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http://www.msnbc.msn.com/id/32243024/ns/business-autos

By Alex Johnson
Reporter
msnbc.com
updated 4:48 p.m. MT, Fri., July 31, 2009
The House vote to extend the wildly popular “cash for clunkers” car program left auto dealers in a kind of limbo Friday, not sure whether they should keep handing out deals to buyers who are flooding showrooms nationwide as they await Senate action next week on the program.

The $1 billion program, which promises owners of certain old cars and trucks as much as $4,500 to buy more fuel-efficient new vehicles, was suspended Thursday because it was already running out of money after less than a week. The House voted to triple the funding Friday, but the Senate won’t act one way or the other until next week at the earliest.

Meanwhile, dealers were gamely soldiering on, promising to honor the deals even though they’re having to dig into their own bank accounts to fund payments on deals they’ve already made. That’s because dealers front the cash and have to wait for a government rebate; it’s supposed to show up in 10 days, but now it could take longer — if it shows up at all.


“We just got word that the White House says it’s not suspended, so we’re still going forward,” Rory Griggs, president of Velde GM Supercenter in Pekin, Ill., said Friday “As of right now, we can’t really even get into the dealer portion of the [government] Web site to see whether the deals that we have in there are being processed or not.”

Anthony Davis, a salesman at the dealership, said cars were stacking up awaiting delivery to new owners, “but we don’t know if we’re going to be paid for them or not.”

In Rochester, N.Y., the showroom at Bob Johnson Chevrolet was packed Friday as dozens of people looked to cash in on their old cars.

The dealership doubled its sales this week — but of its 140 clunker deals, it has been reimbursed by the government for only four of them. On an average of $4,000 per car, the dealership is on the hook for almost half a million dollars, General Manager Dave Foringer said.

With the added uncertainty about whether the program will continue, “dealers are now caught in a situation” in which they may have to tell buyers “they’re not going to be able to complete their deal,” said Brad McAreavy, president of the Rochester Automobile Dealers Association.

If that happens, “people are going to be upset,” he said.

Rush of buyers takes dealers by surprise
Dealers expressed some disgust with the government’s handling of the program, saying there wasn’t enough planning.

“It’s like we’re standing in front of this furnace stoking the fire and suddenly the government says, ‘OK, turn out the fire,’” said David Hoover, owner of Hoover Chrysler Dodge in Savannah, Ga.

“We promised people yesterday that we could do something and they could think about it overnight,” Hoover said. “The government saying we couldn’t do it was not going to be good for them or us.”

The basic problem is that the Car Allowance Rebate System turned out to be far more popular than anyone had anticipated. So many potential buyers flocked to showrooms that some dealers ran out of cars to sell, and the volume of business bogged down the Web site where they’re supposed to get codes authorizing the discounts.

The initial $1 billion was supposed to cover deals at more than 23,000 dealerships, which should have been the first clue that something was wrong, said Rusty Hill, owner of Panama City Toyota in Panama City, Fla.

“If you actually did the math ... it comes out to 10.8 deals per dealer. And I knew and a few other people that the program was going to run out of money three to four days into it,” Hill said.

“It was like a football play being drawn up on the playground,” he said. “There wasn’t a lot of thought behind it, which just boggles the mind.”



Adding to the difficulties, said Jason Cords, general manager of Shaheen Chevrolet in Lansing, Mich., is that “there’s a lot of paperwork” involved in the program, especially after the Environmental Protection Agency reviewed mileage ratings and changed the list of eligible cars.

That’s complicating sales and slowing the deals, frustrating some would-be buyers.

Pete Bracket of Prospect, Conn., traded in his gas-guzzling Oldsmobile, which got 16 miles per gallon, and thought he was getting $4,500 off a more fuel-efficient Nissan Altima this week. But the problems with the federal Web site left him without wheels.

“I can’t drive it,” Bracket said as he stood by the red coupe in the Barberino Nissan showroom in Wallingford, Conn. “This is actually mine right here, and as you can see, it’s still on the showroom floor.”

‘A stimulus that actually worked’
John Schicker, general manager of McMahon Ford’s in St. Louis, said the problems were turning out to be perhaps more trouble than the program was worth.

