Cash For Clunkers Archives

The reality of Government money for your gas guzzling junker is coming to an end! If you’re into that sort of thing you better act while there is still time…

If you are planning to take advantage of the possible $4,500 new car credit the U.S. government rushed to make available, you may want to hop in your clunker and buzz that gas guzzler straight over to the nearest dealer sooner rather than later.

According to a recent announcement by U.S. Transporation Secretary Ray LaHood – the $3 billion government sponsored — taxpayer funded — CARS program, dubbed “Cash for Clunkers” will be coming to an end this coming Monday, Aug. 24, at 8pm EST. Lahood also offered this blurb in his “wind-down” strategy:

As of 6 AM on Thursday, more than 450,000 transactions have been submitted by dealers, representing a total of about $1.9 billion. This represents approximately 2/3rds of the $3 billion allocated to the Department of Transportation to operate the CARS program. Based on conservative estimates of valid deals transacted under the program, DOT has projected that the program will be able to continue to accept new submissions until the Monday deadline, consistent with the statutory authority of the program.

Unlike the first time the cash for clunkers program ran out of money, this time it appears the end has truly arrived.

Just like any other government program, there have been a few hiccups along the way.

Many are upset over the fact the junkers have to be destroyed. There has not been a solid explanation for this to date and that lack of transparency has led many to believe the motivation is less than honorable.
Though the cars are selling like hotcakes, government money is not flowing back into the dealerships at the same speedy rate. Fronting money has become such a problem that some dealers have been forced to withdraw from the program completely due to lack of funds.
Charitable organizations that normally benefit from the donation of older vehicles are suffering because of the unprecedented wastefulness of this government program.

Despite all the problems, the cash for clunkers program can’t be all bad… right? Somebody had to benefit… right?

Who benefited most?

According to statistics, although the Ford Focus was the top vehicle purchased, the next 4 in line were the Toyota Corolla, Honda Civic, Toyota Prius, and Toyota Camry. This means the bulk of consumer money went to companies based largely outside of the U.S. economy. The varying roles each of these companies play in our economic recovery would make for an interesting debate… and one I’m sure many Americans would love to hear!

Though demands for vehicles from GM and Ford are lower than those of their foreign counterparts, both American auto giants have bolstered production to meet the increased demands — which many fear will be short lived. How long will this production hike last? No one knows for sure, but many agree the predominate sound heard at auto dealerships after the Monday deadline will be the peaceful chirping of crickets.

Whether or not you believe the C.A.R.S. program is profitable or just another example of wasteful government mismanagement, if you are looking to participate you better get moving!

Update 8/21/2009 – Cash for Clunkers ends Monday

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Update 7/31/2009 at 3pm EST – Deadline Extended!

Will cash for clunkers come back? Yes. Apparently it will…

New developments in the continuing drama surrounding the Cash for Clunkers (CARS) program being suspended. Earlier today the York Daily Record (an AP affiliate) reported that the House approved a “rush vote” to reinstate the program by funding it an additional $2,000,000,000!

Here is a snippet from the original article:

WASHINGTON (AP) — The House has voted to rush an additional $2 billion into the popular but financially strapped “cash for clunkers” car purchase program.
The bill was approved on a vote of 316-109. House members acted within hours of learning from Transportation Secretary Ray LaHood that the program was running out of money.
Called the Car Allowance Rebate System, or CARS, the program is designed to help the economy and the environment by spurring new car sales. Car owners can receive federal subsidies of up to $4,500 for trading in their old cars for new ones that achieve significantly higher gas mileage.
House Majority Leader Steny Hoyer said the new money for the program would come from funds approved earlier in the year as part of an economic stimulus bill.
This is a breaking news update. Check back soon for further information.

Whether this is good news or bad news depends on your point-of-view. Personally I find it rather troubling – our tax dollars seem to be treated as if they grow on trees. I would rather see the government reconsider the entire program and stop meddling with the market.

Cash For Clunkers suspended after only 4 days!

For the last four days people have been flocking to dealerships to turn in their GM, Ford, Chrysler, Toyota, or any other auto manufacture vehicle for cash! The term “Clunker Cash” has been sweeping across the country with reckless abandon.

Where you able to trade in your clunker for cash before the deadline? Some people would call you lucky. Others would say the entire program was a big waste of time and money, claiming dealers raised vehicle prices to cover the difference anyway. Whatever your opinion… the program has been suspended.

Why was it suspended?

According to the Detroit Free Press:

The decision to suspend the plan came after auto dealers warned the government today that it was in danger of losing track of how many trades had actually been made.
The plan offering owners of old cars and trucks $3,500 or $4,500 toward a new, more efficient vehicle has proven wildly popular, with 22,782 trades certified by federal officials since Monday. But the National Highway Traffic Safety Administration told dealers Wednesday that a vast majority of transactions submitted were being rejected for incomplete or illegible paperwork.
A survey of 2,000 dealers by the National Automobile Dealers Association, the results of which were obtained by the Free Press, found about 25,000 deals not yet approved by NHTSA, or about 13 trades per store. With 23,005 dealers asking to be part of the program, auto dealers may have already arranged the sale of more than the 250,000 vehicles that federal officials expected the plan to generate.

Auto dealers across the country were scrambling to help customers who were frantically trying to get their deal pushed through. One dealer in Bloomington Hills, MI said it was working so well his customers were becoming angry if he couldn’t get to them in time!

Frantic customers were not their only concern… auto dealers were also worried that the program would not last long, apparently they had the inside scoop as to how many cars and how many days it would take before the whole system came to a screeching halt.

Will the Cash for Clunkers (CARS) program come back?

That is the question on a lot of people’s minds! Will the incredibly popular program receive more federal funding and come storming back? Here is what The Freep reported on the subject:

“I think it was a well-intended program … and frankly the program at this very early stage has to be viewed as a huge success,” Czubay said. “We are going to be working with the government to say, are we accomplishing all the things we want?”
Michigan lawmakers were set to meet Friday morning to map a strategy for pushing more money to the program.
“In just four days, we have done more to stimulate the economy with ‘Cash for Clunkers’ than any government program since the downturn began last fall,” said Rep. Fred Upton, R-St. Joseph.
Several Michigan lawmakers had already vowed to press for more money for the program, which had originally been set for $4 billion. But Sen. Dianne Feinstein, D-Calif., has said she would block any additional money unless the program was changed to boost the gains in fuel economy between old and new models.
Federal officials also said today that the government would honor any deal agreed to before changes made in a federal database of mileage figures last Friday.

Basically, at this point no one really knows for sure… but stay tuned – if there are any updates I will post them on DFA.

What do you think?

Is this program in the best interest of the consumer? Should the federal government be getting involved anymore than they already are?

Cash For Clunkers Ending Monday – Toyota and Honda profit much more than Ford and GM