• Aug 25, 2009
Conventional wisdom says that Cash for Clunkers provided a big-time boost to dealers. After all, before Clunkers, most showroom floors were bereft of customers, and scores of dealerships were closing their doors. As good as C4C has been for customers, many dealers are all too happy it's over.

A recent (admittedly unscientific) survey conducted by Automotive News shows that 44 felt that the program should have been extended without being modified. The biggest issue dealers have with C4C is, unsurprisingly, its lack of timely payment. Some multi-store dealers have millions invested in the program, while little or no money has come in yet. An alarming 23 say the program has actually sucked enough cash from the coffers that it has put the dealership at risk.

The Transportation Department and the Obama Administration have stated that every eligible C4C transaction will result in payment, but the federal guarantee isn't boosting many dealers' confidence. AN says that 43 are not at all confident that they'll be paid in full.

Some dealers say that C4C has also hurt their repair, finance, used car and parts businesses, but that's okay if they collect from the feds. Even with the considerable downside of C4C, 74 say they somehow managed to lose money.

Cash for Clunkers officially ended last night at 8 pm.

[Source: Automotive News - Sub. Req. | Image Source: Ethan Miller/Getty]


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  • 62 Comments
      • 5 Years Ago
      Anyone who thinks this program was constitutional (read legal) needs to wake up and learn the meaning of "secure the blessings of liberty".
      • 5 Years Ago
      What a whiney ass'd bunch. If you didn't want the sales generated by C4C, then you didn't have to participate.
        • 5 Years Ago
        What sales did it generate? NONE...because the next 4 months will be DEAD around the lots...negating ANY artificial boom in sales.

        No sales were generated...they were just moved from Sept.-Dec. to August.

        The dealers are the ones who got screwed the most by this program...because our inept administration cannot do anything right.
        • 5 Years Ago
        Agreed! Just goes to show that no matter what, some people will always find something to complain about.
        • 5 Years Ago
        Matt,

        While I actually agree (I can't believe I said that) with your statements about money going overseas to Korea, I have to wholeheartedly disagree with your poorly thought out market predictions.

        First off, the C4C program brought people into the dealers who probably never would have bought new. When you can now get a used car for the price of a used one, you're going to pick the new one. Many people who ponied up and took advantage of the program probably would have bought a used car instead. While the program may have hurt used car sales in the short term, it will help up the value of them in the future as there are less cars available for resale now that these are being scrapped.

        Second, if you know how people work, you'd know that people are scared to death by the "economy", they over-react to what Wall Street and the news man tells them and they stop spending money, even on stuff they need, even when they are not that effected by the issues. It's human nature. Now people are seeing their friends, relatives, co-workers, and neighbors showing up in new cars, they see it as the green light to start loosening up a bit. I personally have 4 aquaintances who have purchased or are about to purchase a new car this month (something I couldn't have said 3 months ago). Of those 4, only 1 did the C4C (Chevy Equinox). The other 3 have or are purchasing an Escape, Edge, and Ridgeline with no government intervention (they traded in their old cars that didn't qualify or were worth more than $4,500). All 3 had plans to buy a new car this year but had been holding back because of the economy. All 3 now feel better about things and are spending. We're talking about 3 people who have the money to buy the cars, and have steady jobs that are not in danger of being lost due to the economic downturn. Two of the three are now waiting for inventory to rise back up to get the exact car they want (Edge and Escape- there were plenty of Ridgelines on the lot- go figure) so those sales won't happen for a couple weeks yet.

        That is the reason the plan could be seen as a good thing. Only time will tell if the market stays up or falls right back down, but I wouldn't be so sure it'll be the latter at this point.

