9/21/2009

The Aftermath of the Clunkers program

Is this what the authors of the Cash for Clunkers program expected it to do?

But once the federal money dried up, so did the sales rally. Now, customers at dealerships like Silko Honda in Raynham are few and far between, and inventory is once again accumulating. . . .

“It was probably, in the end, a complete waste of taxpayer money,’’ said John Wolkonowicz, a senior auto analyst at IHS Global Insight, Lexington forecasting firm. “The dealers, who were supposed to be the primary beneficiaries, many were forced into cash flow problems because the government didn’t pay them in a timely fashion.’’

From the outset, there were problems with the Car Allowance Rebate System. It was supposed to start July 1 but was delayed until July 24. The rules were complicated, and the list of qualifying vehicles and other requirements changed repeatedly. And in addition to the formidable paperwork, the government website set up to process the deals kept crashing, creating a backlog.

Ray Ciccolo, president of Village Automotive Group, which operates eight Boston-area dealerships, said he has received $400,000 from the government, but that is only half of what he is owed. Ciccolo was in Washington last week to hear Transportation Secretary Ray LaHood address the National Automobile Dealers Association. Ciccolo said LaHood pledged to have all claims paid by the end of this month.

“There isn’t much you can do except wait,’’ Ciccolo said. . . . .

“This program was very good at getting product off the lot, but there haven’t been long-term benefits,’’ he said. “Dealers are reporting that showrooms are pretty dead right now.’’

Wolkonowicz said the fall slowdown may have been worsened by the program because many buyers came out early to take advantage of the program instead of waiting until now to shop. . . . .

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2 Comments:

Blogger bdickens said...

And these are the same people who are going to "fix" health care

9/21/2009 12:39 PM  
Blogger OldSouth said...

I drove by auto dealerships in four states this past Thursday through Saturday: ghost towns one and all, and in large cities to boot.

I'm not an economist, don't even play one on TV, but I can't deny the facts in plain sight.

Remember when September was the month many families headed to the dealership to buy the family car for the year?

9/21/2009 10:28 PM  

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