Cash for Clunkers will officially end on Monday at 8 p.m. But don't wait till then to make the deal if you're still interested. That's the hard deadline for dealers to file their paperwork, although based on history, I'm guessing they'll be given time to have the claim rejected for errors, at which point they can resubmit.
Cash for Clunkers to end on Monday - Yahoo! News
The popular program will end at 8 p.m. EDT Monday after burning through much of its $3 billion in funding in just a month. All new deals will have to be completed and dealers must file their paperwork by the deadline in order to get repaid for the big incentives.While the program has certainly increased sales for car makers over the past month and a half, the program has certainly seen a lot of issues that made it a headache for almost everyone else.
History of the Cash for Clunkers (CARS) program
After setting aside $1 Billion in funding, car makers quickly jumped on board, setting up advertising and websites for customers to get all the details.
The program was criticized roundly by analysts and environmentalists. One thought the impact would minimal on sales, while the other thought the environmental impact that was being touted would be negligible.
Government Gets a Refresh
Then there was the 'refresh' of fuel economy figures by the government. Vehicles on the borderline were being pushed back up over the minimum fuel economy requirement even after the program had begun. Which meant that some vehicles were being sold under the program were no longer eligible for the program. The government ended up telling dealers if they had made the deal before the 'refresh' the government would still cover the sale.
Is There Such a Thing as Being Too Popular?
The CARS program was so popular with dealers at first, they crashed the website almost immediately after it was opened. Within a week of its official beginning, the program was almost brought to a halt since the Billion dollars set aside was already gone.
Congress worked 'quickly' to set aside another $2 Billion for the program. The CARS program was supposed to last four months on $1 billion. It took almost four days to burn through most of that. The two billion add-on helped the program last one month in total. The program was originally going to be funded for $4 billion and last one year.
The Check is in the Mail
Then dealers started complaining that it was taking too long to get the money from the government. Processors working on the claims were doubled, then tripled, but even over the past few days, little of the promised rebates have gotten to dealers.
This causes big issues for the dealers because they have to pay for the car within days of selling it. Dealers complained they had sold over 100 cars using the program, but did not have the money to cover the cost of the rebate to pay off the car.
Things were so bad, Chrysler, Nissan and GM both ended up promising to cover the cost with interest free loans, while Toyota has added a 60 day loan that is not interest free for dealers until they get paid by the government. In the meantime, a lot of the cars sold under the program are still sitting on dealer lots, waiting for the payment to come through. Dealers are refusing to deliver until they've received payment.
Numbers? What Numbers?
Although the Transportation Department has released summarized tables on the program almost daily (see the halfway point), the AP and others have complained loudly that the Obama administration refuses to release the full list of trade-ins and purchases. Certainly, the figures released have been slightly different than those compiled elsewhere by surveys (which is to be expected). But why not release the full list?
The final numbers put the total at $2.877 Billion, with a total of 690,114 submissions.
Winners and Losers
In the end, the government is claiming the program has been a wild success. It's certainly been way more popular than expected. But 'success' is defined by the beholder.
Environmentalists laud the increase in fuel economy, while denouncing the 'recycled' vehicles going into the landfills. They also point out the program could have been set up to improve the fuel economy a lot more.
Analysts were right that the number of sales made were a small portion of those made on an annual basis, and are worried that these sales are just ones that would have already been made, if not now. Instead, they worry the program has accelerated the sales of that would have been made over the coming year, which now that the program is ending, will put a crimp on future sales.
Dealers, while extremely excited about the foot traffic and extra sales, have been going into the hole to cover the costs of waiting for the rebates from the government. It's gotten so bad that a lot of dealerships were already backing out of the program, before it's official end. In fact, dealer associations were asking the government to end the program sooner rather than later.
Auto maker executives and workers are probably the only group who thought very highly of the program at the beginning and are still excited about it. It certainly led to an increase in sales over the past couple of months, and did lead to several decisions to re-open or speed up production of certain vehicles. That certainly has to make the laborers happy. But I guess we'll have to see what the long term impact is on sales.
Customers, I'm sure, were happy to get a new vehicle with such huge rebates on vehicles they could not have gotten a trade-for as much as they did. But it's been widely reported that car dealers were taking advantage and were not cutting back on the purchases as much as they normally would have. In other words, people were paying sticker price for the cars they normally would have haggled a lot more about.
And that may be a problem for some. In the immediate aftermath, of 1,000 buyers surveyed by CNW Purchase Path, 17% said they had some or serious doubts that they should have made the new-vehicle acquisition. Only 6-8% normally have buyers remorse after just one month according to the report.
"Primary reason: They are now facing a $275-$350-per-month car payment that didn't exist prior to acquiring the car or truck. That amount, they say, could negatively impact the total family budget more than expected prior to buying the new vehicle."
Tax revenues will certainly go up for some, both for sales and excise. That will certainly help some state and local tax bases. But then, the money came from the federal government, so tax money paid for it in the first place.
Insurance companies are probably happy to have higher premiums being paid out on the more expensive vehicles.
Charities are losing out, however. With these 'clunkers' being recycled, they will not end up in the hands of charities who would have normally gotten the donation.
Tax payers may not be happy since they just spent $3 billion on a program to prop up auto makers who they have already paid billion to become part owners of. Unless they were the customers who participated in the program. I know I've heard of some resentment ("Where is my rebate for buying a fuel efficient vehicle in the first place?").
And then there's the argument being made that Toyota has been the majority winner for sales under the program. Does that mean we just propped up a foreign company more than we helped the 'domestic' companies? I would have to say no, since the most popular cars being sold under the program are mostly made in the US (Yes, the cars from Toyota are made here). But the argument can be made, and won, in the other direction.
How About You?
Was it a success or a failure for you?