        Also, for the dealers bitching about not getting paid in a timely manner, I agree that the program should have been better thought out. There should have been more servers used for the program and the payment should be more quickly dispersed, but let's be honest, there's no way they were going to sell down that inventory nearly as quickly if not for the program. Yes, many are floating the government but they would have been paying interest on those cars sitting there that they wouldn't have gotten back. Any dealer losing money on this proposition deserves to go out of business, they have little to no business ability.
        • 5 Years Ago
        What do you !@#$% mean "I didn't have to participate"? Our !@#$% tax dollars are what's paying for this !@#$% program. We don't have a choice to NOT participate.
        • 5 Years Ago
        Matt,

        I am struggling to use my MBA to decipher your logic.
        No sales were created?
        There were no sales happening, period.
        Are you saying that between Sept-December there was going to be a boom in sales?
        Where is your data to prove this and how was this going to happen?
        Do you have some inside track into the pocket books of the American public that we don't know about?
        Perhaps before shooting off your mouth next time, you should take some time to actually think about what you are going to say.
        • 5 Years Ago
        Exactly. They all know the Federal Government always works on it on damn schedule. Everybody knew you wouldn't get your money back just by snapping a finger. Yet every dealer in my area was participating and had no problem selling cars. Now that the program is over they bitch and moan.
        • 5 Years Ago
        @matt: exactly! now that it's over, the dealers can go back to closing their stores and the manufacturers can load up incentives as their vehicles once again start to gather dust.
        for some reason the govt just didn't expect people to use the program i guess, or at least not as quickly as it happened. what do all those sales people do now?
        sure it didn't impact cars over $50k but the number of people in that pricing are far out-weighed by the folks looking in the $20k range. yes, there are plenty of people that can afford a car in that range, esp when your $1500 car gets you $4500 without dealer bloat.
      • 5 Years Ago
      So 56% or more were happy with the program, that is a majority in my book.
      Who cares if they get timely payment, they have had cars on the lots for months to years at a time.
      I had a dealer here in town that until last month had 2 brand new 2008 Corvettes still on the lot.
      It is not like they are not going to get paid.
      I guess next time around we will just let them close up shop and die.
      Let the strong survive.
        • 5 Years Ago
        That's what I was thinking, nice job spinning the title and the results, trying to take a positive and turning it into a negative. Most didn't think it was a nightmare and most wanted it extended. It goes on to say "74% of dealers say that if they're paid in full by the federal government, the program will positively affect their bottom line."

        This is the problem with media and "journalists" today - everybody has an axe to grind and platform to support. They can't just give you the results, they gotta spin it to support their view. Nice work.
      • 5 Years Ago
      Funny isn't it. Dealers griping about not getting instant payment. This program has only been around 2 months. The same dealers, I'm willing to bet, don't pay their suppliers for at least 30 days.

      With the average transaction prices rising during this promotion, the dealers haven't been going home without food. Plus they got rid of cars they were paying floor plan interest on for several months.

      Would they like some cheese with their whine?
        • 5 Years Ago
        @06VistaBlueGT: $140k for a business is reasonable chunk of change in terms of advertising and stirring up buyer interest. The fact you are guaranteed to get it back at some point in the future means that you can simply borrow it from your lender.

        Comparing that to an individual lending $150k to a friend is juvenile at best. More like lending $5k to a very trusted family member..
      • 5 Years Ago
      thats what they say now but once they received their due payments I bet the tune will change a great deal to how much profits they racked up during the program...
      • 5 Years Ago
      @ Brian:

      "Sending a letter via USPS $ .44
      Sending a letter via UPS or Fedex $8 and up. "

      And let me see - does this mean people DON'T use FedEx or UPS? My point is, low overhead doesn't mean low quality. People still use those companies for a reason.

      And as for the original topic - I'm not sure how this actually does anything environmental. Yes, the cars sold get better mileage. But we don't know anything about how the clunkers were previously used. What if the clunker was only used on weekends, and now the buyer has a brand-new car to commute with rather than take the bus?

      Besides, if we were to have a stimulus, I'd have preferred it to be spent on something a little longer-lasting than a car purchase. We still are benefiting from some of the WPA/CCC programs from the 30's - why couldn't we have spent our taxpayer money on better infrastructure instead - and ensured the money was at least for the betterment of America in more ways than one.
        • 5 Years Ago
        Oh, and BTW Brian - the USPS is one of the few organizations that competes directly with the private sector. Arguably, Amtrak is another - though it doesn't compete directly (there aren't other private passenger-rail companies).

        And for what it's worth, President Obama came up with the USPS comparison.
      • 5 Years Ago
      More proof this program was a terrible idea with terrible execution.

      Only the very blind will call it anything close to a success...
        • 5 Years Ago
        Not really...

