Their killing them

[f_inscreenname]

I was just reading an article on the cash for clunkers deal and something I just read for the first time really sucks. I was hoping there would be a lot of newer motors at the local junk yard soon from these cars and truck being scraped but it looks like no such luck.
“Though all trade-in vehicles must be in drivable condition, dealers are required to disable the vehicles' engines before scrapping them, using a lethal injection of sodium silicate to replace the oil. The car is started and revved to at least 2,000 rpm until the engine stops, from three to seven minutes.” http://articles.moneycentral.msn.com/SavingandDebt/SaveonaCar/top-clunker-the-ford-explorer.aspx
Now that is just sad. :frown:

[Carl C]

What's even sadder is that some of these damaged motors that managed to survive will no doubt end up being sold.

[Just Say N20]

During the week end, while I was working on the boat, I had some talk radio on in the background, and one of the shows had dealers calling in to discuss what was going on at their dealerships with respect to the Cash for Clunkers program.

Without getting into specifics, the consensus seemed to be that about 70% of the cars they had received as trade ins, were perfectly fine, and under normal circumstances they would have put them on their lot as very sale-able used cars.

STOP READING HERE IF YOU DON'T WANT TO DIP INTO A POLITICALLY SLANTED COMMENTARY!




I MEAN IT!!!











Forgive me if somebody reads this next statement as political. This represents so much of what is wrong with our government. A bunch of lawyers (not business owners who understand Capitalism) toss together a poorly conceived program.

It is expected to last for months, and barely lasts a couple of weeks, and they seemed surprised that people were lining up to get their $3,500 - $4,500 of "free" money.

From what I heard dealers saying, it is administered horrifically.

The dealers are required to front the customer's the $3,500 - $4,500, and then wait for the government to pay them back. At this point there seemed to be some serious concern on the part of the dealers that because of the crack job the government is doing in administering this program, they might have already over-spent the program, and the dealers will not get reimbursed for money they have already fronted.

The dealers are required to destroy what in most cases are viable vehicles with plenty of service life remaining.

The program was supposed to bolster sales of Government Motors, Chrysler and Ford product, and yet for very obvious, predictable reasons (to anyone who understands how Capitalism works), Kia and Hyundai were the biggest beneficiaries of the program.

In summary, we have an example of our government at work. The program was paid for with money we don't have, causes financial hardship for the dealers involved, caused the destruction of 20,000+ serviceable vehicles, and didn't accomplish its goal of helping the "American" auto industry.

I think we should let them run health care, too. :shocking: :nilly: :boggled: :bonk:

[BUIZILLA]

pretty soon we'll have a clunker grandparents program....

turn in an elder, and adopt a newer immigrant kid...

oh, wait, isn't cash for cars the same thing? :nilly:

[handfulz28]

caused the destruction of 20,000+ serviceable vehicles

It's Wednesday and I'm on an anti-propaganda kick today. Don't take this personally. :D

Yeah, the program is a joke for a bunch of reasons. But consider that annual new car sales volume used to be north of 15million PER year. Now they're lucky to be near 10 million. Depending on whose calculator you use (:kingme:), each $1 Billion takes 250,000 to 285,000 clunkers out of circulation. There's something like 100 million cars in this country I think? Hardly a dent in the supply of vehicles and parts in all reality.

On principal, this thing has FAIL written all over it. But practically speaking, it's a tax credit for those that take advantage and it "might" keep people working for another month.

The shiznit will really hit the fan when somebody admits there's over 1 million deals sitting out there...:bonk:

[roadtrip se]

The program was supposed to bolster sales of Government Motors, Chrysler and Ford product, and yet for very obvious, predictable reasons (to anyone who understands how Capitalism works), Kia and Hyundai were the biggest beneficiaries of the program.




Kia and Hyundai both jumped the gun on CARS, before the domestcs did, and hoped, seriously hoped, that the program came through. Fortunately for them it did. If it hadn't, they would have been screwed worse than their dealers. Inherently, due to the nature of their car line, cheap and small, a lot of folks did buy their stuff.

Not all frozen tundra for the domestics though. The number one seller on the CARS program? The Ford Focus. Really? Yeah really.

All of the crap aside about pork and subsidies, though. The next worry, is the hangover effect on sales, when the money really does run out. This thing created artificial demand, based on "the deal", that is not sustaniable, nor will it lift the economy for very long.

And oh, this does belong in the political section, where there has been a thread going on about it for several days now. Can't help ourselves, can we?

[HOWARD O]

I still like Mike's (Ghost) quote below, a little humor and a lot of truth:

"If you want to understand the futility of cash for clunkers, all you need do is this: open your refrigerator door and watch how much you can cut your air-conditioning bill."

[HOWARD O]

Can't help ourselves, can we?

Once again I hate pointing out the obvious to you, RT, but pot.........>>> kettle. :cool:

[BUIZILLA]

don't underestimate Hyundai...

[roadtrip se]

Once again I hate pointing out the obvious to you, RT, but pot.........>>> kettle. :cool:

So friend, how are the business facts around how the car companys responded to the program, political? I stayed out of the polical arena on purpose with my comments. You know very well that there is a thread open on this topic in the political section, because you live there, so save it.

