Unintended consequences: Cash for Clunkers

[disneysteve]

File this under "Unintended Consequences"

TIME magazine reported this week that the top 5 models traded in under the CARS Cash for Clunkers program were all American cars. However, 4 of the top 5 cars purchased under the program were foreign (Toyotas and Hondas). The 5th and only American model was the Ford Focus, made by the one US car company that wasn't in such bad shape.

So the program has succeeded in reducing the number of American-made cars on the road and increased the number of foreign cars (although the top Toyota and Honda models are built here but with lots of foreign parts).

If the goal of the plan was to stimulate the American auto industry, it doesn't sound like it is working that way.

[Caoineag]

I have a hard time believing that people didn't realize that would happen. "American" (I use the term loosely in this global economy) car companies make cars with the worst gas mileage. Most of the people I know that are giving up their loyalty to American carmakers are doing so because of the reliability and gas mileage issues.

[tzsgti]

Well, Think of this; Where are you going to get cars that qualify for the program? The "big" three don't have as much as Toyota and Honda. The only Hondas that do not qualify for this program is the Pickup i believe. GM has so many cars that dont qualify. The impala doesnt qualify. But the 4 cyl accord does.

And why is GM still making a Impala that gets a combined 21MPG and is boring as hell.

[Broken Arrow]

If the goal of the plan was to stimulate the American auto industry, it doesn't sound like it is working that way.

Yeah, I noticed that too.

Speaking of unintended consequences, I hear the Cash for Clunkers program has been a bureaucratic nightmare for car dealers. My local Honda car dealer has voluntarily stopped offering it due to the difficulty in obtaining the CARS money from the government. Other car dealers are still offering it though.

[GREENBACK]

I have to wonder about the financial aptitude of those who came up with this plan. They didn't see the unintensional consequences? I saw them and I have little to no experience with this stuff. I don't have a couple billion of someone else's cash to play with either which makes decisions like this easier.

I don't mean to change the argument but this is the same goverment that wants to do a massive health care overhaul. They can't properly orchestrate a little thing like this and we should hand over something far more valuable and expensive like health care to them. Uh, no thanks.

I'm trying to stay open minded but this is a dismal failure and the bad part is that they won't acknowledge it. People should be outraged at the very suggestion of putting more money into it. I guess billion is the new million and no one looks at what it really means.

I'm ranting a bit but we need to open our eyes here.

[Caoineag]

That said (referring to American car industry issue and greeness of the program), wasn't this originally just sold as a way of stimulating the economy? This particular item had been a possibility prior to the bankruptcy of the American car industry so I am not sure that was actually a focus. I was surprised when some of the American companies seemed happy about this because I was pretty sure Toyota and Honda would dominate the trade ins.

[PrincessPerky]

I have to wonder about the financial aptitude of those who came up with this plan. They didn't see the unintensional consequences? I saw them and I have little to no experience with this stuff. I don't have a couple billion of someone else's cash to play with either which makes decisions like this easier.

I don't mean to change the argument but this is the same goverment that wants to do a massive health care overhaul. They can't properly orchestrate a little thing like this and we should hand over something far more valuable and expensive like health care to them. Uh, no thanks.
..

Yeah what he said...was so much nicer than the "DUH" I was thinking of writing.

[Scanner]

I think the idea was to stimulate the economy, not necessarily the auto manufacturers.

I guess the idea is there are people who work at Honda Dealerships, work at American Toyota factories, people who support dealerships with staffing, transporting cars to the dealers and so on who would be working [more] because of the stimulus.

Not defending it. . .just trying to understand the logic. . .just adding some "molecular motion" to the economy I guess.

[feh]

File this under "Unintended Consequences"

TIME magazine reported this week that the top 5 models traded in under the CARS Cash for Clunkers program were all American cars. However, 4 of the top 5 cars purchased under the program were foreign (Toyotas and Hondas). The 5th and only American model was the Ford Focus, made by the one US car company that wasn't in such bad shape.

So the program has succeeded in reducing the number of American-made cars on the road and increased the number of foreign cars (although the top Toyota and Honda models are built here but with lots of foreign parts).

If the goal of the plan was to stimulate the American auto industry, it doesn't sound like it is working that way.

Just because only 1 of the top 5 models being bought is manufactured by the Big 3 doesn't mean the American auto industry isn't being stimulated.

What models are in places 6 through 10? Or 11 through 15?

Are American companies supplying parts for the Toyotas and Hondas?

[jIM_Ohio]

All-

this is why I believe in hands off

the concept of the program is well intended. The execution of the plan and details of the plan licked rocks- there is no good way to put it.

The US car companys will see business increase when they make a product which is competitive in their market.

It is that simple
you can put a dress and makeup on an ugly girl
but that does not make the girl pretty

and its easier to just flick a light switch anyway

Government needs to stay out of making business incentives
and just stop ruining the lives of the people it governs.

[cptacek]

Government needs to stay out of making business incentives
and just stop ruining the lives of the people it governs.

+1000

[tripods68]

No one is mentioning this. Honda and Toyota would have laid off thousands of US plant based workers had they experienced the same losses both GM or Chrysler experienced. To these workers, I'd say it save their jobs; therefore a success.

Beside no one should be surprised with this news. American automakers have not caught up with the Japanese in terms of building quality and reliable cars. That said, I will probably never own American cars as long as I live. But I digress.

[disneysteve]

No one is mentioning this. Honda and Toyota would have laid off thousands of US plant based workers had they experienced the same losses both GM or Chrysler experienced. To these workers, I'd say it save their jobs; therefore a success.

I've said before, there really is no such thing as an "American" car anymore. Which is more American? The car made in Mexico by Mexican workers for a division of a US company or the car made in America by American workers for a division of a Japanese company?

[maat55]

All-

this is why I believe in hands off

the concept of the program is well intended. The execution of the plan and details of the plan licked rocks- there is no good way to put it.

The US car companys will see business increase when they make a product which is competitive in their market.

It is that simple
you can put a dress and makeup on an ugly girl
but that does not make the girl pretty

and its easier to just flick a light switch anyway

Government needs to stay out of making business incentives
and just stop ruining the lives of the people it governs.

Jim for president!!!

[Caoineag]

No one is mentioning this. Honda and Toyota would have laid off thousands of US plant based workers had they experienced the same losses both GM or Chrysler experienced. To these workers, I'd say it save their jobs; therefore a success.

Beside no one should be surprised with this news. American automakers have not caught up with the Japanese in terms of building quality and reliable cars. That said, I will probably never own American cars as long as I live. But I digress.

Yeah that's why I put quotation marks around American. Especially some of the Toyota models, some of the foreign cars are more american in terms of percentage of parts than the american companies.

My big concern with cash for clunkers is that its a one time bonus. Once its done, demand falls again and they are in the same boat as before. Lets just hope that one time splurge is sufficient to get them through to better times though I doubt it.