        People shouldn't be spending money they don't have for no reason. The vehicles traded in under this scam worked. Therefore, it would have been a lot cheaper to keep that car running than to buy a new one.

        $6K in repairs < $25K new car.
        • 5 Years Ago
        @Matt

        Wow... what about the salesman? people who work at dealership? people who will be providing service to the 'Korean' Rio'? Driver who delivered the car to the dealership? The guy who work at dock?... etc etc.. they all must be Korean and sending all the money they earn right back to Korea?

        I really hope you do not own a single foreign product in your possession. Otherwise.. we will all be terribly disappointed.
        • 5 Years Ago
        Cody:

        Thanks for giving our tax dollars to Korea...that should help the US Economy just fine.
        • 5 Years Ago
        It was only a success for consumers who took part in the program. Everyone else? eh... not so much.
        • 5 Years Ago
        My fiance' and I got a 2009 Kia Rio through this program for $10,000 out the door. After the Sticker Price without C4C and Incentives it would have been $17,000 out the door. Funny, we can afford the car just fine. Traded in an old Chevy G10 van that every part outside of the engine block was stripped and sold/used.

        Of course, you are "that" Matt, so wtf do you know anyways?

        • 5 Years Ago
        "I really hope you do not own a single foreign product in your possession. Otherwise.. we will all be terribly disappointed."

        Different.

        I did not ask for a hand out or use any tax dollars to buy the electronics in my house.

        A United States stimulus should stay in the United States...not go to Japan or Korea.
        • 5 Years Ago
        Hey Matt, if you're really that pissed off, an not just an incredibly juvenile troll, STOP PAYING YOUR TAXES.

        If you really believe what you are saying, stop paying them. If you don't, you're just trying to make a stink and couldn't care less about what is done with your tax dollars.
        • 5 Years Ago
        Well Matt, you're going to be real disappointed to find out where AIG was founded.
        • 5 Years Ago
        Sean.. I think that's kind of the point. If Matt refused to pay his mandated part of the Cash For Clunkers program, there would be someone at his house with sidearms making sure he does.
        • 5 Years Ago
        "A United States stimulus should stay in the United States...not go to Japan or Korea."

        Damn right, Matt. All those stupid consumers should have purchased a Ford Fusio...no...a Chevy Camar...no...a Chrysler 30...crap...Hey, how about a nice Honda Accord instead?
        • 5 Years Ago
        That's 100% bullsh*t.

        Car dealers that always want their money yesterday are hardly a measure of the program's success and are notoriously partisan. The true measure is (1) jobs via sales: Car salesmen, production line, truck drivers, dockworkers, parts and service, etc. And (2) getting major polluters off the road, which this did in spades.

        By any TRUE economic measure (not a self-reported survey of guys counting their treasure from afar), the program worked against the goals laid out and put food on the table for a LOT of people.
        • 5 Years Ago
        "It was only a success for consumers who took part in the program."

        Yeah, to those who got rebates for *buying the SUVs* in the 1st place.
        • 5 Years Ago
        Luis scares me too.

        Actually you can not leave the country and not pay taxes. The US Govt requires you to pay taxes for 10 years after leaving the country even if you renouce citizenship. Only other country that requires this is Libya.

        Those govt officials also take an oath to uphold the constitution. Technically there is little in the constitution that allows them effect the economy.

        What you are suggesting is little more than strong arm stealing but you don't have the guts to do it yourself. You require the govt and its guns to do your dirty work.
        • 5 Years Ago
        I think what Matt's saying makes a lot of sense, and this program was not well thought out. For most people, it would be better (on many levels) just to keep their car going than buy a new one. No debt, no worries. My wife drives a 1996 Camry that runs great, it has 188K Kms on the clock and runs just fine. Even if we had to put $4K into the car over the next year to keep it running tip-top, it has lots of life left in it. Its either pay a small amount right away and be done with it, or jump into payments for the next 2-6 years.

        That being said, if her car got 15 mpg I might rethink my strategy...

        • 5 Years Ago
        @akboss302

        well.. obviously in your case, keeping 96 Camry makes perfect sense as it probably does not quality as a 'clunker' any ways.

        For a lot of other people, however, this was a great program. They got rid of their old, fuel guzzling cars for a new, smaller, fuel efficient cars at a GREAT price.

