What lesson from Cash For Clunkers?

[vicman]

A lot of hyperbole expected from all sides the rest of this week as new car sales plummet to their previous abysmal numbers.

But what is it really?

The authors of this very commendable legislation exposed a fact (perhaps unwittingly).

New cars are overpriced. Cost too much.

By about.....

$3500 to $4500 dollars.

The "free" market has just belched out a loud "opinion."

Do we have the ears to hear? The courage to admit that "free" carries a big pricetag that has to be paid by somebody???

[GodlyDemocrat]

1. Without subsidies, car companies cannot make a profit pricing cars that low.

It costs money to make cars. So unless of course you royally screw over auto workers, you're not going to get a car that cheap.

[melm00se]

2. you are confusing

cost and value.

they are 2 different things.

[liberal N proud]

3. The lesson I see...

I don't know about over priced, maybe they are
But what I see from the CARS program is what I was saying when the stimulus was originally being debated. Give each American $5000 with requirements that they spend it.

Personal spending puts people to work.

That is the lesson that I take from CARS.

[DJ13]

4. I think the real lesson is that if the government wants to stimulate the economy

.....they need to stop focusing on stimulating the top of our economic pyramid and stimulate the lower classes directly for maximum bang for the buck.

[vicman]

5. Cash or value????

If you take out the cost of health insurance per car, and maybe add a little bit of tariffs that stem the flow of CASH to foreign competitors, you could probably... and put some of that savings into making a better quality car in the hated state of Michigan... oh, I don't know? mebbe knock down the price of each car by... well... $3500 to $4500 dollars? How much do Japanese and German car makers spend per employee for health insurance? How much health insurance do the workers in the foreign automakers sweatshops get in the American South?

[SoCalDem]

6. Dealers order/makers offer cars with too many pricey "features"

A very long time ago, cars WERE available that were bare-bones and you paid EXTRA for the features you wanted.. So many now come "standard" with all the bells & whistles, that the prices have outpaced the people's ability to buy them.

Cars are at LEAST 25% more expensive than most people can afford.

If it takes 5-7 years to pay off a new car, people have no time to "save up" for another new one because they are paying enormous car payments, for such a long time, and during that time. expensive car repairs are also staring to occur, which eats up even more disposable income, and in that 5-7 years, the newer models are continuing to rise.

Cars used to be affordable enough, so you could pay it off in 3 years, drive it with no car payments for a couple of years, and at the end of 5 years trade it in on another new one, or just buy a new one with the 2 years' worth of "no-car payment-yay!" savings, and keep the older one for a spare.

The success of cars like "the Beetle" and other no-nonsense cars proves that not everyone wants or needs a super-dooper-spiffy-deluxe vehicle, but they DO like the idea of getting a NEW car...if the price is right..

$4500 off seems to be a deal-maker..

[vicman]

8. What are you willing to do without?

Side airbags? Kinda pussy. A bumper that can survive a six mile-an-hour crash that will cost you more than $1500 to fix? We settle for so little in this democracy. Face it. We're whipped. We're done.

[SoCalDem]

9. If I had a "price list", I could find a LOT I could do without

for one.. A/C... For people who use their car for short trips and don't travel a lot, AC is a waste of money:)

[MindPilot]

12. Yes, but . There are some serious engineering factors that come into play

If you build a car without A/C, it may actually end up being more expensive. It is not just a matter of not installing those components as it rolls down the line.

The emission and milage profile of the vehicle will be different, requiring a separate EPA certification for that model; the entire heat and vent system under the dash will be different, the engine-driven accessory bracketing and belts will be different. And in the end the manufacturer may very well not sell enough of them to recoup their costs.

Just a little factoid, back in the 70's when I was working for Ford, it actually added IIRC $20 to the sticker to NOT have a radio. It was the "radio delete option" and the reason was it cost more fabricate, color-match and install that little plastic filler panel than it did to install the standard el cheapo AM radio.

[PSzymeczek]

13. A/C is not a waste of $$ in AZ.

It's an absolute necessity.

[FarCenter]

22. If you hold on to a car long enough, it won't have AC

Unless you spend a bundle to get it fixed.

