Cash 4 Clunkers ends, nationwide industry sales are off 19 percent

[Bindare_Dundat]

http://market-ticker.denninger.net/

Sept. 16 (Bloomberg) -- Chrysler Group LLC, the U.S. automaker run by Fiat SpA, said nationwide industry sales are off 19 percent so far this month after a government purchase- incentive program ended.

“We are going to see harsh reality in September,” Sergio Marchionne, the chief executive officer of Fiat and Chrysler, said at the Frankfurt Motor Show. He described the U.S. industry results as a “disaster.” Fritz Henderson, CEO of General Motors Co., said the market is “very weak” this month.

Disaster eh?

But but but I thought all those "cash for clunkers" buyers were people who wouldn't have bought a car otherwise?

Looks like that was a load of BS out of the administration.... just like all the other so-called "stimulus" programs.

Just another example of pulling forward demand, which works exactly once per application, but then leaves a gaping, sucking hole where demand would have been in the subsequent months.

PS: Expect them to try some sort of BS similar with the expiring "Home Clunker" $8,000 rebate program that is ending in a couple of months.  The two problems with it are the same as the problems here - the consumer is tapped out and can't afford to buy (witness the FHA default rates in excess of 20%!) and those who DO buy anyway find themselves in a financial position they cannot really afford and didn't think through.

In addition you further drain the demand pool and thus when the "stimulus" ends (and all must eventually end) you find yourself with no real buyers left!

All this faux "demand" being generated by the so-called "stimulus" is just doing more damage to the economy - damage that is accruing and will come to the surface with devastating effect.

[Kazan]

What!? How can this be

[Bindare_Dundat]

What!? How can this be

Don't worry the reccession is over, people will start buying again next week.

[GigantorX]

This Admin. is doing everything it can to front-load GDP for the next 2 quarters.  It will work and 3rd/4th quarters will show "growth", but it isn't organic, nor sustainable as it was brought on totally by obscene govt. spending and programs. Although I'm sure Blanco will be on here touting it like Obama has saved the day or something, but the facts show completely otherwise...not like he will listen or anything.

No fundamentals support the markets rise, none...and they didn't support the market in 1999 either.

[Soul Crusher]

This Admin. is doing everything it can to front-load GDP for the next 2 quarters.  It will work and 3rd/4th quarters will show "growth", but it isn't organic, nor sustainable as it was brought on totally by obscene govt. spending and programs. Although I'm sure Blanco will be on here touting it like Obama has saved the day or something, but the facts show completely otherwise...not like he will listen or anything.

No fundamentals support the markets rise, none...and they didn't support the market in 1999 either.

Schiff is jumping in! 

[drkaje]

Sadly, a lot of dealerships will go broke with the govt owing them millions.

[Soul Crusher]

Sadly, a lot of dealerships will go broke with the govt owing them millions.

This was another dumb idea from the get go. 

[GigantorX]

Wait, but I thought there were a few on this board who claimed that CFC worked "too well"?

[Soul Crusher]

Wait, but I thought there were a few on this board who claimed that CFC worked "too well"?

The economic illiterates on this board are always cheering on the happy drunk while he is laughing, happy, slapping high fives, BUT NEVER want to take responsibility or deal with the hangover.

Does that make sense Gigantor?

[drkaje]

Wait, but I thought there were a few on this board who claimed that CFC worked "too well"?

Here's the thing.... a part of me is glad it failed. If the government can't handle something this simple there is no way they can do a national healthcare. The govt owes some dealerships millions that should have been paid within the 10 days!!

I don't know how much people understand about floor plans but those dealers are screwed because they'll still end up paying the 1.5% to maintain their good standing. This means either going broke or borrowing money for payments and operating expenses while Uncle Sam takes his sweet ass time. Basically it's a lose, lose scenario because both parties ended up taking on new debt. It would have been cheaper to give all taxpayers money up front and let them pay down debts, spend the money on crack, save, or anything else aside from taking on new debt to keep automakers afloat.

I'm in no way surprised they're planning to do it again in November.

[Soul Crusher]

Here's the thing.... a part of me is glad it failed. If the government can't handle something this simple there is no way they can do a national healthcare. The govt owes some dealerships millions that should have been paid within the 10 days!!

