Cash for Clunkers: A Big Band Aid with Big Holes
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Was this really a good idea?
We’ve all seen the ads and signs at car dealerships…. Cash For Clunkers!
But what exactly does it mean? Most people don’t really know. In short, it is called the CARS (car allowance rebate system) program. It is a part of President Obama’s Stimulus package; a $1 billion chunk allocated to allow consumers a $3500 to $4500 credit toward the purchase of a new car. Its goal is twofold… to allow consumers to spend money and buy a new car, and to stimulate the suffering auto industry. And on the surface, it has worked like a charm. Car sales are up as much as 40% in many areas.
But what happens now? While this band aid may have done considerable good for the consumer, the damage to the Auto industry and car dealers specifically may not be so rosy. Those who were going to buy cars, in many cases, just did. Where does that leave the dealers once the CARS program is over? Many dealers are simply using this campaign as a method to cut their losses prior to shutting their doors, which seems inevitable in many cases. While the program has done well on some fronts; there are now a great deal more fuel efficient vehicles on the road, several months from now there will be fewer dealers putting them there and lost jobs to go along with it.
I am no politician, and far from a financial expert, but this would seem, on the surface, to be a very poorly thought out corner of the stimulus package. If I can see it, why can’t they? They have extended the program to the extent of $2 billion, but after that? We cant just keep throwing the money at the program. Is there a solution? For one, I don’t know. I’m not the guy making the decision. I’m just one of the guys with a new fuel efficient car. Let’s just hope they’ve got answers.
3 Comments
I could not have said it better, so much has to change for anything get better. (I believe by Christmas many cars are going to be reposts, and yes, people will be getting the pink slip)
Awesome article
I agree with your thoughts. All cash for clunkers did was take a lot of revenue from used car dealers, auto repair shops, auto parts stores, car donation charities and taxpayers.
the theory of the CARS program was genius, but it was at that, a band aid. this is the kind of thing that would work during a good economic time, just give a little boost in the market and help the planet a little. but a lot of dealerships never even got the check from the federal government. One man on the news was owed over $2 million in rebates that was never paid to him
a few more things could have been added to the bill that would make it more than a band aid and make it a real economic stumulator. first, make it for American built cars only. second, make it to where you don’t have to own the car for a year to be able to trade it in, this would move a lot of broken-down cars out of the way, and people selling their old car but not looking for a new one, could sell it to someone else, than that person trades it in. a lot more people would have made money over it that way. one last think, make it last for two years. that way everyone has time. the amount of my consumers would have spend would have given the economy a little caffeine. I’m going to send you a friend request on Triond.