My 2 cents on Clunkers

[georgew]

maybe. some of those same people however can probably also sell their cars for more than what they paid right now too

Originally Posted by frogpond1

What really concerns me is this C4C could really set up a disaster. People oh so eager to get something new and the opportunity to get rid of their old vehicle are now stuck with car payments that they may not be able to handle. Like the mortgage crisis I see this turning into a car loan crisis over the next year.

[SilverPriusIII]

Originally Posted by werewolf34

Funny thing, I was set to clunk in the 1st week but my 1st clunker got reclassified from 18mpg to 19mpg (1987 bmw 528e) so the govt kneecapped me at the start.

Funny, my clunker was not qualify from KBB.com, then the following week when the program started, it was classified as a clunker.
(91 Previa all trac)

[DianneWhitmire]

You know, I don't know if it was specifically MY buyers or the dealership's buyers for cars but half our customers paid cash. I know that of all my Prius deals with clunkers, 50% paid cash for their cars. So... they HAD the money, they were just unwilling to part with it till it became a no-brainer. I personally didn't sell a single car to anyone, based on credit history or income, who couldn't afford what they were signing for. Not from my experience... and I will usually SAY something when I think a wiser decision is not being discussed.

Di

Originally Posted by frogpond1

What really concerns me is this C4C could really set up a disaster. People oh so eager to get something new and the opportunity to get rid of their old vehicle are now stuck with car payments that they may not be able to handle. Like the mortgage crisis I see this turning into a car loan crisis over the next year.

[DianneWhitmire]

Yes, it's proved to be a better boon for the buyers that's for certain! I heard that thru last Friday, of all 300 deals we did ... we've been formally paid on 11.

Other than venturing out for local lunch with my son (a Lance Corporal in the Marines at Camp Pendleton, who's doing some equipment training for 6 weeks at Miramar) and a trip to the local grocery store, I slept and rested most all yesterday. But, I am back for more today. I crave normalcy for the workday but of course, wrapping up C4C will be the focus this week. And, restocking the proverbial shelves with new product to sell!

Thanks DrJon! I'll settle for quiet office time and peace of mind to organize my office, which I left in disarray for most of the week! Anyone who WAS in my office can attest to that fact....looks like two bears were makin' love in there and one of them didn't want to... heh.

Di

Originally Posted by DrJon

This program turned out to be a lot easier for the customer than the dealer (right Diane??!!). The docs they had to provide, the rules, etc.

I was supposedly the 8th deal at my dealership and they did not even know that they had a form I needed to sign specifically for the clunkers program! I had to tell them to pull the page from the appendix of the rules, etc. I actually knew much more than them about what was involved on their end to get paid! I went in yesterday and the Sales manager told me that they still hadn't got paid on any clunkers deals yet. Really, it just confirmed for me how poorly prepared they were to deal with the intricacies of a government program. Every little i needs to be dotted and T crossed. I know personally. I have had to deal with the feds on a few health care programs and sometimes you have to say to yourself "Wow, is the headache really worth it?"

Diane, you deserve a day off or three, what the heck, take a vacation!

C4C RIP!

[DianneWhitmire]

No kidding! A Spa WEEK!

Originally Posted by LoraJ

Dianne,
I think a spa day is in order!!!!!

[octavia]

My aunt, who has a very limited income, needs reliable transportation, and could have really benefited from the c4c program, didn't qualify because in theory, the old rattling maxima she bought last year to get from job site to job site, gets over 19 mpg. In reality it gets less than 16, she has figured her cost per mile.

If the people taking advantage of the program where people who could afford to pay cash, then I'm wondering if the majority were trading in a second car, or a third...spare transport that was not being used very much anyway.

The effect that will have is:

The people that really needed the 4500 were LESS likely to get the deal because the burden on the dealerships was so intense, what salesperson is going to go the extra mile to find financing for someone when there are 10 people waiting who have cash to pay?

The people who buy those clunkers regularly are people who can't afford any other transportation and we have just effectively cut their available inventory down, which will raise the price of the remaining ones. The salesperson we were dealing with this weekend in Hermiston was cheering because now his "worthless" old pick ups and SUV's will fetch a lot more come hunting season ( around the corner) because there will be fewer to choose from.

I know the intentions of the program were good, I just wonder if they really thought it through.

[DianneWhitmire]

Octavia, in a biz sense, your theory is wrong.
I'd rather have financed every single one. We don't turn cash buyers down but as a rule, folks financing are easier to track for future sales thru TFS at least and make "trade it now" offers to (and more likely to trade a car eventually) and also, a tad more generous in finance with extras such as warranty products and alarms. Adding a few bucks to a car payment a month is easier to accept than making a check out for hundreds and hundreds more for extras. It's psychological. And, let's face it. Clunker keepers are going to want to keep THIS car even longer... 75% of these cars will be the Clunker in their homes in 15-20 years.

