Clank The Door On "Cash For Clunker"

Well tomorrow is the end of the ignominious “Cash For Clunkers” – an unmitigated flop in my book.

It sold some new cars – no question about this, and that helped some dealers move inventory.

Selling cars was never the real goal as I see it. It was just another way for government to  interfere with the market and gain more control over people’s lives. It created some temporary jobs, but we’ll get back to that one.

Here’s what went wrong.

First, the market was manipulated so that people who may have wanted a new car in the next 3-4 years were pulled out of the market and sold a new car now. What happens to that evaporated demand? What about people who were enticed into buying a new car who weren’t capable of it financially?

Second, perfectly good cars – in many cases – were permanently destroyed when there were many people in this country that would love to have bought an upgraded car or a second car. There were people that needed inexpensive transportation that weren’t allowed to get it and will have difficulty in the future because a large part of the supply of those cars is gone.

Third, the dealers are still waiting for their money from the government because they had to advance it for the $4,500 discounts. My guess is that many will never be paid, and they are prohibited from repossessing the cars that they were required to deliver as well.

Fourth, the jobs. Jobs were artificially created to manage a made-up, unnecessary program. Dealers had to hire people just to fill out the government-required applications on each purchase. Then many applications are kicked back to the dealer for more work. Additionally, people had to pour the glass into the motors to disable them and get the cars ready for the graveyard.

To paraphrase Shakespeare, this was a case of way to much to do about nothing. It also was a huge blow to free enterprise.

───

For more information on my coaching and educational programs and services, visit my website stevehoffacker.com or go to my other blog homesalesinsights.com for additional sales tips, insights, and commentary. You can also listen to my free podcast messages at Steve Hoffacker's Happenings.

© Steve Hoffacker, 2009. All Rights Reserved.

26 comments • Steve Hoffacker - Real Estate Sales & Marketing Consulting and Strategies • August 23 2009 10:44AM

A "Cash For Clunkers" Clinker

Did you hear the one about the government giveaway program where they convinced auto dealers to sell new cars to consumers and give them a $4,500 credit for their trade-in, and then not pay the dealers the rebate amount - leaving the dealers on the hook for the money?

This is happening all across America. Dealers must - by law - if they participate in this program, deliver the new car immediately if it is in stock, not have a financing contingency, and not have a contigency or "Plan B" if the government is tardy in repaying them - or chooses not to do it at all. The risk is entirely on the dealer.

The dealer, once the sale is made must deliver the car - even if later the buyer can't qualify for the loan, must destroy the trade-in and therefore not return it to the buyer if there is a snafu later on, and must use their own $4,500 to float the deal.

Brought to you by the same forward thinking, fiscally responsible administration that wants to give you government health care.

──

For more information on my coaching and educational programs and services, visit my website stevehoffacker.com or go to my other blog homesalesinsights.com for additional sales tips, insights, and commentary. You can also listen to my free podcast messages at Steve Hoffacker's Happenings.

© Steve Hoffacker, 2009. All Rights Reserved.

24 comments • Steve Hoffacker - Real Estate Sales & Marketing Consulting and Strategies • August 15 2009 01:45PM

Not Only Is The Cash For Clunkers Program A Bad Idea, It's A Really Bad Idea

OK, so roughly a quarter million new cars have been sold by an artifically propped up demand that gave approximately $4,000 per traded in car to use up the billion dollars allocated.

Economic mistake number one: totally unsustainable sales - a one-shot deal. How long before any of these car buyers will need another new car?

Economic mistake number two: destroying the engines of all the trade-ins. Where are we supposed to put all of those unworkable blocks of steel that used to be automobile engines that are now laden with hardened glass?

Economic mistake number three: a quarter million cars worth of used car parts suddenly hit the junk yards across America - a huge, atypical influx. Oh, no engine parts though.

Economic mistake number four: plenty of would-be drivers in this country and abroad missed out on an opportunity to have an inexpensive working car - many nicer than others. Many tried in vain to get one from the various dealers, but they were told the cars had to be destroyed by law.

Economic mistake number five: American cars were outsold by the imports. Less than half of the sales (47%) were American (Ford, GM, Chrysler).

Economic mistake number six: only the Ford Fusion was in the Top 5 of cars sold - 3 Toyotas and a Honda were in there.

Economic mistake number seven: the used car market has taken a 250,000 car hit. Normally when a new car is bought, a trade-in becomes a used car opportunity.

Economic mistake number eight: they didn't get it right by only spending one billion dollars so now they are going to commit another two billion dollars to make mistakes 1-7 all over again.

───

For more information on my coaching and educational programs and services, visit my website stevehoffacker.com or go to my other blog homesalesinsights.com for additional sales tips, insights, and commentary. You can also listen to my free podcast messages at Steve Hoffacker's Happenings.

© Steve Hoffacker, 2009. All Rights Reserved.

24 comments • Steve Hoffacker - Real Estate Sales & Marketing Consulting and Strategies • August 04 2009 05:38PM

Cash For Clunkers - Another Great Slippery Slope Program From Government Motors

Who’s idea was it to waste all of these perfectly good cars, tires, electronic components, and accessories in the name of doing what the government want?

In an era when “green” seems to be quite in vogue, why would we just ruin perfectly good, drivable cars that until the moment they are traded in at the dealership - and then destroyed - are fine serviceable vehicles?

If the government arbitrarily decides that no one should drive a lower miles per gallon vehicle than some bureaucrat thinks should be the new standard - and that they are willing to pay out $4,500 (of our money as taxpayers) to stimulate sales (ostensibly to get them off the street) - why obliterate something of value?

Are there no poor people without adequate transportation? Are there no college students or struggling young married couples that could use an inexpensive reliable car? No seniors that need a dependable car? Are there no nations in the world where we could export these cars – or any of their components? Do we not need an spare parts? Oh, I guess we really won't after we wipe out all of a certain model car.

When the government gives the dealers the $4,500 dollars (which only applies to a limited number of eligible cars for each dealer anyway), why must the dealers destroy the cars? If that is really the intent, then the cars have zero cash value and really could be given away to people who otherwise not have adequate transportation.

OK, so they don’t get 100 miles to the gallon. If they aren’t traded in and destroyed, they will still be on the streets anyway getting whatever mileage they already are getting. And remember on a few cars are eligible anyway - just the ones Government Motors has targeted.

Oh, by the way, the dealers aren’t just allowed to send the cars to the crusher. They actually have to blindfold and executethe cars  by pouring a chemical into the motor and running it without oil until it breaks. Then they can have it towed and crushed. It must not be in working orderl when it leaves the dealer. This is sick. What a waste.

Another great way the government has manipulated the free market economy. The government is now exercising more control over what people will drive, what cars are available, what our choices are, what will be manufactured, what parts will be inventoried, and what parts and supplies will be available.

───

For more information on my coaching and educational programs and services, visit my website stevehoffacker.com or go to my other blog homesalesinsights.com for additional sales tips, insights, and commentary. You can also listen to my free podcast messages at Steve Hoffacker's Happenings.

© Steve Hoffacker, 2009. All Rights Reserved.

14 comments • Steve Hoffacker - Real Estate Sales & Marketing Consulting and Strategies • August 02 2009 07:00PM