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‘clunkers’ Auto Rebate Plan So Popular That It’s Broke

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http://www.nytimes.com/2009/07/31/business...tml?_r=1&hp

New-car shoppers appear to have already snapped up all the $1 billion that Congress appropriated for the “cash for clunkers†program, leading the Transportation Department to tell auto dealers Thursday night to stop offering the rebates.

But a White House official said the program had not been suspended, creating confusion about its status. The program offers $3,500 to $4,500 for people who trade in an old car for a new one with higher fuel economy.

In a statement issued Thursday evening, Robert Gibbs, the White House press secretary, said: “We are working tonight to assess the situation facing what is obviously an incredibly popular program. Auto dealers and consumers should have confidence that all valid CARS transactions that have taken place to date will be honored.â€

The program, formally known as the Car Allowance Rebate System, was scheduled to be offered until Nov. 1, or as long as the money was available. But the program was so successful that it has exhausted all the money allocated within the first week. Dealers have submitted applications on behalf of consumers seeking rebates on about a quarter-million vehicles.

The National Automobile Dealers Association surveyed its members in recent days and warned the Transportation Department on Thursday that it had a very large backlog of applications, said Bailey Wood, a spokesman for the association.

Late in the day, the group said the Transportation Department had responded by telling it to stop taking applications at midnight. The government and the dealers were concerned that buyers would close trade-in deals to buy new cars assuming they had a big rebate coming only to discover later that money was not available.

The dealers’ group said late Thursday night that it had not heard about the White House policy reversing the decision. Mr. Wood said that his group would ask Congress and the White House to add money to the plan.

Transportation Secretary Ray LaHood has already been making calls to members of Congress, telling them about the situation. The Michigan delegation was planning a meeting Friday morning to discuss the situation, a Congressional aide said.

On Thursday evening, the government Web site describing the program, www.cars.gov, still showed a chart shaped like a fuel gauge that indicated $779 million was available for trade-ins of cars and light trucks. Earlier Thursday, the Transportation Department issued a news release that said that applications for fewer than 23,000 vehicles had been submitted as of Wednesday, with a rebate value of just under $100 million.

Here's a radical thought it appears that cheaper cars sell. Why not get rid of the govt subsidy and just make everyone reduce there prices?

Or is that just being plain silly?

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http://www.nytimes.com/2009/07/31/business...tml?_r=1&hp

Here's a radical thought it appears that cheaper cars sell. Why not get rid of the govt subsidy and just make everyone reduce there prices?

Or is that just being plain silly?

Bloomberg reporting a top US player is about to announce why he thinks the recession is about to end.

I wonder how much of the measured GDP includes the subsidys governments a re giving.

for example, they sell a car and 10% of its cost is paid for by the taxpayer.

is the GDP based on the car sales price, or the price less the subsidy?

and when the subsidy stops? what then?

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Bloomberg reporting a top US player is about to announce why he thinks the recession is about to end.

I wonder how much of the measured GDP includes the subsidys governments a re giving.

for example, they sell a car and 10% of its cost is paid for by the taxpayer.

is the GDP based on the car sales price, or the price less the subsidy?

and when the subsidy stops? what then?

It's almost certain that the subsidy gets counted in GDP, manipulating the figures nicely.

The subsidy can't stop, because then no cars would sell, meaning the cutting of prices which of course affects profitability, share prices etc..... We can't have a low share price so this govt subsidy is distorting the entire economy. But then again that will be the point to try and generate confidence.

“Subsidies . . . prolong the life of inefficient firms at the expense of efficient ones, distort the productive system, and hamper the mobility of factors [of production] from less to more value-productive locations. They injure the market greatly and prevent the full satisfaction of consumer wants. . . . The greater the extent of government subsidy in the economy, therefore, the more the market is prevented from working, and the more inefficient will the market be in catering to consumer wants. Hence, the greater the government subsidy, the lower will be the standard of living of everyone, of all the consumers.â€

–Murray Rothbard, Man, Economy and State and Power and Market (Mises Institute), 2nd ed., p. 1255

Shamelessly stolen from Lowrent

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Yet they gave 180 billion$ to AIG with barely a second thought. Imagine the stimulus impact if this was funded to 180 billion. Or even 1/5th that.

