you, right? Well, the small town of Tracy, CA is that place. The municipality is giving away 800 $500 gift certificates to any one of the city's car dealerships and the dealers apparently love the program. Sales in the region are down 50% versus previous years, and a Volkswagen store has already closed, and a Cadillac/Pontiac/GMC store is set to follow suit at the end of this month.
While the city is spending $800,000 in public money to fund (including advertising) the program, it won't only serve the dealers. In the past, the city received 20% of its revenue from dealers, and recently that figure is down to 15%. Sales taxes from the sale of cars and trucks also make up 30% of the city's $45 million city fund, which pays for necessary services like police and fire. The taxes paid on the 800 vehicles will pay off a significant portion of the $800,000. Spurring sales at the dealerships will also help save tax-paying jobs, further bolstering the city's finance.
The $500 gift certificates makes Tracy, California a hot spot for car sales. It also illustrates just how important dealerships are to small cities and towns across the US. Thanks for the tip, Jon!
[Source: Tracy Press]
Reader Comments (Page 1 of 1)
Epyx 9:25AM (5/07/2009)
What a waste of money! $500 is not going to make ANY difference in a decision to buy a car.
Why not purchase $800K worth of cars and auction them off- the car dealers make money and the city can recoup some of the purchase costs. The money can then be used for some other purpose -
There are 81,548 people living in Tracy, Ca so assume they can sell 16k ticets at $50 each, the purchase price could be recouped.
I know my idea is half-baked but so is the actual idea.
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Judy Zik 10:58AM (5/07/2009)
How about this one for a half baked idea. Buy 40 cars (about $800,000 worth) and hold a contest where you give them away to the people driving the worst old beaters who are in desperate need of a car to get to work but can't afford one (proof of ownership for more than 2 years and no lapses in insurance coverage to keep people from heading to the scrap yard). You could even use it to advertise the cash for clunkers program (that did pass there didn't it?). Then you make a big PR job out of crushing them. The PR for the city and the participating dealerships promotes them. You get 40 dangerous smog belching wrecks off the road. 40 people living a marginal existence who likely would have lost their jobs and stopped paying taxes because their clunkers couldn't get them there get a hand up. To top it all off you don't do any damage to the pent up demand for new car sales or their margins since these people couldn't afford one. That is the good for society idea.
The good for the city idea is you have car buyers fill out a ballot if they buy a car in YOUR city with the chance to win their new vehicle (or up to $20,000 off the purchase price). It would bring in not just your local buyers but steal sales from anywhere within driving distance. People love to gamble because they love to dream.
Personally I don't think an extra $500 off is going to make any difference. I can remember when my Sister and her husband were buying an Odyessy during the good times and their Honda dealer had them almost sold on paying full sticker because they were so popular (the lot was full). By the time we were done with them they got $8000 off. In this market you can easily negotiate way more than $500 yourself and the dealerships in that city will just use that coupon as a way of talking the fools (most buyers) into not negotiating any further discount.
Sea Urchin 11:30AM (5/07/2009)
Judi, i think its called welfare
Jake B 5:53PM (5/07/2009)
How about not spending money on some idiot program. Less government spending = more money in peoples pockets = more money for people to spend! IT IS GENIUS!
Dude 9:28AM (5/07/2009)
What a short-sighted plan.
Even if the Government gets most of the money back, now the citizens have strapped on new debt and will have less to spend on other things. So it will be a loss in the end.
The Law of unintended consequences strikes again.
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Hamhock 9:31AM (5/07/2009)
My understanding is that Tracy is the poster child of the housing bubble and subsequent bust....a bunch of people who ABSOLUTELY HAVE TO HAVE YARDS (that they never get to see) doing 5 hr suicide commutes to SF, paying $500k for $200k houses (hey!!! first time buyer!!!). Unless they get a high speed rail that town is doomed to revert to the $9/hr strip mall economy it had before the boom and all the purchasing power that goes with it....
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Epyx 9:36AM (5/07/2009)
The town is serviced by commuter rail to SF but I don't know how long the commute would be.