The idea was to get the guzzlers off the road - help the air quality and help the economy in the auto biz for many manufacturers. I didn't get many cars from folks who had just bought them. I took cars out of households after 1-2 decades.

This program hurts folks like your aunt in a way you won't see... because folks like her looking for cheap transportation in tough times won't find many old beaters now. They are being crushed in the thousands this month... meaning they will have to upgrade to better cars with better fuel economy and perhaps a tad newer... because buying an old car from a private party just became harder.

Originally Posted by octavia

My aunt, who has a very limited income, needs reliable transportation, and could have really benefited from the c4c program, didn't qualify because in theory, the old rattling maxima she bought last year to get from job site to job site, gets over 19 mpg. In reality it gets less than 16, she has figured her cost per mile.

If the people taking advantage of the program where people who could afford to pay cash, then I'm wondering if the majority were trading in a second car, or a third...spare transport that was not being used very much anyway.

The effect that will have is:

The people that really needed the 4500 were LESS likely to get the deal because the burden on the dealerships was so intense, what salesperson is going to go the extra mile to find financing for someone when there are 10 people waiting who have cash to pay?

The people who buy those clunkers regularly are people who can't afford any other transportation and we have just effectively cut their available inventory down, which will raise the price of the remaining ones. The salesperson we were dealing with this weekend in Hermiston was cheering because now his "worthless" old pick ups and SUV's will fetch a lot more come hunting season ( around the corner) because there will be fewer to choose from.

I know the intentions of the program were good, I just wonder if they really thought it through.

[werewolf34]

Originally Posted by DianneWhitmire

You know, I don't know if it was specifically MY buyers or the dealership's buyers for cars but half our customers paid cash. I know that of all my Prius deals with clunkers, 50% paid cash for their cars. So... they HAD the money, they were just unwilling to part with it till it became a no-brainer. I personally didn't sell a single car to anyone, based on credit history or income, who couldn't afford what they were signing for. Not from my experience... and I will usually SAY something when I think a wiser decision is not being discussed.

Di

Dianne,

What is the rule of thumb on affordability of a new car? price = 25% of gross income?

[octavia]

I understand your point, and you're right, I did not consider if from a profit point of view. I was looking at the difficulty in finding financing for someone like my aunt, on social security, with a variable income based on what she can earn month to month and figured that from a salespersons perspective.. why do that if you don't have to? Neither demographic would be highly profitable in my guestimation!

I think we are saying the same thing about the long term consequences though. I agree that the intentions are good and I like the idea of moving towards greener thinking and cleaner air.. very much so, what prius lover doesn't? ^^

I work predominantly with poverty issues and just notice in the case of this program, as in so many others, there are fall out effects that hit those living in poverty hardest of all. Some people can't move to newer, better cars. What are they going to buy with the 1500 bucks now?

In the case of my aunt, my initial hope was to take her to the dealership, with her clunker and get her into something I could help her afford. Basically, the 4500 from the government added to her gas savings and repair cost savings, might have gotten us to a point on an entry level car, that I could have funded the remainder of her payment.

Originally Posted by DianneWhitmire

Octavia, in a biz sense, your theory is wrong.
I'd rather have financed every single one. We don't turn cash buyers down but as a rule, folks financing are easier to track for future sales thru TFS at least and make "trade it now" offers to (and more likely to trade a car eventually) and also, a tad more generous in finance with extras such as warranty products and alarms. Adding a few bucks to a car payment a month is easier to accept than making a check out for hundreds and hundreds more for extras. It's psychological. And, let's face it. Clunker keepers are going to want to keep THIS car even longer... 75% of these cars will be the Clunker in their homes in 15-20 years.

The idea was to get the guzzlers off the road - help the air quality and help the economy in the auto biz for many manufacturers. I didn't get many cars from folks who had just bought them. I took cars out of households after 1-2 decades.

This program hurts folks like your aunt in a way you won't see... because folks like her looking for cheap transportation in tough times won't find many old beaters now. They are being crushed in the thousands this month... meaning they will have to upgrade to better cars with better fuel economy and perhaps a tad newer... because buying an old car from a private party just became harder.

[Mike Dimmick]

The intent of the program was to get people to buy new cars and thereby keep auto workers in employment for a short period. In this regard it's a success whether it was a rich guy trading in his third car or someone trading in their only means of travel. The fuel consumption improvement was a sop to the environmental lobby, really. Improving the performance of 250,000 cars was never going to have a huge impact on the 100 million cars on US roads.

The UK scheme only provides £2,000 off the VAT-inclusive price, but our prices are a lot higher - an entry-level Prius is over £18,000 on-the-road. There are no fuel consumption limits, but the car traded in must be at least 12 years old - we're relying on the general improvements in economy since then. The scheme is 50:50 government:manufacturer funded, so the £300m can fund 300,000 cars. Even so, this is less than 10% of the cars that qualify. If someone's driving a car that old, you have to assume there's a reason!