One thing that really got the Chinese economy moving was a big rebate on fuel efficient cars.

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Quite a few posters nailed the piss-take scheme when it was announced.

Not only have a tiny fraction of the cars been sourced form the UK, the manufacturers have effectively just bled money from the taxpayer.

http://www.dailymail.co.uk/motoring/articl...8B0EACB50D1085D

Car price rises neuter 'cash for bangers' scheme

By Olinka Koster

Last updated at 7:52 AM on 31st July 2009

* Comments (6)

* Add to My Stories

Cash for bangers scheme

The 'cash for bangers' scheme will leave many buyers no better off because manufacturers have hiked car prices, a report has warned

The 'cash for bangers' scheme will leave many buyers no better off because manufacturers have hiked car prices, a report has warned.

The initiative enables the owners of cars at least ten years old to get £2,000 off a new vehicle when they trade in their old one.

But Which? Car found that some makers have raised list prices by as much as 14 per cent.

The price of a mid-range Ford Fiesta 1.25 Zetec has jumped from £11,570 when the car was launched last October to £13,195 this month, a rise of £1,625.

Read more: http://www.dailymail.co.uk/motoring/articl...D#ixzz0Mp0V0yCP

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Quite a few posters nailed the piss-take scheme when it was announced.

Not only have a tiny fraction of the cars been sourced form the UK, the manufacturers have effectively just bled money from the taxpayer.

http://www.dailymail.co.uk/motoring/articl...8B0EACB50D1085D

Car price rises neuter 'cash for bangers' scheme

By Olinka Koster

Last updated at 7:52 AM on 31st July 2009

* Comments (6)

* Add to My Stories

Cash for bangers scheme

The 'cash for bangers' scheme will leave many buyers no better off because manufacturers have hiked car prices, a report has warned

The 'cash for bangers' scheme will leave many buyers no better off because manufacturers have hiked car prices, a report has warned.

The initiative enables the owners of cars at least ten years old to get £2,000 off a new vehicle when they trade in their old one.

But Which? Car found that some makers have raised list prices by as much as 14 per cent.

The price of a mid-range Ford Fiesta 1.25 Zetec has jumped from £11,570 when the car was launched last October to £13,195 this month, a rise of £1,625.

Read more: http://www.dailymail.co.uk/motoring/articl...D#ixzz0Mp0V0yCP

This scheme removes the number of cars available to the less well off.

Why does that pr1ck Gordon Brown hate the poor so much?

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Quite a few posters nailed the piss-take scheme when it was announced.

Not only have a tiny fraction of the cars been sourced form the UK, the manufacturers have effectively just bled money from the taxpayer.

http://www.dailymail.co.uk/motoring/articl...8B0EACB50D1085D

Car price rises neuter 'cash for bangers' scheme

By Olinka Koster

Last updated at 7:52 AM on 31st July 2009

* Comments (6)

* Add to My Stories

Cash for bangers scheme

The 'cash for bangers' scheme will leave many buyers no better off because manufacturers have hiked car prices, a report has warned

The 'cash for bangers' scheme will leave many buyers no better off because manufacturers have hiked car prices, a report has warned.

The initiative enables the owners of cars at least ten years old to get £2,000 off a new vehicle when they trade in their old one.

But Which? Car found that some makers have raised list prices by as much as 14 per cent.

The price of a mid-range Ford Fiesta 1.25 Zetec has jumped from £11,570 when the car was launched last October to £13,195 this month, a rise of £1,625.

Read more: http://www.dailymail.co.uk/motoring/articl...D#ixzz0Mp0V0yCP

I remember reading articles at the time where the car manufacturers were blaming the price rises on the Pound/Euro exchange rate which wasn't far off parity then - funnily enough they haven't mentioned any price cuts since the Pound has strengthened from roughly 1.02 to 1.17.

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