Didn’t I just write about how the Car Allowance Rebate System was ending? Then I wrote about how they got another $2 billion? Well guess what’s ending again? Cash for Clunkers will officially end by 8 p.m. EST, Monday on August 24th.
Just after congress approved more money to extend the program it’s now going broke again. But it seems this time is it. Congress is already on vacation so no new funds could be approved before sessions start again after Labor Day anyway.
Cash for Clunkers has generated more than 450,000 new car sales since the program officially began July 24th (though deals were actually starting beginning July). Though new cars sales are booming only $145 million has been repaid to dealers. In fact problems with reimbursement have led some dealers to require consumers to sign agreements to pay back the credit if the dealer can’t get the government to pay. In New York hundreds of dealers have dropped out of the program citing difficulties in getting paid. If money runs out before all applications can get in then many dealers may have to write off the credits. GM has told dealers they will give them cash advances on their credit deals (it’s government money anyway, right?).
So, is Cash for Clunkers a success or a failure?
If dealers get paid for their deals then they can consider it a success. New vehicle sales may top 1 million in August for the first time in 12 months. People are going back to buy new cars and this is keeping dealers afloat in this sagging economy. But if dealers don’t get paid or have to wait long periods for payouts then this could turn into an epic failure. Imagine dealers that have been hurting now out hundreds of thousands. We could see dealers close because they were overextended on credits they expected the government to reimburse.
It’s been nice knowing ya Cash for Clunkers. You certainly knew how to build up hype, huh? Who da thunk that many cars would be sold so quickly? I hope history looks kindly on you!
More takes on CARS ending:
- Cash for Clunkers Program is Dead. Gas Guzzler Trade In Ends Monday.
- Cash for Clunkers Will End Monday
{ 5 comments… read them below or add one }
In my opinion, Cash fro Clunkers was a failure before it even began. Yes it may have spurred half a million new car sales. But really all it is doing is taking future car sales and causing them to happen now. That’s called a bubble. As the cash for clunkers runs out of cash, the bubble pops and the dip in sales after it lasts for a long time because all of those sales were shifted.
Additionally, we should consider the unseen effects of the destruction of a half million older cars from the US fleet. What impact does this have on auto mechanics, who won’t be doing repairs on those older vehicles? How does this affect the inventory of used car dealers? With half a million less used cars for sale the price of used vehicles must increase which hurts the poor (and/or frugal) people who only buy used vehicles.
The destruction of the ‘clunkers’ is ridiculous, and paying people to destroy them even more so. It’s similar to trying to stimulate the economy by tearing down Chicago in order to rebuild it again.
.-= Matt´s last blog ..The effects of time =-.
Government cannot be a sponsor forever, it’s about time it stops wasting time and money on this. Is it enough that GM were bailed out but we have to spend more money on cars.
I’d like to start trading stocks and I was wondering if government will sponsor me, like if I lose they refund me the money
? I don’t think so.
I take the other side of the argument.
I think Cash for Clunkers has been a success. In order to gain an improvement in mpg, the guzzlers need to get off the road. Reselling them to poor people will not help us reduce our dependence on foreign oil or help lower emissions.
With all the talk of how the recession is coming to an end, I think there will be a “keeping up with the Jones” effect. Some people will see all these new cars and they will get an itchy trigger finger and buy one as well.
If that happens then the small boost that C4C has given the auto & finance industries should continue after the rebate is long gone.
.-= DD´s last blog ..13 Simple Tips To Make Tent Camping Easier And More Fun =-.
I’m so glad the program is ending. I hate to even think about the number of people who purchased a new vehicle just because they were getting a rebate.
If they were planning to purchase a new car and had prepared for it financially, it was a win/win. If they weren’t, they probably just put themselves further and further into debt.
.-= SingleGuyMoney´s last blog ..Cash is King =-.
Funny how quickly $3 billion can disappear, isn’t it?
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