I hope the title got your attention. In reality what the detroit free press is reporting is amazingly good news. I'll have more below. I will link to the story at the bottom if you want to read the whole thing.
The U.S. government will suspend the popular cash-for-clunkers program after less than four days in business, telling Congress that the plan would burn through its $950-million budget by midnight, several sources told the Free Press.
If you want the gist of the story - there is it. So many people are trading in their cars and buying new ones the well is going to run dry. I expected free money to bring people out - it always does and always will. but I never imagined it to have this much success in so little time.
The plan offering owners of old cars and trucks $3,500 or $4,500 toward a new, more efficient vehicle has proven wildly popular, with 22,782 trades certified by federal officials since Monday. But the National Highway Traffic Safety Administration told dealers Wednesday that a vast majority of transactions submitted were being rejected for incomplete or illegible paperwork.
To me this almost seems like people were waiting for the program to take effect, which is great. Just think of how many new cars would have been sold if all the paperwork was done right!!!!
A survey of 2,000 dealers by the National Automobile Dealers Association, the results of which were obtained by the Free Press, found about 25,000 deals not yet approved by NHTSA, or about 13 trades per store. With 23,005 dealers asking to be part of the program, auto dealers may have already arranged the sale of more than the 250,000 vehicles that federal officials expected the plan to generate.
I'm no math genius. Ok, I'll admit it, I'm horrible at math. A calculator is my friend. But anyway, 13 trades per store not approved yet. Which means the numbers are only going to keep going up.
I see this as amazing in a few ways. First, the government made a program that not only met expectations, but exceeded them. Lets not kid ourselves, our friends (and enemies) in congress have made more programs than any of us can count - but the amount that exceed expectations is lower than I would like. The next time someone tries telling me the government has never run a successful program, this is going near the top of my list of rebuttals.
Second, think of the economic impact. the dealerships are getting refunded, so they get the full price of the car. they get rid of the extra inventory that has been sitting around for god knows how many months. everytime they turn over a car I bet the salespeople and the owners do a backflip - because it is one more car than they were able to sell just a couple months ago. Most people buy cars on credit, meaning small banks and lenders now have new business.
If the idea is to get money flowing, then this does it, credit is moving. 250k vehicle sales, 12k average, that comes out to a ton of money being thrown around in just the past couple weeks. Not to mention the car makers have a reason to make more cars - which I bet they're doing backflips over.
third - environmental impact. I'm worse at this stuff than the math stuff. So how about we keep it simple, better milage = better for the earth. YAY.
Here is the question I have for all the smart people out there - what happens next. I assume there is no way congress can take this program and chuck it because it is too successful. How hard do you think republicans/fiscal democrats will fight if the car dealers say they need 2 billion more for the program? How does the white house sell the program - you can get a day or two of great PR out of this, but I have not been able to figure out how yet. If it keeps working, do they expand it? Personally, if it's not broke don't fix it. I would argue add money to the program - take it from somewhere else (i'm sure there is somewhere in the budget or stimulus they can find the cash) and keep the program the same, Keep adding money as needed until the demand drops.
I promised a link to the story - I'm sure it is now making the rounds, but here is the detroit free press article.
thanks for reading! I have not proofread - mostly because I'm in seattle and I'm just happy to not be melting, let alone have my grammar and brain work. If I made any huge wtf type errors, let me know and I'll fix them as needed.
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update - Mouser 68 has pointed me toward a wapo article with more information. here is the link. Looks like they are going to meet ASAP to keep the program going. Positive comments about the program from both sides of the aisle. Thanks Mouser.