“It’s a little bit scary, because we’re taking a car in, we’re giving people an allowance for the car that the government’s going to refund us on, but we’re not 100 percent sure ... we’re going to get our money,” Schicker said.

An msnbc.com-NBC News special report
Alex Johnson is a reporter for msnbc.com. The following NBC stations contributed to this report: WEEK of Peoria, Ill.; WHEC of Rochester, N.Y.; WILX of Lansing, Mich.; WJHG of Panama City, Fla.; WOAI of San Antonio, Texas; WSAV of Savannah, Ga.; and WVIT of Hartford, Conn.



Alan Helfman, general manager of River Oaks Chrysler Jeep in Houston, said he’d resigned himself to the probability that “I’m going to get hammered on a deal or two.”

McAreavy of the Rochester dealers group said lawmakers should pause for a moment, “figure out where we are, allow the deals that have been approved and completed to go through the system and just basically do an accounting and see where we are.”

But Foringer of the Pekin, Ill., GM dealership said he hoped it would be full speed ahead, even with the problems he’s putting up with right now.

“This is a testament of a stimulus that actually worked,” Foringer said. “This is one thing the government has done that’s proved to be good.”

Copy paste the article into your topic please. Thank you.

Done

What will be curious is if all the used cars are munched, what happens to the price of a used car? Or the price for second hand parts from junk yards?

Well, none of the engine parts will be usable...

Check out the youtube videos.

They sieze the engines.



But this is perfect Liberal politics in action: Go "Green" by throwing stuff away...

no... its not a very accurate preview of Aun o bamas health care plan will go..... the health care plan will be a much more epic fail.

this was just a measly 1billion (3billion if the dems in congress get their way).

the healthcare plan will fail hard with TRILLIONS of dollars.



its sad that it takes THIS much for people to see... i love my country to much to see it go down the tubes, but that is exactly what is happening.... i mena come on, 8 YEARS of BUSH sounds better then a hundred DAYS of failbama.

Baby jesus crys, you get a new boss and all you can do is whine.. grow a set ffs

Cash for Clunkers = New Healthcare Program?

So, if I bring in my grandmother, do I get a newer, more efficent, better home-cooking model?

Yeah, you'll get lots of bonus "features" that you don't currently have, but you're going to have to shell out some serious, serious cash upfront for that hot, new, sexy thing.

And you'll be paying more for years to come...
____

So really, it's just like marriage in miniature.

Guys, the US auto industry is in crisis, the economy is in crisis.
on news hour last night i watched a DEM and A REp both say this is exactly the sort of program needed.
Short term, focused, and productive (it gets rid of lame old cars and sells newer, better ones, thus stimulating the economy and keeping the car industry afloat).

The proviso I would have made would be that you have to buy an american built car with the rebate.... not much point America keeping the Japanese or German car manufacturing afloat is there?

Well, if the health care is going to mimic this, then Obama will borrow a FFSzillion dollars to pay 30 times what health care providers are worth, shut down a thousand or so hospitals and let you trade in your grandmother for a rebate on insurance that they won't pay for.

Waaagh_Gonads wrote:Guys, the US auto industry is in crisis, the economy is in crisis.
on news hour last night i watched a DEM and A REp both say this is exactly the sort of program needed.
Short term, focused, and productive (it gets rid of lame old cars and sells newer, better ones, thus stimulating the economy and keeping the car industry afloat).

The way the program is running now doesn't appear to be doing anyone any favors. It'll be really interesting to see what happens when a lot of the people that got in on this deal start defaulting on their loans because they couldn't really afford a new car in the first place.

Given that they already took my tax dollars to prop up GM & Chrysler, I don't see why they need more of my tax dollars for a car sales promotion.

Given that they already took my tax dollars to prop up GM & Chrysler, I don't see why they need more of my tax dollars for a car sales promotion.

The point of stimulus is to encourage the consumer model of capitalism we work under to continue working. That happens when people buy things. Welcome to capitalism, it doesn't work when everyone saves. Higher than expected demand means that this is actually an effective form of stimulus use, both creating a net demand for new vehicles and removing older less efficient models thus reducing the national gas burden (theoretically driving down gas costs, though thats a net effect and would really only serve to slow the rise).