I don't know how much people understand about floor plans but those dealers are screwed because they'll still end up paying the 1.5% to maintain their good standing. This means either going broke or borrowing money for payments and operating expenses while Uncle Sam takes his sweet ass time. Basically it's a lose, lose scenario because both parties ended up taking on new debt. It would have been cheaper to give all taxpayers money up front and let them pay down debts, spend the money on crack, save, or anything else aside from taking on new debt to keep automakers afloat.

I'm in no way surprised they're planning to do it again in November.

Notice how none of those shills will show up in this thread and defend C4C now?

They are economic illiterates and cheer on the very worst policies because they cant look beyond the immediate feel-good sales pitch by the politicians who can sell anything to these fools.     

[drkaje]

Notice how none of those shills will show up in this thread and defend C4C now?

They are economic illiterates and cheer on the very worst policies because they cant look beyond the immediate feel-good sales pitch by the politicians who can sell anything to these fools.     

I wouldn't say "economic illeterates", LOL! That kind of language doesn't encourage useful dialogue.

It's a case of people being disconnected from the nuances of automotive finance beyond their credit getting approved. Same thing with healthcare, people don't get that delivering care has real costs.

The dealers are screwed because of simple math. They only get a 30, 60 or 90 day float and use profits to keep the business running. Since the Govt is too far behind in payments there's no possible way for dealers to catch up without either spending savings or accumulating more debt.

No dealership can survive without its line of credit so you may even see salespeople jobs being cut, even though sales are technically up because the turnaround time is too long.

Actual healthcare would end up being an even bigger mess because very few practitioners run their offices on LOCs. No one's gonna give some new doctor a $1M line of credit to pay off loans, LOL! The doctor would have to buy supplies, employ people, fund health insurance, rent, malpractice insurance, etc... and only pay 1.5% of the outstanding balance while the practice waits for Uncle Sam to pay.

[Butterbean]

What is the Gov't's reason for not paying the dealerships yet? 

[Soul Crusher]

What is the Gov't's reason for not paying the dealerships yet? 

Incompetence, underestimating usage of the program, and sheer inefficiency that normally accustoms any and all govt programs. 

Imagine how they will handle intake and payment of medical claims once they take over health care?

Instead of car dealers waiting for $$$, imagine all the doctors who will be left in the same boat? 

[drkaje]

Stella,

They'll eventually get around to paying the dealers and business expenses like finance charges are tax deductible but how many millions in the whole will people be in the interim. One particular dealership is nearly $25M in the whole right now.

Still, I'd rather look on the bright side and take this as a sign that the infrastructure itself must be greatly improved before tackling something where lives are at stake, not just livelihoods.

[tu_holmes]

Seems to me you're missing a fundamental part of what cash for clunkers also accomplished.

See, while cash for clunkers was a stimulus to the automotive industry, a 19% drop off is hardly "evil". Where would Chrysler have been without the boost?

Also, since the people are buying newer more fuel efficient cars, their overall expenditures for the year in fuel is obviously going to be lower.

Why are you guys so sure that a 19% decline is going to break the bank so to speak? What was boost with the program? Compare that to a 19 percent loss this month and you'll have a more balanced idea of what is occurring.

This is more "The sky is falling" talk and doesn't really equate to much.

[Soul Crusher]

They would be in Bankruptcy where they should be, not acting as a money pit for the US taxpayer who is seeing the value of the dollar decimated and disintegrating daily because of these insane policies. 

C4C was nothing more than a scam by the govt to bailout and transfer money to the UAW while fooling the public to take on more debt and turn in perfectly usable cars. 

 

[tu_holmes]

They would be in Bankruptcy where they should be, not acting as a money pit for the US taxpayer who is seeing the value of the dollar decimated and disintegrating daily because of these insane policies. 

C4C was nothing more than a scam by the govt to bailout and transfer money to the UAW while fooling the public to take on more debt and turn in perfectly usable cars. 

 

We've been over this 100 times... Better to take some debt and keep the company in the US then to allow a foreign entity to take it over.

[drkaje]

Seems to me you're missing a fundamental part of what cash for clunkers also accomplished.

See, while cash for clunkers was a stimulus to the automotive industry, a 19% drop off is hardly "evil". Where would Chrysler have been without the boost?

Also, since the people are buying newer more fuel efficient cars, their overall expenditures for the year in fuel is obviously going to be lower.

