Cash for Clunkers - A Real Bust

The Wall Street Journal is reporting this morning that CARS was a complete bust costing taxpayers as much as $24k per vehicle sold. They site an Edmunds.com study indicating that only 125k out of the 690k cars sold in the program actually added to SAAR. The rest would have sold anyway.

I don't know about you, but I could use my share of $24k as year end taxes and the holiday shopping season approaches...

How To Make A Great Deal On A New ¾ Ton Truck

Now may be one of the best times ever to make a killer deal on a new truck or SUV. CARS has had a tremendous impact on US auto sales and one of the byproducts is a growing supply of trucks and SUV's sitting on dealer lots.

How To Make A Great Deal On A New ¾ Ton Truck

Be Careful Who You Mess With

It amazes me how some auto dealers still play the game this way. Certainly there is an art to the sale, but the guys at this Dallas area dealership are probably wishing they dealt in a more straight forward and transparent manner.

An up comes in ready to buy. He and his wife are dead set on buying a new car and looking to do a Cash for Clunkers trade. They've done their research and know their vehicle qualifies for $4,500 under the government's CARS program.

The dealer decides to milk it for all it's worth and ties them up in the old sales manager's office back and forth. After a hour and a half, the customer gets pissed and walks. The dealer gets nothing but a really poor review from a noted columnist.

Now why on earth would you make a lay down so difficult? Especially these days!

Work the deal but for Godsakes, make it work!

The world of car sales is changing at warp speed. Those that get it stand to win and those that don't are going to get left behind quickly.

Just remember, each prospect deserves to be treated with respect - regardless if they come in with a chip on their shoulder or not. After all, they might just be a noted columnist...

http://frontburner.dmagazine.com/2009/08/12/new-car-dealer-con-game-involves-cash-for-clunkers/#more-24458

The Long Term Effects of Cash for Clunkers

Just posted an article about the unintended consequences of Cash for Clunkers / CARS. It's been a short-term boon for franchised new car dealers but will it last and will it come at the expense of others?

http://www.articlesbase.com/automotive-articles/cash-for-clunkers-long-term-effects-1097970.html

July's Most Popular Online Searches

Last month's most popular vehicle searches at AutoBidsOnline reflect consumers' desire to take advantage of Cash for Clunkers / CARS:

2010 Ford Fusion 4dr Sdn Hybrid FWD (City: 36, Hwy: 41)
2009 Toyota Camry 4dr Sdn I4 Auto (SE) (City: 21, Hwy: 31)
2010 Honda Odyssey 4dr Wgn EX (City: 16, Hwy: 23)
2009 Toyota Yaris 5dr HB Auto (GS) (City: 29, Hwy: 35)
2008 Chevrolet Corvette 2dr Cpe (City: 16, Hwy: 26)

source: www.autobidsonline.com July Search Results

Cash For Clunkers - Scary Thoughts for Dealers

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.

More Insight on the CARS Debacle

Here's a good video report from JJ's AutoFinanceNews.net: http://autofinancenews.net/video/video/show?id=2192375%3AVideo%3A20602&xgs=1

CARS Mess Has Only Just Begun

As my grandfather would say, "The Federal Government could f*ck up a wet dream."

In their infinite wisdom, the EPA increased the combined MPG on certain vehicles last Friday. What impact did this have on buyers looking to take advantage of the CARS / Cash for Clunkers program?

Plenty as our buddies at Auto Remarketing Today reveal at: http://www.autoremarketing.com/ar/news/story.html?id=9804

Cash for Clunkers Set To Disappoint - BIG TIME.

And it's going to be a real pain for all involved. Why you ask? Afterall, there is great anticipation of the program's official launch on Friday 7/24 and there is plenty of information on the web explaining how it will work.

Yet most consumers believe they are going to get some kind of voucher they can use when they trade in their "clunker".

Unfortunately, this is a big misconception. The program is only going to benefit those whose trade-in value is worth less than $4,500 (or $3,500 in some cases). Far less in reality.

I want to repeat that.

Unless your trade is worth LESS than your tax credit, Cash for Clunkers (or CARS as it is now officially called) won't add up to anything more than a hill of beans.

I had my "aha" moment last night talking with well known auto industry expert David Ruggles of AutosAndEconomics.

According to Ruggles, you've got to look at the program from a dealer's perspective to truly understand it.

When a dealer takes a trade, he bases the trade-in credit for what he can resell it for to another pre-owned buyer. Most who qualify for the program are not thinking about this very important aspect of the business. And unless we get the word out, the dealer is going to take the blame.

Here's a simple example that Ruggles posed that made it crystal clear:

Let's say you have a 2000 Dodge Caravan that qualifies for CARS and has a trade-in value of $4,500. You go to the dealer expecting to get $4,500 for your trade PLUS your handy little $4,500 "voucher" from the government. You'll get $9,000 for your trade, right?

WRONG.

The dealer cannot resell your Caravan and recoup the $4,500 you wanted him to give you for your trade. This is because CARS requires the dealer to SCRAP your Caravan.

So the typical customer goes to the dealer thinking he's going to get $9,000 for his trade when in reality he's only going to get $4,500. Most customers are going to be really pissed and blame the dealer when it's not the dealer's fault at all.

The only real beneficiaries of the program are going to be those who truly have a "clunker" that has no significant market value.

Given the state of the current economy, Cash for Clunkers is generating a buzz that I've never quite seen before. Consumers and dealers are all chomping at the bit to take advantage of it but few really understand how its going to work.