I really don't think any of you understand how stimulus programs work.

no... its not a very accurate preview of Aun o bamas health care plan will go..... the health care plan will be a much more epic fail.

Especially you.

http://news.bbc.co.uk/2/hi/americas/8178992.stm

US seeks to continue car rebates


The scheme has been more popular than the government expected
The US House of Representatives has approved an extra $2bn of funding for the Car Allowance Rebate System.
Under the scheme, Americans who trade in their old cars for more efficient models receive cash payments.
The programme was backed by $1bn (£600m) of stimulus funds, but has proved so popular that more cash is needed to keep it going.
The House has approved an extra $2bn, and the Senate is expected to vote on the matter next week.
But funding cannot be made available until the Senate approves it.
Bipartisan solution
Before the House of Representatives vote, US car-dealers had been expressing concerns that the government would not be able to honour pledges to pay car-buyers their promised rebates.
Under the terms of the programme, which has been dubbed "Cash for Clunkers", Americans are being offered up to $4,500 if they scrap their old cars or trucks and exchange them for new, more fuel-efficient vehicles.

It has succeeded well beyond our expectations
Barack Obama
Officials projected that $1bn would be enough to fund 250,000 transactions.
They planned for the scheme to operate until 1 November or until the money ran out, but sales volumes have been unexpectedly high, and the funding is drying up more quickly than had been predicted.
"I'm happy to report that it has succeeded well beyond our expectations and all expectations, and we're already seeing a dramatic increase in showroom traffic at local car dealers," said US President Barack Obama.
"It's working so well that there are legitimate concerns that the funds in this programme might soon be exhausted," Mr Obama added.
"So we're now working with Congress on a bipartisan solution to ensure that the program could continue for everyone out there who's still looking to make a trade."
No precise sales figures are available but the Associated Press has quoted Michigan Senator Debbie Stabenow as saying that some 40,000 sales have been completed through the scheme, with dealers estimating that a further 200,000 deals are in the pipeline.
In the House debate, some Republicans criticised the way in which the scheme had been implemented.
"I've got dealers who have submitted the paperwork three times and have gotten three rejections," said Representative Pete Hoekstra. "What is a dealer supposed to do?"
The scheme was designed to stimulate the US car industry, which has been hit badly by the global economic crisis.
Car sales for the first half of 2009 were down 35% from the same period in 2008, and observers are predicting only a slight recovery during the second half of the year.

I hadn't been paying too much attention to this, but decided to look into it...this is a frelling brilliant stimulus plan. People are running out to buy new cars! Did the detractors posting here not read the part about car dealers running out of cars to sell?

So to address the OP...if Obama's health care plan is as successful as this "Cash for Clunkers" program, then I certainly hope it goes the same way, and that Congress throws it the money a successful plan deserves as they will be for this one.

What gets me is that this is quintessential capitalist economic theory: in order for a capitalist system to thrive in the long term, you require tremendous buying power in the hands of as many people as you can get it to.

You need a lot of consumers, spending a lot of money, in order for a capitalist system to work.

So...a bunch of people spending money on cars is a good thing even if the government is subsidizing $4,500 per car, because the average cost of a car is around $30,000 give or take a few grand.

The same sort of thing is going to happen when everyone finally has health care, and people aren't seeing it.

If you suddenly give health care to millions of Americans who don't have it, perhaps then they'll go to a Primary Care Physician for simple things like getting a really bad cold, standard aches and pains that may be indicative of something more serious developing...they pay a $20 co-pay to the doctor's office but now there are MILLIONS more Americans going to the doctor on a regular basis. All that money is being spent where it was previously not being spent, AND all of these people were previously only getting medical care when things had deteriorated to the point where they had no choice and had to go to emergency rooms, where they couldn't afford to pay for the medical care anyway AND it was more expensive because their conditions were so much worse due to the lack of preventative medicine and who do you think pays for that care when the patients cannot afford it?

Understand that the only reason Republicans are trying to sink this health care reform package is because they've got the insurance companies' you-know-whats in their mouths. The Republicans are owned by Big Business - and insurance companies are going to have to lower rates and start treating people like human beings once there's a public option on the table for competition.