Josiah 9:36AM (5/07/2009)
...except with really nice houses and brown yards
Epyx 9:41AM (5/07/2009)
Brown yard - no problem, just paint it green!
http://www.grassbgreen.com/?Click=2&gclid=CICa0sSqqpoCFQOaFQodIj5g1A
Joe 10:04AM (5/07/2009)
GrassBGreen...that's funny as hell. Just wrote up this sales pitch for them and sent it to friends...
"Have brown grass?
Use the GrassBGreen system, which will allow you to not only cover up those unsightly brown spots on your lawn, but is safe and non-toxic, while at the same time giving you a natural, lush, green look, and reducing your water consumption.
Why water your lawn when it’s just going to need more water tomorrow and require more frequent mowing?
Save gas!
Save time!
Forget those backbreaking hours of raking, seeding, mowing, fertilizing, and tending your lawn. Each bottle of GrassBGreen covers 300 square feet of lawn, and for only 14 dollars and 97 cents, you, too, can be the talk of the town with your very own GrassBGreen lawn. Impress your friends, impress your neighbors. Maybe that loved one will see a little more spice in your relationship, because you have a green lawn, without all the work!
Call now, and we’ll thrown in a SECOND bottle of GrassBGreen, and that’s not all. Call within the next 15 minutes, and we’ll give you the ShamWOW! Clean up messes instantly without paper towels! WOW!
1-800-SUCKRDU"
Epyx 10:13AM (5/07/2009)
Joe,
You jest but this crap is actually catching on! In Las Vegas there are actually companies providing this service to help spruce up the curb appeal of foreclosed homes.
MJS 11:42AM (5/07/2009)
You don't understand Tracy. Tracy is 1 hour from the San Francisco, but most work closer. Tracy was growing before the housing boom. I don't even live there, but drive by the town when I'm going to the Bay Area. Their mall is very nice. What everyone needs to understand is that this will bring people into the dealerships. Right before the increase in California's sales tax and DMV reg increase, sales for March were much better than prior months. That's because people did not want the extra 200-300 dollar tax increase. In this market, which changed dramatically in October of 2008, you have to try new things that were never used before. Good for Tracy, their trying to increase business by giving back money. Go figue, lower prices or taxes, people will spend, spend, spend and tax revs. will increase.
johdaxx 1:50PM (5/08/2009)
That's the way I see it - the town hardly existed 20 years ago, and grew solely because of the massive economy and housing booms. Assuming the bust continues, places like that are bound to dry up...even with their $500 subsidies. I think Judy's idea above is genius.
s13hybrid 10:07AM (5/07/2009)
Government spending strikes again. (bad super villan music in background)
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DA_U 10:37AM (5/07/2009)
love governments. spending just as much money as the program provides. must be one hell of an advertisement campaign for $400k
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anthonypbhs 10:44AM (5/07/2009)
Why does everyone try to prop up artificially high sales again? It is going to take a long time, if ever, for sales to get back to the level they were before the economy imploded.
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Luis 10:46AM (5/07/2009)
Especially in CA where towns are restricted from raising property taxes, so they rely on Automalls to generate tax revenue. The town makes more than $500 on every car sold in Tracy, and losing a car dealership to another town is devastating, because if someone wants a VW they are going to give their tax dollars to a neighboring town. It's actually very perverse and towns that rely on autosales to maintain basic services are unpleasant places to live. This Central Valley city is extremely auto-dependent with lots of strip malls and a crappy standard of living. Yet they have little opportunity to raise revenue to fund schools, fire and police and other core functions.
This isn't big brother, this is the result of the micro-management of ballot initiatives by people who don't believe in Representative Democracy.
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Luis 10:49AM (5/07/2009)
I should add that in California and other large states the people usually feel powerless because the statehouse is so "distant", so they result to this micro-management. It really is a good argument for these large states to be broken up, not that small states are susceptible to corruption and nepotism, but at least your representative is (theoretically) more accessible.
Patrick 12:03PM (5/07/2009)
It would be hilarious and evil genius if Tracy had made the gift cards only redeemable in the city. Out-of-towners would have to go back to good ol' Tracy another weekend to use it, pumping the money back into the city.
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jeanneb 7:44AM (5/08/2009)
Well, I don't get it.
If they spend $500 to get $500 in sales tax...how does that improve the city's revenue stream?
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