I was just wondering if everyone realized the true purpose of “cash for clunkers”? The media orientated goal for the clunker program was to ultimately remove the environmentally detrimental gas guzzlers that were emitting ozone endangering emissions with an “asterisk” on boasting the economy through new car sales.
While this is certainly true, it will remove the old inefficient automobiles and improve on the degradation of the ozone. It will even help the consumer by offering such a lucrative deal to get up to $4500 for your clunker, which in real terms they would not have gotten that true cash value from the dealer as a “trade-in”. But in realtiy it will cause the consumer to purchase a new car in this economic crisis forcing he or she to then take on a loan to compensate for the balance after the rebate.
This is boosting the economy not only in car sales, but it is flooding the financial banking institutes recently in crisis with new loans and sources of equity. Coming from congress this is a brilliant idea masked in green. The consumer gets a desperately needed new efficient vehicle which is emitting green instead of toxic emissions.
Now let me tell you where it is hurting the economy. With the overwhelming success of the program, the monetary crunch is now is placed on the dealers. The government has made the program parameters extremely hard to implement in terms of getting the rebate money. The reflection being that they simply want the clunkers to be true “clunkers” and getting them off the road. What this is causing is an extreme cash flow problem. As a selling/advertising tactic many dealers are taking advantage of the clunker program and advertising their factory rebates along with the clunker rebate to sweeten the deal to the consumer and draw them in. What the dealer didn’t realize is how long they had to wait for the funding of the clunkers. As a true example from a dealer to put it in simple math terms: if you sell 132 clunker deals multiplied by $4500 the amount that the dealer is waiting for is: $594,000. That is a staggering amount of money to be floating for a dealer especially in today’s economy.
The state of the economy has taken a real toll on the dealer to begin with being that an automobile is a big ticket item to be purchased in times of crisis. After licking their wounds (if they survived) the dealer are now put in an even more pending doom state. The government needs to do something real soon or many more dealers will fall from their ill laden plans.