I pay higher and higher premiums every year through my job...if you offer me a public option at a markedly-reduced rate than what I'm paying for my health care right now, such that I will be paying lower premiums AND lower co-pays AND get to keep all my doctors, then damned straight I am going to ditch my health care plan so quick it'll make their head spin.

Now they have to actually compete to keep me. Now they have to make sure that when my sister applies for health care she doesn't get turned down due to a "pre-existing condition" because she'll just turn to the public option, and screw the health care companies.

This is also about another absolute prerequisite for economic health in a capitalist system: COMPETITION.

Monopolies are the death of capitalism. Quality of product falls (hello Windows), prices of products rise (hello Big Oil), and then everyone OTHER than the companies get fethed...and the companies in charge of the product get so few in number that they don't bother competing with one another. They're not stupid...they all act in concert to set rates fairly equally across the board so as to make sure they all get to keep running to the bank. When the number of companies competing for the consumers get so few in number there are plenty of customers for everyone, and each company only has the infrastructure to supply product to a certain geographical area, so they just divide the pie and that's that.

Obama's health care reform package if it would just get passed as originally construed would introduce competition into health care and sign up millions more Americans who would then start SPENDING MONEY when they actually could AFFORD to go see a doctor...but the peenor-sucking Republicans are fighting it tooth and nail because they know that once the reform goes through IT WILL WORK and then the current system whose teat they suckle from goes away forever...and the stupid Blue Dog Democrats are falling for all the b.s.

Seriously...Americans are SO fething stupid, it kills me...I just wish that New England would secede from the Union already and let everyone else either go to hell or secede along with us and come along for a much better ride...and then let all the conservative areas of the country burn and who cares...I get really tired of feeling like my nation is getting held back by herds of dullards who eat up whatever the television tells them because they're too ignorant to exercise a little thing we call LOGIC.

/rant off

I'm shocked you have such a negative attitude. Shocked and appalled.

As I said before, I'm just waiting for all the dafaults to start happening. There's a reason a lot of these people haven't gone out and gotten a better car already, and that is the fact that they didn't have enough to afford a better car.
All of a sudden, they're going to be able to carry the rest of the payments on a new car because they got the first $4,000 on it?

For those that missed this in the first news article that was posted:

In Rochester, N.Y., the showroom at Bob Johnson Chevrolet was packed Friday as dozens of people looked to cash in on their old cars.

The dealership doubled its sales this week — but of its 140 clunker deals, it has been reimbursed by the government for only four of them. On an average of $4,000 per car, the dealership is on the hook for almost half a million dollars, General Manager Dave Foringer said.

A little further in the same article:

The initial $1 billion was supposed to cover deals at more than 23,000 dealerships, which should have been the first clue that something was wrong, said Rusty Hill, owner of Panama City Toyota in Panama City, Fla.

if you actually did the math ... it comes out to 10.8 deals per dealer. And I knew and a few other people that the program was going to run out of money three to four days into it,” Hill said.

“It was like a football play being drawn up on the playground,” he said. “There wasn’t a lot of thought behind it, which just boggles the mind.”

This from the second news article:

Before the House of Representatives vote, US car-dealers had been expressing concerns that the government would not be able to honour pledges to pay car-buyers their promised rebates.

Of course showroom traffic has increased. We've got people taking out loans on cars they can't afford, though, and dealers aren't being reimbursed.
I'm envisioning we're all going to get screwed on this in the end.

The economy was "booming" with people taking out loans on houses they couldn't afford and credit cards they maxed out on I think we all know the story on how that ended up. This is a repeat, folks.

Your sounding like Captain Hyperboles sidekick, Coke-lens glasses Boy.

Did I miss the part about the dealerships being forced into this? I might have.

Msnbc wrote:Meanwhile, dealers were gamely soldiering on, promising to honor the deals even though they’re having to dig into their own bank accounts to fund payments on deals they’ve already made. That’s because dealers front the cash and have to wait for a government rebate; it’s supposed to show up in 10 days, but now it could take longer — if it shows up at all.

Yeah... that part. They seem to be focusing on the fact that people are responding well to this program... but in a bad way? Forgive me for saying HUH?

Wrexasaur wrote:Your sounding like Captain Hyperboles sidekick, Coke-lens glasses Boy.