[n2doc]

7. I still think the real incentive was to eliminate haggling on the trade in value

If the car companies were smart, they would institute a cash for clunkers program of their own. They already have $3000 or more incentives on vehicles. Turn that into a guaranteed trade in value of, say, $3500, for the car, and eliminate the Governmental restrictions on mpg and age. Probably could get some $$$ back from even the worst clunkers just because they could salvage the engine parts.

Biggest problem is that they couldn't do this with the cheapest cars, which I think were the biggest sellers in the last round. But it would be worth a try.

[MindPilot]

10. That some shitheads unrec threads no matter what the topic?

CARS proved that the economy is stimulated when ordinary working class folks buy stuff, not when wealthy people get their taxes cut.

It also shows that it takes--at least in the case of an automobile, about 15% of the cost of the product--to effect a stimulus.

A $250 tax rebate won't do shit, but give me $4k for my 20-year old car and we have a deal.

[MercutioATC]

11. People will buy stuff if you PAY them to buy stuff.

Same story with the effect the $8000 first-time homebuyer credit has had on the housing market.

It certainly has a much better stimulative effect than bailing out insurance companies, but it's not sustainable.

[vicman]

14. I'll pay you $100

right now to go out and buy one ounce of crack cocaine

[MercutioATC]

15. There are millions of people in the U.S. who would take that offer...

...and the crack dealers would make a lot of money...and the crack producers would make a lot of money...and the people who brought the coke into the country would make a lot of money...and the coca growers would make a lot of money.

...but only until you ran out of $100 bills to hand out. Then, things would return to their normalized, sustainable state.

[vicman]

16. But will YOU take it?

[MercutioATC]

18. No, but I didn't use the C4C program either...

I didn't state that EVERYBODY would buy absolutely ANYTHING if they were offered money.

I do stand by my statement that people will buy things if you pay them to, and that's not a sustainable economic model (at least, not at the levels used for the C4C and/or $8000 tax credit homebuyer programs)

[vicman]

19. That is not what you said

[MercutioATC]

20. Ok, HERE'S my direct quote: "People will buy stuff if you PAY them to buy stuff"

That statement is true...and it doesn't state that EVERYBODY will buy stuff if payed to buy stuff, nor does it state that people will buy absolutely ANYTHING if you pay them to buy stuff.


Had I said "Anybody will but anything if you PAY them to buy it", your assessment would be true.

I didn't.

[vicman]

17. I can't even pay DU

to let me unrec this thread.

Some things even commie white trash dollars can't buy......

[Spike89]

21. So much of it just very effective hype

The program did what it set out to do and I'm fine with it. However, I don't believe your conclusion is in any way valid. The requirements that the trade-in be a) insured over the past year and b) owned/registered by the customer don't totally stop customers from trading in cars worth $0. The reality is the average "clunker" would almost certainly had a trade-in value well over $2000 and from what I've seen, many probably could have gotten $3000 or more for the trade-in anyway. Heck, I bought a new car before the program and my trade-in got me $1000 and I'm pretty sure they couldn't sell it for $100 if they spent $500 fixing it!

The point being that for consumers, this was hype and a much smaller bonus than the math challenged see. I thought about trading my older pickup in on a new one...I qualified for $3500 trade-in. But, when shopping last winter for the new car, we were offered $3500 for trading it in (we got rid of the "other" car instead). So basically, the cash for clunkers was a zero benefit for me. Even someone with a $2000 car qualifying for the full $4500 "deal" is only getting $2500 extra and that isn't really unprecedented, I've seen dealer sales that were almost that good.

It was the meme that buying a car now makes sense, rather than the real math that made the cash for clunkers work.

[Lars39]

25. We bought a 15,000 car.

We were given 4500 credit for our clunker that had a blue book value of about 1500. We also recieved 1250 credit from Nissan. Our new car wound up costing us less than 10K.
The program worked for us. :)

[FarCenter]

23. People will take on even more debt if you tell them that they are "saving" money

[Stinky The Clown]

24. Universal Single Payer Health Care would reduce the cost of cars by a few bucks.

That's a good place to start.

It would also lower the costs for typewriters and blow dryers and machine tools and baseball pats and baby shoes.