Can't Win For Losing: Chrysler kills Cash for Clunkers incentives after running out of cars?
What do you do with a program that is driving so many customers into your showrooms that inventory is now running low? If you are Chrysler, and it's the popular incentive plan tied to the government's C.A.R.S. (a.k.a. "Cash for Clunkers") program, you extinguish it and replace it with a new, less attractive version. Really.
The Wall Street Journal is reporting that as of Tuesday, Chrysler Group LLC will no longer automatically add another $4,500 of its own incentives on top of the $4,500 CARS rebate. Instead, the company will vary the size of the rebates based on vehicle brand and model.
The about-face is the result of a near-unbelievable turn of events for the struggling automaker. An overabundance of inventory forced Chrysler to shut down its factories earlier this year... and now it is faced with dealers complaining about low inventory levels on key vehicles like the Town and Country and Jeep Wrangler, with swelling waiting lists as the incentive program has proven too fruitful.
[Source: The Wall Street Journal | Image: Scott Olson/Getty]
Reader Comments (Page 1 of 3)
GTrav 10:03AM (8/03/2009)
Doh!
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inteller 12:22PM (8/03/2009)
Chrysler is a clunker that the gov should have filled with sodium silicate a long time ago.
Greg Aryous 10:11AM (8/03/2009)
Crisisler = STUPID!!!!!!!!! While Ford reduces incentives and increases profits and Ford (F) broke $8 and is UP again today! I said Buy (F) months ago when it was at $4...
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Luis 10:23AM (8/03/2009)
I bought it when it was $1.82. :) Sold at $6, but that's ok. That was my goal.
Frank 10:26AM (8/03/2009)
No. Government = stupid. It's not Chrysler's fault they reduced production in this sales environment. If the had increased production in anticipation of this proram (and there wasn't time to do that anyway) and they didn't sell many vehicles, you would be saying Chrysler = stupid for building all those cars they couldn't sell. No one knew how well (from a sales standpoint) this program was going to be, not even our government.
alex 11:56AM (8/03/2009)
oh all you arm chair analysts are hillarious. did you ever consider that maybe there was a reason chrysler wasn't running their plants? Maybe it's not that they or the govt is stupid, but there was a REAL reason for it?
For example.... maybe, just maybe they didn't have the cash on hand to operate the plants and pay vendors for parts?
Nah, you're all probably right. They had plenty of money to build more cars, they just didn't plan anything.
Aloysius Vampa 10:11AM (8/03/2009)
The lack of planning is hilarious.
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jpm100 10:29AM (8/03/2009)
Our government in action.
Especially when Chrysler & GM were dictated to decrease inventories by people who are unfamiliar with what being able to respond to 'pent up demand' means to the auto industry.
Sean 11:11AM (8/03/2009)
Our Government in action? How the hell does Chrysler's ineptitude have anything to do with our Government? They got the loan money and now are back to their old wiley tricks.
You don't think there are a bunch of senators on the Chrysler board telling them to do this, do you?
Epyx 10:12AM (8/03/2009)
My cousin bought 2 Patriots (his and hers) through the program and paid less than ~22K for the package. He and his wife both had old mid 90's Jeeps (1 Cherokee and 1 Grand Cherokee) and used the Cash for Clunkers money and incentives to get a nice deal on two new vehicles. He did not even like the Patriot much but the deal was too good to pass up.
Lame having his and hers cars but whatever.
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Epyx 10:20AM (8/03/2009)
Edit -- should be $32K not $22K, they got the limited versions with the sunroof, leather, and automatic.
Not bad for two new cars.
Sean 11:13AM (8/03/2009)
Damn, two brand spanking new Patriots for less than $16k each. Didn't even get my no-frills Mazda3 for that cheap two years ago.
Epyx 11:37AM (8/03/2009)
Yes, He told me they sticker at around $25K each but were reduced by $4500 for CARS and then another $4500 dealer cash from Chrysler. So $9000 off of each vehicle. He saved $18,000 -not bad. The two trades were worth next to nothing and he increased MPG from the old Jeeps. Of course he now has car payments.
Frank 1:54PM (8/03/2009)
I'm not hearing the fact that 2 gasoline thirsty engines were replaced by 2 much less thirsty engines doing the same job. Doesn't anyone think this is a good enough thing worth mentioning?
Epyx 2:30PM (8/03/2009)
Frank wrote **I'm not hearing the fact that 2 gasoline thirsty engines were replaced by 2 much less thirsty engines doing the same job. Doesn't anyone think this is a good enough thing worth mentioning?**
I wrote **The two trades were worth next to nothing and he increased MPG from the old Jeeps.**
What is your point Frank? That we all must only spout the altruistic virtues of the C4C program? I hate to break it to you but NO ONE is participating in the program out of altruism. There may be positive effects of the program but the reasons for trading in a car and buying another are purely selfish - and that is not a bad thing.
jdemonto 10:16AM (8/03/2009)
I told those folks yesterday that this was all over on Monday.....You snooze...You lose!
Jason
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merlot066 11:32AM (8/03/2009)
You loose what, the chance to own a fine Chrysler vehicle? lol, i'll pass.
Luis 10:20AM (8/03/2009)
Ok, so now that autosales are out of the doldrums, where are the CARS naysayers? Sure, there are some glitches in a program that was quick to pass. Sure cars would need to replaced anyway. The program has done exactly what it was designed to do, jumpstart the auto industry. Now factories can begin churning out products again, hopefully not as quickly as before, but at least inventory is cleared out.
I, for one, was a naysayer, thinking the CARS program would not be successful. I was wrong. It's a smashing success. Now those of you on the right can complain all you want, but this program has helped thousands of middle-income Americans get into a new car. It's essentially a $4500 middle class tax cut that has stimulated the economy. The very wealthy doesn't get a piece of it (this is WHY the Repugs are complaining) and it's not a welfare check.
Bravo Congress and Obama for doing something that actually worked.
Now on to healthcare. It's time to end the profiteering off of our health.
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strchild3 10:30AM (8/03/2009)
I would not conclude that the CARS program is successful. In 2008, sales were down about 2.8mil automobiles from the average for the 2000s. What good is 250,000 for every 1mil in funding. It still won't make up for the lost sales. Once the funding is gone, auto manufacturers will be in even worse shape than ever. Consumers will then just wait again until the government wants to "stimulate" the auto industry sales.
Frank 10:39AM (8/03/2009)
A success? Yes it is if you think it's good too:
*save the environment by trashing older cars in a junkyard
*pull forward auto sales so they can crash again (Germany finally ended their program becuase they found that the consumers and manufactures were waiting on it like a crack addict and wouldn't do anything without it. It's like those energy drinks - you go great guns for a few hours and then you crash)
*Deny cheap autos to charities and poor people
*trash cars that would be worth more than $4500 in a private or retail sale but below that wholesale
*grenade perfectly good motors that could be used as parts/replacements in other cars
Other than that yea, I guess it's a great program.
As for healthcare, did you get a new fax from the dems on who the new villain is for this week? I thought it was big pharma. Oh that's right, Madame Pelosi's new villain is the insurance companies. Who's next week, the tobacco companies? Lawyers? Oops can't do that, they contribute money to the dems. Fact: according to surveys, the great majority of Americans are happy with their insurance company. But you got to have a villain and a crisis if you want to pass stupid legislation.