Cash for Clunkers to allow reservation of popular models that run out
The first half of 2009 was so poor in terms of car sales that automakers had to shut down factories for weeks and even months at a time in order to keep inventory in check. Now that Cash for Clunkers put a jolt back into car sales towards the end of July, the same dealers who weren't ordering cars a couple months back are begging for more product to fulfill requests. Since nearly half of the $2.95 billion allotted for C4C is already accounted for, dealers were beginning to worry that they wouldn't be able to fully capitalize on the program because of vehicle shortages.
The Department of Transportation has now fixed that problem by amending C4C to allow customers to turn in their clunkers in exchange for a reservation on models that aren't in stock at their dealership. Popular models like the Ford Focus have been flying off the shelves so fast that the Blue Oval actually instituted mandatory overtime at it's Wayne, MI assembly plant, but the additional stock isn't hitting dealers fast enough. Now, customers looking for that certain vehicle can still get what they want, even if it takes a little longer to get behind the wheel.
Gallery: Review: 2009 Ford Focus SES Coupe
[Source: Detroit Free Press]
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Reader Comments (Page 1 of 2)
C.W. 10:03AM (8/14/2009)
"whah! whah! whah!... the focus is ugly! ... why is it sold in America?!?... American cars suck! only Japanese and European cars are cool!!!! Ford needs to get a clue!!!!"
there. now you dont have to post all those comments that invariably come anytime a picture of the U.S. spec Focus is shown.
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John P. 10:08AM (8/14/2009)
LOL! I don't think anyone can post now that you've covered all the bases.
About the focus, it may not be the prettiest car in the world, but it's a very economical and competent butt hauler. They are even fun to drive.
StanleyVanBuren 10:29AM (8/14/2009)
Ya know what isn't ugly? The Fiesta. Wonder if you can "reserve" one of those yet...
Photo Phil 11:25AM (8/14/2009)
Nice, CW. Why would an American want to by an American car anyways? That can't be right. We all must buy a Toyota. Japanese are the only ones that can make good cars. Some days I think autoblog is a non-american blog, leastwise they talk down about American car companies quite often.
Ugly is a relative term purely based on opinion. Aztec was an "ugly" car, but how many of them sold? Driving an "ugly" car gets you around just as much as any other.
homunculus 12:48PM (8/14/2009)
... it's still ugly. but the interior and sync aren't half bad at all.
nardvark 10:09AM (8/14/2009)
This kind of seems like a non-issue to me. They burned through the first billion in a week, but it seems like the sales rate has slowed way down, and the next 2 billion should last for at least a couple months. That should give plenty of time for inventory to replenish. I guess the dealers just want to lock people in before the buzz dies down.
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Avinash machado 10:10AM (8/14/2009)
The Focus might be ugly,but the Corolla is ugly as well.
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Chris O 11:18AM (8/14/2009)
Avinash machado +1
There are some tastefully done sub-compacts and compact cars, but really... are ANY of them really all that attractive? I don't really think the American cars look all that much better or worse than foreign cars (in those segments).
IOMTT 10:16AM (8/14/2009)
Layaway plan, pickup in time for Christmas!
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ack154 10:18AM (8/14/2009)
It's more of a Raincheck I think. Lame though.
Kumar 10:18AM (8/14/2009)
Will be good for Audi and VW for their 2010 diesel offerings if they can start cranking them out before labor day....hint hint. ;)
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ripslymemc 10:40AM (8/14/2009)
I like this C4C program, I really do.
Dealers, car companies get the business they need, and in turn, people get new cars that are safer and better for the environment.
Imagine the smiles and excitement as the buyers examine their brand new car; it must be a huge upgrade from their old clunkers.
Our elected officials must be doing something right.
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XJ 10:53AM (8/14/2009)
Don't get me wrong I think the C4C program was a good idea. It helps the environment, it boosts the economy, it makes us less dependent on oil, it introduces newer and safer cars on the road, etc... But now you have a lot of owners, who didn't plan on buying a new car, get a hold of a large debt that they have to pay off of every month. Consumer spending is bound to go down as these folks will be eating out less often, buying fewer clothes and shopping for fewer school supplies for their kids. In my eyes, this is the biggest downside to C4C.
