I just saw an interview with a Dodge dealer in Michigan City. Like many franchised auto dealers, he has already taken in a larger number of "clunker" trades - 13 as of this morning. The report indicated there are many other dealers who have already traded for 30 or more.
Do you see the problem yet? There are plenty with the latest Congressional brainchild - but this particular problem is in the math.
Congress has allotted the CARS program one billion dollars to reimburse dealers for qualified trades. At an average of $4,000 per trade, that is a cap of 250,000 vehicles that will be eligible for reimbursement.
And while current averages are not yet known, assume for a minute our Michigan dealer’s 13 clunker trades represents the national average. If that is the case, multiplied by 20,000 franchised dealers, we are already 10,000 vehicles OVER the amount the program is scheduled to fund!
We still don't know how long it is going to take the dealers to get reimbursed. The window of "opportunity" here, if you can call it that, is huge.
So just how many dealers are already sitting on crap cars with $4,500 ACV's? There could be thousands.
How's that for scary?
In the end, Congress will probably just print more money but who knows for sure. They haven't gone out of their way to protect wrongfully terminated Chrysler and GM dealers.
Cash for Clunkers / CARS continues to be a mess.
I cannot wait for government run health care.
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