Why are you guys so sure that a 19% decline is going to break the bank so to speak? What was boost with the program? Compare that to a 19 percent loss this month and you'll have a more balanced idea of what is occurring.

This is more "The sky is falling" talk and doesn't really equate to much.

The 19% decline could just as easily be a 25% increase and it's still a horrible idea because the Govt. basically quasi-bailed them out again and increased consumer debt for those with decent credit. Artificially stimulating the economy without growing it is just stupid.

Regarding the increased fuel efficiency, I'd have to do research and math (not fun) to qualify the assertion that most people would be better off with a less fuel efficient car.  The fixed carrying costs (insurance & monthly payments over 3-6 years) are probably lower while the price of gas is manipulated. Also, people without car payments probably have a little less debt and financial stress.

We could lower the cost of gas $1 today in New York state by removing taxes. Other states are the same. Also we could let some out of reserve and the Sauds would have to back off the oil price/barrel.

No. The sky isn't falling. We are all going to accept, deal with, get used to, or whatever flowing words you'd like to use, a new reality.

[Soul Crusher]

We've been over this 100 times... Better to take some debt and keep the company in the US then to allow a foreign entity to take it over.

No its not better to take on debt and keep a failed company going.  There is a reason Chysler is behind the pack, BECAUSE THEY SUCK!  

All you are doing is delaying the inevitable and pouring good money after bad from people not in the best position to go into debt.  We have enough debt and that is the primary reason we are in the mess we are in.  More debt does not solve the problem of existing debt.  Thats pure nonsense.  That like trying to curb your wifes credit card spending by transfering a balance on one maxed out card onto a new card with a higher limit and sending her to the mall.  Its reckless.  

We need consuption and lending based upon personal savings, not govt debt that we all have to pay back and that undermines our currency.

 

[drkaje]

No its not better to take on debt and keep a failed company going.  There is a reason Chysler is behind the pack, BECAUSE THEY SUCK!  

All you are doing is delaying the inevitable and pouring good money after bad from people not in the best position to go into debt.  We have enough debt and that is the primary reason we are in the mess we are in.  More debt does not solve the problem of existing debt.  Thats pure nonsense.  That like trying to curb your wifes credit card spending by transfering a balance on one maxed out card onto a new card with a higher limit and sending her to the mall.  Its reckless.  

We need consuption and lending based upon personal savings, not govt debt that we all have to pay back and that undermines our currency.

 

There are people who genuinely believe it's possible to borrow oneself out of debt.

[Bindare_Dundat]

There are people who genuinely believe it's possible to borrow oneself out of debt.

Frightening but sadly true.

[Skip8282]

No its not better to take on debt and keep a failed company going.  There is a reason Chysler is behind the pack, BECAUSE THEY SUCK! 

All you are doing is delaying the inevitable and pouring good money after bad from people not in the best position to go into debt.  We have enough debt and that is the primary reason we are in the mess we are in.  More debt does not solve the problem of existing debt.  Thats pure nonsense.  That like trying to curb your wifes credit card spending by transfering a balance on one maxed out card onto a new card with a higher limit and sending her to the mall.  Its reckless. 

We need consuption and lending based upon personal savings, not govt debt that we all have to pay back and that undermines our currency.

 

Exactly.  The government trying to float companies that the consumers have condemned is just a waste of tax dollars.  I'm not sure how people just can't see that...

[scooter]

All I can say is that we have 240 C4C cars sitting in our back lot right now waiting to be paid for. We have been paid on about that same amount. 240*4500=108000 that we are owed by the govt. thats a lot of money. Maybe we will see half of it? This was a great program short term we sold lots of cars (to people that shouldnt have bought them) but long term I see this being a complete failure.

[Butterbean]

No its not better to take on debt and keep a failed company going.  There is a reason Chysler is behind the pack, BECAUSE THEY SUCK!  

Unfortunately this has been true for many years

All I can say is that we have 240 C4C cars sitting in our back lot right now waiting to be paid for. We have been paid on about that same amount. 240*4500=108000 that we are owed by the govt. thats a lot of money. Maybe we will see half of it? This was a great program short term we sold lots of cars (to people that shouldnt have bought them) but long term I see this being a complete failure.

It's kind of a relief to hear your store has been paid for at least 1/2.  I hadn't heard a figure that high before.  Hope you'll get the rest.

What do you sell?