As curtain closes on 'cash for clunkers' what did we learn?
Filed under: Technology, Economy, Ford Motor Co.
DailyFinance's Peter Cohan attributes much of CARS' success to "nudgenomics," or the act of creating policies that "nudge" consumers to spend their money in the most productive way. In this case, he argues, the program wedded environmental improvement, economic stimulus, and customers' self-interest in a way that drove people to pour money back into the economy.
Many critics have noted that the plan also provided a significant stimulus to foreign car manufacturers. This is a fair critique: with 19.2 percent market share over the life of the program, Toyota reaped larger benefits than any Detroit automaker. However, even this significant benefit for Toyota still may translate into a major stimulus for American auto workers. According to Cars.com's annual "American-Made" index, of the ten cars that are most constructed in America, four are made by Toyota and a fifth is made by Honda. Incidentally, of the remaining five, two are made by Ford and three are made by GM. None are made by Chrysler.
Beyond the "made in America" arguments, however, the"cash for clunkers" program has brought a larger issue to light. For much of the past decade, at least since 2001, Americans have seemed eager to find a way to help their country through its diplomatic and, later, economic malaise.
The issue is not a matter of will, but rather a problem with direction. One of the lessons of the past eight years is that Americans want to be told how and where to help. When presented with numbers like a $700 billion bailout or trillions of dollars of national debt, many consumers are inspired to act, but are unsure of the best course of action. Even apparently obvious directives like "buy American" become problematic when many American companies use foreign factories and many foreign companies use American factories.
When the last President told Americans to spend money, they did so in droves, fueling massive consumer sales and (arguably) delaying a recession. When this President used paper-thin environmental justifications to encourage consumers to buy cars, they once again did their part, turning "cash for clunkers" into an unmitigated success for car manufacturers, distributors, and salesmen. What's more, they did so with only minimal political grumbling.
On the cynical side, one could argue that Americans are far too inclined to vote with their wallets. However, a brighter -- and perhaps more relevant -- perspective would be consumers want to do their part for their country, and are only waiting for their government to point the way.
Reader Comments (Page 1 of 2)
8-24-2009 @ 6:00PM
rick said...
lets do a over 55 years of age program called 1 millon dollars give away -tax free -three reqirements --buy a new car -and buy a house or pay off your morgage--and retire --it solves the unemployment -problem the car industry troubles-and the 55 crowd will vote for it
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8-24-2009 @ 7:45PM
laura said...
I will vote for it too!
8-24-2009 @ 6:06PM
Mead Carlson said...
Stupid program destroyed perfectly good cars. Hurts the little dealer and his customers who buy used cars. These people paid full price for a one year old(09)car. They will owe much more than the cars is worth. Isn;t this how we got in trouble in the first place? The real objective is to get cars off the road. Some people because of the lack of good used cars will now have to ride the bus which is the real reason.
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8-24-2009 @ 7:47PM
Rick said...
you are correct Mead - 100 percent correct this is exactly how we got in to trouble only with houses.
Tell the government to stay the H out of our lives with the exception of closing the southern border of america and removing all non-documented citizens.
And for all the complainers yes next we would close the northern border, where we have less of a problem with Canada.
The UNDERGROUND
8-24-2009 @ 6:10PM
RON said...
it is articles like this that fuel erronous comments.
the last figure i read was cash for clunkers generated 450,000 sales. even if the funding estimate of 750,000 are sold, out of a projected 10,000,000 that is not much. hopefully it will be a shot in arm so to speak for the economy.
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8-24-2009 @ 7:01PM
bailoutsos said...
All the government has done is upset the natural course of the auto selling cycle. Get ready dealers, you are in for some very lean months.
8-24-2009 @ 6:15PM
rick said...
what really happened is the socialists in our government enabled a lot of people to buy new cars with MY tax money. My clunker didn't qualify so I am once again left holding the Washington crap bag. I will vote everyone of them out as soon as election day rolls around. No matter how it is reported MY research shows almost everybody is fed up with Barney Fife, Nancy Pleurisy and the rest.
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8-24-2009 @ 6:18PM
gary said...
Of course, another lesson we learned is when the government gets involved things get messed up. Look at all the dealers who are stuck filling out two dozen forms for each car sold under the program and then having to wait for their money. The lesson learned is that we can expect much the same if the government gets involved in the health care business. It will not be surprising that many doctors will opt out of the program, just as they have with Medicare, in order to financially survive. Bravo to those short term thinkers led by the Prez and Chuckie Schumer.
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8-24-2009 @ 6:18PM
SHARON said...
GREAT!!! SPEND 3 BILLION DOLLARS SO SOME PEOPLE COULD GET NEW CARS WHILE WASTING GOOD CARS. THAT 3 BILLION SHOULD HAVE BEEN USED TO SUPPORT THE FAILING SOCIAL SECURITY SYSTEM. ELDERLY PEOPLE ARE NOT EXPENDABLE!!!!
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8-24-2009 @ 6:23PM
walt Jones said...
One thing for sure is I don't know what planet your from !
What ever possessed you to think that I want my "Government to point the way" in which I make any of my daily decisions has simply melted your mind! I don't want "Government" telling me anything except how they are upholding their constitutional oath of office I sent them to do in the first place. That does not include asking me to buy a car .... that me, my sons and my grandsons have already paid for and will keep paying for well after I die!