Did I miss the part about the dealerships being forced into this? I might have.

Msnbc wrote:Meanwhile, dealers were gamely soldiering on, promising to honor the deals even though they’re having to dig into their own bank accounts to fund payments on deals they’ve already made. That’s because dealers front the cash and have to wait for a government rebate; it’s supposed to show up in 10 days, but now it could take longer — if it shows up at all.

Yeah... that part. They seem to be focusing on the fact that people are responding well to this program... but in a bad way? Forgive me for saying HUH?

The way it reads, it sounds like a screwed up deal to me. I'm wondering how much this stimulous is going to end up costing us in the end. How is it hyperbole to think this is a repeat of the housing defaults in the making? Is giving someone $4500 dollars really going to give them the ability to carry out the rest of the payments on a $14,000 car they couldn't afford in the first place?

There is a pretty big difference between a house and a car, thus the smaller form of Hyperbole, which includes media hype of course.

This whole deal is totally new to me, that is why I find it odd that it is such a huge deal all of a sudden. News people always spin things in very strange directions, just the name of the game most of the time.

Calling this the next "big scam" so to speak just may be a tad irrational. That is all I am saying.

The way it reads, it sounds like a screwed up deal to me. I'm wondering how much this stimulous is going to end up costing us in the end. How is it hyperbole to think this is a repeat of the housing defaults in the making? Is giving someone $4500 dollars really going to give them the ability to carry out the rest of the payments on a $14,000 car they couldn't afford in the first place?

Given that the actual amount of the stimulus is public knowledge, as is the form and function of most of it's current projects I'm just going to assume you either don't understand what a stimulus plan is or are just making a partisan fuss without a sensical factual basis because you don't have one but want to feel smart anyway.

4,500$ dollars out of 14,000$ is nearly a third. Thats a pretty hefty down payment. That reduces monthly car payments considerably, and in the current tight credit climate your unlikely to see dealerships or banks handing out loans freely to unqualified consumers. It's a very different environment from pre 08 status, and a 9,500$ car debt is nothing compared to a 600,000$ debt on a piece of property you purchased specifically to sell.

Frazzled wrote:I'm shocked you have such a negative attitude. Shocked and appalled.

Whose attitude? Lots of us complaining in this thread...might want to be more specific.

ShumaGorath wrote:

The way it reads, it sounds like a screwed up deal to me. I'm wondering how much this stimulous is going to end up costing us in the end. How is it hyperbole to think this is a repeat of the housing defaults in the making? Is giving someone $4500 dollars really going to give them the ability to carry out the rest of the payments on a $14,000 car they couldn't afford in the first place?

Given that the actual amount of the stimulus is public knowledge, as is the form and function of most of it's current projects I'm just going to assume you either don't understand what a stimulus plan is or are just making a partisan fuss without a sensical factual basis because you don't have one but want to feel smart anyway.

4,500$ dollars out of 14,000$ is nearly a third. Thats a pretty hefty down payment. That reduces monthly car payments considerably, and in the current tight credit climate your unlikely to see dealerships or banks handing out loans freely to unqualified consumers. It's a very different environment from pre 08 status, and a 9,500$ car debt is nothing compared to a 600,000$ debt on a piece of property you purchased specifically to sell.

The mentality of spending beyond one's means to pay back is still being fostered, though, and I think a lot of defaults are going to be happening.

I'll complain and be more specific.

The cash for clunkers program gives people a reduction of 4000-4500. If thats the reduction it takes to sell 300,000 cars in 2 weeks, then why the f*** didnt car dealerships do that in the first place, instead of calling bankrupcy. Reducing your prices is a hell of a lot better than losing all your money, employees, customers, and dealerships. Because these donkey-caves decided that they only wanted to lower car prices by a maximum of 2000$, the taxpayers have to deal with Xtrillion$ in national debt, and government programs.

"But they wouldnt make any money if they reduced thier prices by 4000$ without the government giving them any money back"

My dad bought a Nissan X-tera, a year ago, before the car dealerships were in trouble, and got 9000$ off.

If the idea was to raise fuel economy, then the easiest thing to do is to add a buck or two to the federal gas tax.