NudeLove93 10:57AM (8/14/2009)
I thought the biggest downside was the needless of running vehicles...
NudeLove93 11:11AM (8/14/2009)
*destruction of
God damn it...
Lemon 11:19AM (8/14/2009)
I'm still undecided on C4C...only time will tell. I read an article yesterday that said the used car market is really hurting because of this and used car values are going up since so many are being taken off the market.
There are pros and cons to everything. Hopefully the pros will outweigh the cons.
cokamuro 11:41AM (8/14/2009)
I'm all for thoughtful stimulus, but I don't think that C4C is a good idea.
The boost to the economy is short-term, and isn't sustainable. If you are getting people into car loans (that formerly owned their clunkers outright), you're reducing their disposable income for the next several years. That's a pretty big problem when you consider that 80% of our GDP is from consumer spending.
Also, getting people into more revolving debt at a time when unemployment (and underemployment) levels are at the highest point in decades doesn't seem smart. There's a reason why credit card and mortgage default rates are extremely high.
I don't think that dealers and car companies are getting the "business they need". We're in a free market system, and consumers are ultimately going to set the consumption levels for cars. At some point the dealers and car companies are going to have to adjust for lower marketwide sales targets. C4C has moved a lot of metal, but the outflow rate will return to maybe a 10mil unit a year level once the program has stopped. At worst, it's creating an artificially high demand now, that will result in a sustained low demand afterward.
The overall mileage of vehicles in the US won't be substantially dented by C4C, in my opinion. I don't have any figures on the miles traveled by vehicles 10 years or older, but anecdotally, I would say they pack on fewer miles than cars not qualifying for C4C. Besides, many of the older vehicles have surprisingly high mileage figures due to their lower weight....
....which brings me to safety. Modern cars are so much safer than cars made even a decade ago. If they want to market the benefits of C4C to the masses, this seems like the most valid point. In reality, however, the fatality rate per million miles travelled is actually pretty low in the US. Considering my supposition that "clunkers" do not (on average) travel nearly the distance of non-clunkers, I would think that the net effect on safety will not be statistically significant.
ripslymemc, you have a point about the excitement of buying a new car... and if that would translate directly into some quantitative benefit, I would probably be for it.
XJ, you mentioned that consumer spending would go down (a point I've made as well), but I would think that (based on the history of US consumers), we could have a completely different problem. What if C4C purchasers DIDN'T make any adjustments to their consumer spending, and just ran up debt? It's not like we haven't seen that before in the late 90's/early 2000's.
In the grand scheme of things 3 or 4 (the originally proposed amount) billion dollars isn't all that much. I just wish that economic stimulus would be put forth in programs that are sustainable... this just strikes me as a ploy with dubious benefits.
Epyx 12:06PM (8/14/2009)
"Also, getting people into more revolving debt at a time when unemployment (and underemployment) levels are at the highest point in decades doesn't seem smart."
Do you even know what revolving debt means because from this - you dont.
Not everyone with a Clunker is poor. Many are just cheap. I know quite a few people that have used the clunker program only because they could not pass on the deal. Trade a car worth $1000 bucks at any other time but now it is worth $4500 and some of the dealers are matching that! $9000 off is hard to pass on. The people I know don't finance cars or finance a small portion, the deal just made it worth dropping the coin on a new vehicle.
Epyx 12:08PM (8/14/2009)
"Besides, many of the older vehicles have surprisingly high mileage figures due to their lower weight...."
Those dont qualify. Its based on EPA numbers not age or quality.
Chris O 12:21PM (8/14/2009)
@Epyx:
I understand the situation pretty well. Most poeple don't have any idea that they're going to lose their job until they do. Likewise, most of the people that are defaulting on their debts didn't consider themselves poor until their situations changed.
That's why I was citing the unemployment and underemployment.... it's not like it's actually stopping - the rate of loss is decreasing, but an additional quarter of a million jobs were lost last month alone.