Cash for Clunkers, What Were They Thinking

My auto dealer friend was telling me the other day why she didnt participate in this program. As she explained it, you had to bring in a car newer than a 1984, it had to have been licensed and with insurance for the past year and you had to buy a brand new car (the reason for the program)that on paper got more gas mileage than the one you were trading in.

She gave me this example. I drive a 2006 Suburban and I could have traded it in on a new 2010 Suburban (if she could get me one) because the new one would 'technically' get better gas mileage than the old one. So my 2006 would qualify.

And here is what she would have to do with my nicely kept 2006 Suburban. She would credit me for the $4,500 and then she would run a prescribed solution to seize the engine and then she has to have the vehicle taken to a crushing yard and have it smashed into a cube. No canabalizing of parts, gone from the market. And only after she has the certificate of crushing you might say can she apply back to the federal government to get her $4,500 back that she credited the customer. And that takes 90 days or so to process the check, so the dealers, those folks who actually have car buying customers, are the ones who get screwed. Its a beautiful thing if you're sitting in the mahogany office dreaming this stuff up.

When I was in Utah for the late summer of my inconveneince I visited with an old friend who has a golf course, great new clubhouse and wedding venue who has something on the order of 80 new golf carts. He was telling me that dealers in the area that also sell golf carts were processing them through a loophole into the 'cash for clunkers' program. Like I said, its a beautiful thing our government is.

The result of this problem is now a used car market that is stripped of good use cars. She was telling me they can no longer buy used cars at auction because they are priced so high she can't bring them back and make money. And the kicker is she has people working Craigs List all day buying vehicles direct from individuals at a price they can resell ... that keeps their business going.

And I think right now she has received two more of her order of twenty new 2010's she ordered in the first of September, and had to pay for then. Do you think that task force in DC is really helping the industry?

And if I didnt mention it, she contacted our Senators and Representatives ... and well, she's still waiting.