For those of us who thought Cash for Clunkers was shortsighted, this article seems to confirm.
Confirm what? That some one at CNN Money “thinks and predicts” car prices will go up over the next few months?
I predict prices will go down and everyone will get a free monkey. Do I win?
That depends. Do you have a blog?
And … what *kind *of monkey?
If I get a monkey and a car you definately win.
Actually, it appears to me that it did exactly what it was intended to do, support the auto industry. Higher sales, higher prices, higher profit. It’s not like cars were selling at prices higher than MSRP, the companies were simply under less pressure to offer super deep discounts, because they were actually selling something.
If the economy had rebounded, and resulted in this level of sales, the prices would have been higher then too, would you consider that a failure of some sort?
You want deals, just wait a few months for all those new cars to be repoed! 
I figure, if you want a deal, just wait until next year. There are so many new cars on the road right now, as a result of the CARS program, that next year’s sales are bound to be slow. Deals galore!
Yea, I don’t get the OP’s point. Isn’t this what the program was supposed to do? Raise the demand on cars, lower inventories and hence raise prices giving the car industry a kick. The program wasn’t supposed to help out future consumers get a good price.
If there are no deals next month, people may buy less cars. So dealers will want to keep deals, keep people coming in. What’s the big deal? You think, all of a sudden, people are going to want to pay full price for their cars? Before Cash for Clunkers, the Dealers were going ‘Look! You just pay what we pay!’ and so on. I don’t think they’re any less hungry now.
My point is that this article tends to support what the critics of the program have said: It merely consolidated the buyers into a short time period.
When sales slump for the next two months, the dealers will be right back where they started. So what did the program accomplish other than printing an extra $3 billion?
The article said that sales would slump because that was the normal slack period for car sales. I don’t see where it said they would slump because of the clunkers program.
Even if the progam results in no increased sales in the long run, (very unlikely IMO), cash in had now is worth more than cash you’ll get three months from now.
More money churning in the economy means more money - multiplier effect. Since we need more money now (or needed it several months ago when this was passed), incentivizing people to make their purchases now is probably a plus - and the momentum of the increased money in the economy is supposed to help keep the economy going.
There is a lot of probably and supposed to - economics is a soft science.
But since I don’t have a clunker, I’m waiting until next year to buy a car.
( Quote taken from this article )
I can’t find the exact interview, but an analyst on NPR at the beginning of the Cash for Clunkers program opined that yes, it would cause a short term boom and bust for car sales. The idea, though, was that the benefits of the boom would last long enough to get the car manufacturers into a position to better weather the bust.
It stimulated the economy. We’re in a recession, you know? Not only did it stimulate the economy to the tune of 3 billion, it also added the remainder of the car’s cost to the economy. If the average car was 15k that 3 billion facilitated 9 billion being added into the economy.
If the C4C program helps the car companies weather the recession and make it to the recovery it did what it’s supposed to.
From the link
Congress obviously shouldn’t have wasted so much time reading the stimulus bill.
I forget the exact number, but somewhere between 20% and 40% of C4C buyers would have bought a used car without the program. That is a real sales gain.
If you spin stuff the right way, you can make it seem negative. Inventories high, prices low (like before C4C) - OMG, Detroit is getting clobbered! Inventories low, prices higher, like now. OMG, the consumer is paying too much!
I’m not an auto expert, but aren’t there end of the model year sales to clear out inventory, and if the dealers got rid of the inventory without cutting prices to hell good? Aren’t prices a bit higher at the beginning of the year so that people wanting that brand new model can get them? If the car makers over produce so there is another glut, they are idiots, but I think it is safe to say they know there will be a sales dropoff and will produce only to get inventories back to desired levels.
The clunker program helped, directly, middle class people with clunkers and enough money for a new car, and the dealers. Indirectly they helped the car companies, but I don’t think the numbers registered more than a blip for them. They, after all, were selling the cars to the dealers at a discount for the past year, losing money on each car. The program didn’t change that.
Indirect benefactors are the junk yards and anyone who buys junk parts (other than engines) to keep their own clunkers going. So the money dribbled down to that extent.
Nominally hurt were charities that get clunkers as donations, but the real people hurt there are the places like auto auctioneers that usually buy the cars donated and keep most of the money from them, leaving the charity only a small kickback.
According to this article*, 2008 new cars sales were 13,139,058, down 18.7% from 2007.
According to most reports, there were 700,000 CARS deals made, which is roughly 5.3% of the 2008 figure. That’s more than a blip.
There was concentration of buyers, sure. However, a non-zero percentage of CARS buyers, if they had waited, would have decided not to buy at all.
*: I didn’t read the article other than use it for sales figures.
Consolidating economic activity into the near future was what the entire recovery plan was all about; even if growth is stagnant for the following 12 years, brisk growth and near-normal employment in 2010 and 2011 will benefit a lot more people than waiting until 2016 for the same recovery, but growing a touch faster after that.