My 2 cents on Clunkers

[PeteJE]

Just to add - my anecdote supports this educated view. We traded in a Jeep that we bought used, had for 11 years, and but 120k of our own miles on. Could we afford a car without C4C - barely; probably would have bought a 2-5yr used again once the next large repair was needed. This 4500 (+ 100 salvage) allowed us to purchase.

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.

[DianneWhitmire]

That's up to the individual.
If you're talking payments, and budgeting, when credit is bad, they want payment to be no more than 10-12% of your gross monthly income. With pretty good credit, it's 15% of monthly income. With great credit, you do what you want as far as payments go.

As fas as what's prudent, it's up to the buyer as to how far in debt they wish to go -- and for how long.

Originally Posted by werewolf34

Dianne,

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

[The Electric Me]

Well, one thing we've learned from the experience is that you can encourage spending if you give people direct incentives. Even in tough economic times, when people suddenly found out that the near worthless car sitting in the driveway could be worth $3500-$4500, they went out and bought.

Despite flaws in the execution of the plan, affecting mostly dealers, I think it has been a good thing. Lot's of clunkers will be taken off the road, lot's of new cars were sold.

If a future incarnation of this plan is ever re-introduced, I would hope feedback from dealers would result in some changes. I think owners of clunkers get the rebate, Dealers get the Clunker and full scrap value. No more "haggling" over what the dealer is getting for scrap. It also sounds like some expediting and streamlining of the entire process needs to be done. More cooperation between "Cash for Clunkers" and Dealers probably should of been in place before the program was even launched.

What if this program would of had a year lead in time? You could of gotten dealers to increase inventory. Prepare. It's been great for dealerships, but I also feel sorry for those actually working within them because I can bet it's been stressful.

[SilverPriusIII]

Originally Posted by The Electric Me

Well, one thing we've learned from the experience is that you can encourage spending if you give people direct incentives. Even in tough economic times, when people suddenly found out that the near worthless car sitting in the driveway could be worth $3500-$4500, they went out and bought.

Despite flaws in the execution of the plan, affecting mostly dealers, I think it has been a good thing. Lot's of clunkers will be taken off the road, lot's of new cars were sold.

If a future incarnation of this plan is ever re-introduced, I would hope feedback from dealers would result in some changes. I think owners of clunkers get the rebate, Dealers get the Clunker and full scrap value. No more "haggling" over what the dealer is getting for scrap. It also sounds like some expediting and streamlining of the entire process needs to be done. More cooperation between "Cash for Clunkers" and Dealers probably should of been in place before the program was even launched.

What if this program would of had a year lead in time? You could of gotten dealers to increase inventory. Prepare. It's been great for dealerships, but I also feel sorry for those actually working within them because I can bet it's been stressful.

I think the lead time is what's get us into this. I think most people, including me, when they heard that the C4C is coming, they waited to see what the deal is and cause less traffic at the auto dealer. When it became finalized, then fused this run.
Most C4C buyer are long term keeper of their auto, otherwise they will trade it every 5 year or so. After this these buyer will not buy another car for at least 10 years later.
My 2 cents on this C4C is even this has generated sales and works for people, this is not the good steady growth or pace that lead us out of the recession. Factory and/or dealer are doing overtime to catch up and I am not sure if more people are hired in this short time program to cut down our unemployment rate. This OT in effect, helping some people getting more money but still leave many unemployed people helpless.

[Jabber]

I can finally get back to the website. Glad C4C is over. We are sitting on 180ish deals, and only 9 funded. We still have 15 deals that we need to send to the gov't, but that website is down and has been for the last 7+ hours.

Glad to see you survived Dianne. The hurricane is almost over. BTW, count your blessings on the number of cars you have.. We carry about the same number of product (350-400) and have exactly 12 new cars in stock. 7 of which are solara converts that don't qualify and 1 Sequoia. The only remaining cars are ones that came in within the last 3 days that we didn't get a chance to sell. I won't get the chance to replenish my stock as all the buyers that weren't using C4C are now buying inbound cars. I won't see an available Corolla until October. Yaris is October. Camry is end of September. I think September is a good time to take a vacation...and sleep.

Lead time would have been nice. But it wouldn't have made too much of a difference. Toyota could have built more cars, but not nearly enough to cover the potential loss if it wasn't as successful of a program. It isn't like I can say to Toyota, "You know, we only did 80 C4C deals. Those extra 60 corolla's I took we really didn't need. I need to return them so I can afford my floor plan".