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8-24-2009 @ 6:31PM
Jen said...
DUMB. Many dealers are going to get shafted in this deal - it was 'announced' today. Perfectly good used cars were or are being destroyed. People don't buy cars every year, so those 450,000 units sold are 450,000 less units sold at another time. And I don't need the government to tell me how to spend my money - and then, on top of it, to SPEND MY MONEY themselves on socialist crap like this. I'm getting a car this week - trading in my foreign car on a used foreign car, and keeping my wonderful "clunker", a 2001 Suburban. And one more thing... I am NOT buying one damn "green" thing if I can help it.
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8-24-2009 @ 6:34PM
evanrogers said...
This program was a way for Obama and company to pay their UAW dues with our money. The Unions did not throw money at the Democratic Campaign and expect nothing in return. Same with the attorneys, thus no tort reform on health car. Yes it is becoming a very transparent administration. Ray Charles could see thru these guys.
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8-24-2009 @ 6:40PM
S L said...
This was the worst thing to date to come out of Washington. We are in a Depression not a recession as we are told. Sure the FED (power players) has printed a ton of greenbacks, but who wants to borrow or which bank is willing to give you a loan? I got a letter today to support this from a credit card I haven't used in three years and have a 0 balance. My rate, should I EVER use the card again, went from 10.9% to 26.9%. Guess who loses my money.
Back to the cash for clunkers program, all it has done is make a lot of people walk to work. The people who can not buy a new car or need parts for the beater they have to drive.
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8-24-2009 @ 6:45PM
pw said...
OH MY WORLD, EINSTEIN SAID STUPIDITY IS INFINITE
JUST LIKE THE UNIVERSE. THIS IDEA IS THE ULTIMATE CON---GRESS ACT. CHECK OUT THE FACTS.
1. $4,500 TO BUY BACK JUNK THAT WAS MOSTLY
MADE BY THE STUPID U.S. AUTO MAKERS.
2. LETS GIVE MORE PROFIT TO THE FOREIGN AUTO
MAKERS AT TAXPAYERS EXPENSE.
3. LETS BURDEN MORE DEBT ON 450,000 DEBT
RIDDEN AMERICANS.
3. STUPID PEOPLE WILL DRIVE A NEW CAR NAKED
AND HUNGRY.
4. $4,500 = DEPRECIATION DRIVING OFF THE LOT
IN YOU NEW CAR.
JUST BECAUSE OUR GOVERNMENT IS CLUELESS
ABOUT THE NATIONAL DEBT LETS SHOW THE
AMERICAN PEOPLE THE TRUE MEANING OF DEFICIT
SPENDING. YOU MORONS.
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8-24-2009 @ 6:47PM
maria said...
I have a 1986 Buick. If that's not a clunker I don't know what is, but Gov,t says I get 20mpg. I don't. I thought this program was intended to get OLD clunkers off the road. That would've made more sense to me, So people with perfectly good cars were able to buy a new car, NOT ME!
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8-24-2009 @ 6:51PM
Xenicman said...
Thank you for STEALING more of my tax dollars for your liberal, welfare class agnda. SHAME ON YOU OBAMA!!!!!!!!!!!!!!!!!!!!!! Counterfeiting, the ultimate stimulus
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8-24-2009 @ 6:52PM
JUJU said...
A good lesson learned.. The government just wasted 3 million dollars. Sure auto dealers got a boast, so did manufacturers. Japan is sure happy! Now what happens in the next year? No one needs a new car, the repo men will be busy because alot of people probably still can't afford to make the payments, and dealerships will still close, because they can't get rid of the new 2010 models that people where hired back to work and paid overtime to get them into the market. Sorry more lay offs next month.
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8-24-2009 @ 6:52PM
briefex said...
Cash for clunkers? The fed has no cash. Balance the budget, then consider giving money that you actually have away. Somebody in Washington needs to buy a $3 calculator.
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8-24-2009 @ 7:01PM
CHABSENTIA said...
I was watching a Financial show today. Aparrently some Dealers are telling people that there is no discount on Autos and they have to wait for the $4500.00 check.Some Dealers are also telling people that they have to sign contracts that if the Dealers do not receive the $4500 from the Government that they are liable for it. This is another example of a Program by the Government with t lack of Oversight. This is in addition to the fact that 100,000 people had planned to buy a Car anyway but postponed it until Cash for Clunkers took effect. Meanwhile the Automakers such as GM brought back another shift instead of waiting to see if this demand was artificial which is probably the case. No problem. GM can count on the Taxpayer to bail them out if they misjudged the situation. And these people are going to run Health care which is about 17% of the whole Economy. And then we have Taxpayers paying a few Billion dollars so others can buy cars they might not be able to afford.Just bend over because more of this nonsense will be coming. In N.Y.C. only the Children of poor people received $200 per person to buy school supplies and much of it was spent on cigarettes, Beer and Video Games etc. How do you people like the "NEW CHANGE"?
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8-24-2009 @ 7:04PM
LARRY said...
THE LESSON LEARNED FROM THE CLUNKER PROGRAM IS THAT THE GOVT DOES NOT KNOW WHAT THEY ARE DOING -- OBAMA AND HIS THIEVES COULD NOT RUN A DIME STORE WITHOUT STEALING MONEY FROM IT--------------------------------------------------------
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