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Boost from 'Clunkers' won't last long
Ford vehicles are offered for sale at a in Countryside, Illinois. With the help of the U.S. government's 'Cash for Clunkers' program, Ford Motor Co. reported an increase of approximately 1.6 percent in U.S. sales for July in comparison to the same month last year. It has been almost two years since Ford has reported a U.S. sales increase.
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Kai Ryssdal: The monthly sales numbers that came out of Detroit today tell the story of what a smash cash for clunkers has been so far. Ford, GM and Chrysler all reported sharply higher sales in July than they had in June. And even though they're still not selling as many cars as they were a year ago at this time, the Big Three's not going to turn its nose up at government-financed incentive programs. The Senate has until the end of the week to decide whether to put more money into Cash for Clunkers -- $2 billion is the figure being talked about. But no matter what happens in Washington, the deal's going to run out sometime. Which does make one wonder how dealers will keep buyers coming into the showrooms when it's gone. Marketplace's Alisa Roth has more.
ALISA ROTH: Nobody in the auto industry thinks Cash for Clunkers is going to save the business. Erich Merkle is a consultant to the industry. He says the program is a one-off. It attracted a different kind of driver.
ERICH MERKLE: A lot of these people are folks that probably would not likely be new-car buyers.
The automakers' regular customers upgrade their vehicles every few years. Their cars were less likely to qualify for the program.
But Merkle says those buyers are the ones carmakers are counting on.
MERKLE: When the traditional new carbuyer comes back in the market. And we also see recovery in fleet sales, we're going to see sales snap back pretty hard.
He doesn't think those buyers will be back until the end of this year. Or maybe not until next.
The money from Cash for Clunkers is tiding car companies over until that happens. Meanwhile, they're jockeying for position.
George Augustaitis follows the auto industry for consultants CSM Worldwide. He says they're trying everything from fuel-efficient cars to new marketing tactics.
GEORGE AUGUSTAITIS: Ford's putting as much product in the pipeline as they can. Chrysler and GM are putting money on the hood, they're really trying to get financing.
None of that will matter unless the economy gets better. And people can get the credit they need to buy cars again.
Gary Dilts from JD Power Automotive says cash for clunkers has given carmakers a hand. But the industry's still in a terrible state.
GARY DILTS: Let's not pretend paradise is breaking out here. It's still an industry that's running at about an 11-million unit rate in the month of July. It's not going to be too hard to see an industry better than that, even without a clunker program.
This week, the Senate will keep fighting it out over Cash for Clunkers. But Dilts says the auto industry is already moving on.
I'm Alisa Roth for Marketplace.
This money doesn't fall out of the sky. The same people using it, will be paying for it. So, you could just take a cash advance from your credit card, duck all the restriction on the C4C program, and have exactly the same effect.
Should that cash go towards dropping the cost of the car, does the taxes paid also go down? For many towns, the tax base is made up mostly of cars and land. Will there be a noticable drop in tax revenue this cycle?
Is it coinicidental that this program came AFTER dealerships were culled, so there was less competition?
As for foriegn cars being bought, luxury versions I don't think count, due to fuel consumption. That leaves the economy cars, and aren't quite a few already built down south?
You can buy or trade in both domestic and foreign vehicles so not just the US made cars.
Henry
Blogger
www.cashforclunkersfacts.info
http://www.cashforclunkersfacts.info
You did not report was percentage of car purchases were for US made cars and what percentage were for foreign made cars. Whose economy are my tax dollars supporting anway? Having supported the US economy by buying American made cars all my life, I am not ethused by a program that helps people buy foreign cars, leading to more unemployement in this country.
Further, if people get rid of their old cars (which needed repairs) for new ones, won't that lead to further unemployment of auto mechanics?
And what about the cars that are still in working order, but are being crushed because of this program? Won't that raise the cost of used cars, making it more expensive for the poorer folks to buy a car? Not to mention the destruction of auto body parts, which could be used to fix damaged cars still on the road.
If people want to save 10% - 15% on their gasoline bill, let them ease up on the accelerator and obey the speed limits.