I have almost the exact same stats as far as cash vs finance. 50% were cash. I am outside of chicago by about an hour. This far north and west is bordering on farm towns. In fact, at 11pm, I see more cows than cars on the drive home. I had about 4 people that just had an old farm truck laying around. They took their oldest one, used that, took their 2001-2003 and made that the new farm truck, and are driving the new one as a daily driver. I had a good number of people (doctors, lawyers, etc) that traded in their kids cars for the program. One of my customers traded in a 1991 Aerostar that he used to haul around his kid's dirtbike. That is the only reason he owned it. It was strictly a moving vehicle. And he didn't have a trailer for it. He parked the bike in the back after removing the seats. I refused to even get in it to pull it around back because it was so filthy. His annual income? around 800k per year.

Do I think this program caused a "pull ahead" factor? Of course. Was it as bad as everyone says? Doubtful. What about you Dianne?

[DianneWhitmire]

Jeff, we have 222 cars on today's tac sheet but most are in transit and some are still slated to get built, meaning they can be as far out as a month. I have about 80 on-ground units and they vary... it's slim pickings!!!

[malibucarl]

Originally Posted by DianneWhitmire

Jeff, we have 222 cars on today's tac sheet but most are in transit and some are still slated to get built, meaning they can be as far out as a month. I have about 80 on-ground units and they vary... it's slim pickings!!!

Dianne and Jeff,

It seems to me that there were mostly winners in this program. That's based on a BIG assumption--that the Government will payoff the dealers in a timely manner.

The dealerships principals. They sold a large amount of cars, at decent prices, and have greatly reduced costs.

The commission based employees, obviously salespeople. I'm sure it was a PITA but the money must have been good.

The buyers who received gov't assistance of 3.5K or 4.5K. I tried but started too late.

The Manufacturers. Some still have fundamental problems but a "nice shot in the arm".

A bunch of people who are in support of the Auto industry--I have no idea who they may be.

Possible losers.

Buyers w/o C4C. They will have to wait awhile for a "good" selection of cars to arrive.

Taxpayers who funded the program--but did not USE the program.

All in all seems like a good program especially in these "rocky" financial times.

Thanx,
Carl

[bps]

Jeff and Dianne,

Thanks for your insight -- it's great to receive input and feedback from dealers. When I was closing on my Prius early this morning, the guy in the business office told me that they have had tons of cash-paying customers (I'm one too -- I never finance a car unless I can get 0%). If one could study all of the data points from the CARS program, I bet we'd see some interesting results.

I was also one of the folks who's application did not get through when the servers crashed early in the afternoon. And unfortunately, my dealer refuses to let the Prius go until it gets in the system. However, they have given me a 2010 Camry to drive in the meantime.

Bryan

[DianneWhitmire]

They kept the website for dealers open thru 10am today CA time because of the crashing problems they were faced with suddenly ending the program. I hope you have your car!

Originally Posted by bps

Jeff and Dianne,

Thanks for your insight -- it's great to receive input and feedback from dealers. When I was closing on my Prius early this morning, the guy in the business office told me that they have had tons of cash-paying customers (I'm one too -- I never finance a car unless I can get 0%). If one could study all of the data points from the CARS program, I bet we'd see some interesting results.

I was also one of the folks who's application did not get through when the servers crashed early in the afternoon. And unfortunately, my dealer refuses to let the Prius go until it gets in the system. However, they have given me a 2010 Camry to drive in the meantime.

Bryan

[massman]

I thought I read a line in the C4C program about HAVING to finance for 60 months? I did, but figure to pay it off in less than a year. Frankly, I had purchased nothing of note in 10 years, so it looks OK on the credit report.

My C4C experience was a good one. Went in with all my paperwork in hand...signed the title, handed over registrations, insurance, etc. The salesperson did call my insurance company and ask for a new letter stating continous insurance coverage...the letter I had was dated 8-17 and I did the deal on 8-20. I bought one of the last 2009 in N. TX, so I could use the C4C $4500 and the Toyota $1500! Every little bit helps. I actually waited until an elderly couple drove the car, worked with their salesperson and then decided they didn't want black. My guy grabbed the keys, off we went for a test drive, they came back with an acceptable deal and I was done in a couple of hours. The sales manager did say they had been paid on 4 of almost 200 C4C transactions, and as I waited they all received an email that they would only go thru that Friday...giving them the weekend and Monday to get everything submitted.

I really hate to read of the potential appliance rebate program. That is almost a trivial purchase nowadays and could get folks in real trouble.

I love the $800K doctor brining in an old Aerostar. Thrifty runs deep.

All in all, I bought what I wanted, when I wanted, got a good deal in my mind and hopefully will drive this 2009 5-7 years as I do all my vehicles in the past and then figure out what to do.