JohnHwangDD wrote:If the idea was to raise fuel economy, then the easiest thing to do is to add a buck or two to the federal gas tax.

Agreed

Illeix wrote:Well, if the health care is going to mimic this, then Obama will borrow a FFSzillion dollars to pay 30 times what health care providers are worth, shut down a thousand or so hospitals and let you trade in your grandmother for a rebate on insurance that they won't pay for.

What are you even talking about? This is how it works now, only you pay the "FFSzillion" dollars.

JohnHwangDD wrote:If the idea was to raise fuel economy, then the easiest thing to do is to add a buck or two to the federal gas tax.

That doesn't encourage spending on durable goods. It just causes people to save more and cut down on travel expenditures. Once again, the purpose of stimulus is to directly fund the consumer economy. Something taxes, higher or lower, don't do. When gas was 4-5$ a gallon it didn't boost the economy, and while it did encourage the death of the SUV market I didn't see people rushing out to trade in their brand new POS, unsafe, gashogs. They just complained and tightened their belt. Which is bad for the flow of money in a capitalist economy. Though a gas tax is, as always, a viable method of funding other forms of stimulus (thus forcing the consumer dollar into different places, but not removing it from the equation).

The mentality of spending beyond one's means to pay back is still being fostered, though, and I think a lot of defaults are going to be happening.

Except its not. Consumer credit and loans are currently incredibly hard to get. This is not the fast and crazy credit market of 2007 and high risk loans, not the concept of the loan itself is what broke our economy in the first place. It's the place of banks to provide well designed and factually derived loans based on the payment history of the person trying to get the loan. Seriously, what are you even trying to say? That the concept of a credit centric capitalist economy is dysfunctional? Because if so you're proposing something a hell of a lot more extreme than anything obama is, and something thats pretty well incorrect given the last 60 years of relative success.

So, let me get this straight.

Like the UK, the US has tabled and motioned a 'Bangers for Cash' deal, whereby those with an older Car can trade it in, and get money off a brand spanking new Car.

The scheme is a success, and people are complaining.

As Shuma mentioned, this scheme benefits Car Makers way more than a bail out. It sells Cars. It stimulates the economy. And that it's being used to sell Greener Cars is a nice touch to my mind.

But of course, you just decide that everyone using this is going to default, and thus it must be a bad idea. What a crock. Again, as Shuma said, the Banks are now stricter to who they lend money too these days, thus it should (only should. Never deal in absolutes when it comes to Bankers Greed) mean the finance is only made available to those who can genuinely afford it.

And spending is infectious. You get people into Showrooms, and the Salespeople make their money, keeping their job secure. The salespeople (and indeed others involved in supplying the new Car) are then in a better financial state, and can start to enjoy luxuries in life once more. This does the same trick to those who supply said luxuries. Rinse and Repeat and eventually your economy is back on track.

Now if the media could just STFU about green shoots being nothing of the sort etc, we can end this recession in the next few months.

Why? In the UK, we have a ridiculously low Interest Rate at the moment. This means those people with Mortgages are paying less than ever before, putting a couple of hundred quid in their sky rocket each month. Which is disposable income. This money can either be used to pay off Credit Card and non-Mortgage debt (thus meaning the banks get greater liquidity, hurrah!) or be used to indulge yourself. WE HAVE THE SODDING MONEY, SO START SPENDING. This is the only way out of a Recession. You spend your way out of it. Get the cash flow, well, flowing once again.

But no, the Media just want to sell their sensation. You tell people they don't have money, and they will believe you. You only present the negative, and rubbish the positive, and you keep the recession around for longer. Tossers.

N.B. This stimulus package is different from the Bail Outs the automotive industry received. The Bail Outs were about job protection, and trying to avoid things getting even worse. This one however, is about reversing the decline through improved cash flow. Enable people and companies to pay off their debts (secure job, secure income etc) and you benefit the Banks as they encounter arguable fewer bad debts.

Except, all it's doing is discounting car purchases that people would have made anyways.

JohnHwangDD wrote:Except, all it's doing is discounting car purchases that people would have made anyways.

Provide factual basis for erroneous claim please (or explain the 100% sales spike mentioned in above articles). Come on DD, you can troll better than this. It's like you're not even trying.