        • 5 Years Ago
        "WITH MY TAX DOLLARS!"

        Thanks for your tax dollars Matt. Next time lets cut out the middleman, I'll come over and you can just open your wallet.
        • 5 Years Ago
        "For a lot of other people, however, this was a great program. They got rid of their old, fuel guzzling cars for a new, smaller, fuel efficient cars at a GREAT price."

        WITH MY TAX DOLLARS!
        • 5 Years Ago
        Now I don't have any strong feelings about the program, because it had it's positives (it got people in to new more fuel efficent cars) and it's negatives (it cost us money that we don't have).
        As for the Domestic vs. Import argument, you can't say that buying an import is better for the US economy than buying an Import. Like futurama, you do realize that "the salesman? people who work at dealership? people who will be providing service to the 'Korean' Rio'? Driver who delivered the car to the dealership? The guy who work at dock?... " Ford, GM, and Chrysler vehicles are sold by salespeople (except a few GMs that are sold on e-bay), people work at Ford, GM, and Chrysler dealers, people service Ford, GM, and Chrysler vehicles, and Ford, GM, and Chrysler have to send cars from their factories around the US/Mexico/Canada to the dealerships too. The few models that Ford/Chevy/Chrysler don't make in the US are made nearby in Mexico or Canada, and you mostly have Bill Clinton and NAFTA to thank for that.
        As for you EGON, I can play that game too. You can buy a Toyota Priu... or a Honda CR-..., or any model from Kia... oh crap. How about a nice Ford Taurus instead? No car company makes all their models in America, at least the Ford/GM/Chrysler cars that aren't made in America are made nearby in Mexico or Canada, opposed to being made on the other side of the Atlantic or Pacific. Also, the more cars the American companies sell, the more taxes they will pay to the American government. It doesn't matter where a Toyota is put together, the profits are sailing across the ocean to go into Japan's pocket.
      • 5 Years Ago
      Finally there is a nicely done bumper sticker for survivors of cash for clunkers.
      See ebay item 290337935544
      I bought several just to remind me in future years of this soon to be historic debacle.
      • 5 Years Ago
      Short term gain,long term loss. Let's see what car sales are going to be over the net 6-8 months.
        • 5 Years Ago
        And what were sales numbers doing anyway? They were abysmal to start with, they can't get much worse.

        You may be right, but I hope you're wrong.
      • 5 Years Ago
      Excellent post,Gloria. You summed it up very well.
      • 5 Years Ago
      Here's the part I don't get: Unsold cars in dealer lot = no money for that car in dealership bank account (in fact they pay for it every day it sits unsold). Car sold via C4C = money for most of cost of car cost in bank (down payment/loans/however it usually works) but dealership waiting for balance from gov't. Isn't it better to have the bulk of the car's cost in the bank then to have an unsold car on the lot?

      Also, love this line "...while 5% say they somehow managed to lose money". Just like a car salesman to claim he's losing money on a deal when he clearly isn't!
        • 5 Years Ago
        Just guesses here, but I would guess because the cars on the lot are already paid for, they were just collecting dust, and costing the dealer maybe a small insurance fee.

        But then they sold the car at 80% of what they paid, expecting the other 20% to come from the government. If that 20% from the government is delayed, and they have received it by the time they make their next purchase to the manufacturer, they can only buy 80% of the cars they could have bought. if they wanted to buy a full load, they might have to take out a short term loan themselves.

        I suppose if the dealer doesn't expect to get any money from the government (unlikely) they just took a 20%+ hit to their bottom line. That plus overtime paid to employees filling out paperwork could mean a net loss for some dealers...
      • 5 Years Ago
      "An alarming 23% of dealers say they have had to borrow money to cover the cash crunch left in the wake of the Clunkers program, while an additional 10% say the program has actually sucked enough cash from the coffers that it has put the dealership at risk."

      So, this illustrates two things.

      1. Cash for Clunkers worked to get more businesses borrowing, which has stimulated another sector of the economy: business borrowing.

      2. Cash for Clunkers may serve to put out of business those dealerships which are close to being unviable in the wake of reduced manufacturing output.

      Chalk up two more goals achieved.
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