Buiz, in regards to Hyundai, Toyota is watching them VERY carefully..

[Ghost]

don't underestimate Hyundai...

Ditto that. BIG TIME.

[Barry Eller]

I was at my Vince Whibbs Automotive today getting Denise's Cadillac serviced. Remember I worked there as a salesman for 20 years. The President and CEO, Mark Whibbs saw me and came hugged me and told me how much they missed me. Asked if I was ready to come back.

Thank you very much Mark, but no.

They are a Cadillac, Buick, Pontiac(for a while yet), GMC, and Saab(for a while yet) dealership. They only had 3 "clunkers" brought in. All Ford Explorers, and the $3500/$4500, whichever they qualified for, was much more than they were worth in real money.

The dealerships that sold more vehicles because of this were mostly imports, Toyota, Honda, Nissan, Hyundai and KIA.

I agree this will cause a "false economic boost" that isn't going to make a "CHANGE" in our overall economy.

Not even close and NO Cigar!

Now I'm going to rest my "GOUT RIDDEN" foot.

Bye Bye

[MOP]

Wish I had my camera with me today, one of the largest dealers has a big sign out no clunkers no cash. Makes you wonder!

[Rootsy]

What's even sadder is that some of these damaged motors that managed to survive will no doubt end up being sold.

They won't survive... You are more or less running liquid glass through that engine... The only way any engine will make it through this trial is if it isn't performed in the first place...

[f_inscreenname]

What a waste of a bunch of future boat motors. :confused:

[BUIZILLA]

The dealerships that sold more vehicles because of this were mostly imports, Toyota, Honda, Nissan, Hyundai and KIA. and Mazda.... and Volkswagen... and BMW...

[HOWARD O]

So friend, how are the business facts around how the car companys responded to the program, political? I stayed out of the polical arena on purpose with my comments. You know very well that there is a thread open on this topic in the political section, because you live there, so save it..
Once again, you fail to see the obvious. Instead of simply stating your last sentence, "And oh, this does belong in the political section, where there has been a thread going on about it for several days now. Can't help ourselves, can we?", which would've made sense, you first felt the need to post your opinion on the matter. It matters NOT what your post contained, the whole damn subject is political. By first stating your opinion, you're as guilty as the next guy. Get it yet? Knock knock, anybody home in there?

If you still fail to see your hypocricy, then I can't help. As for "living" in the political forum, that's just patently not true! I try to spread my love equally throughout Donzi.net, you just don't pay any attention to me, RT! :frown:

[HOWARD O]

There's a Hyundai dealer here that has a sign with their own terms. You only have to own your clunker for 6 months instead of a year....and the MPG on the new car need only be 1 MPG better. I'm not so sure they care about reimbursement from the gov't, considering how much traffic I've seen on that lot lately.

[mrfixxall]

might be a bunch of bs but who knows?


http://www.youtube.com/watch?v=RAOBlqUqUZ8

[roadtrip se]

in terms of share has gone right down typical market share lines with the domestics getting a little under 50% and the rest going to the transplants, depending on what trade rag you read.

Howard, pipe down dude, you might blow a vein...

[BigGrizzly]

Your VOTE's in the next election can help stop this BS. Like RT said the hang over is going to get a real look. Remember when people are put on releif it is really hard to get them off. Part of the straggly was to get the public to get use to hand outs then give them more to make a gov take over easy

[Ghost]

Part of the strategy was to get the public to get used to hand outs then give them more to make a gov take over easy

A very subtle but critically important point, in my view.

[f_inscreenname]

I think you all are missing the point of the post.
Having these motors in the second hand market would also be a plus. I know they only show the 78 Dodge Dart in the dumpster but for the most part these folks are not turning in these cars and trucks. They are most likely from the last 4 to 7 years and they are bigger cars and trucks. To get better economy people are going to smaller cars and trucks. Now that’s good but on the other hand there is nothing wrong with these bigger cars and trucks except that they are bigger.
Now I don’t know about the rest of you but in my boat or other big vehicle a 1.4 liter motor would not so much as move it. So there is a need for bigger motors and vehicles besides driving the housewife to the store.
Put it to you this way. If I had the need to buy a motor and it was a choice of something built this century or something that was made in the 80’s I think I would do the newer motor and the environment would thank me for it. Also by them destroying all these motors will make a shortage in after market salvage parts business. So if you are holding on to the “bigger car or truck” because you need the size just keep in mind that salvage parts will never be cheap for it.
Last, who says you can’t take one of these turned in vehicles, buy it and put in an even older motor to get it running again? I bet the guys that run the service bays are loving this. It must be like Christmas. If they do anything to it at all they can fix it after they buy it for salvage prices.

[Ghost]

I think you all are missing the point of the post.
Having these motors in the second hand market would also be a plus. I know they only show the 78 Dodge Dart in the dumpster but for the most part these folks are not turning in these cars and trucks. They are most likely from the last 4 to 7 years and they are bigger cars and trucks. To get better economy people are going to smaller cars and trucks. Now that’s good but on the other hand there is nothing wrong with these bigger cars and trucks except that they are bigger.
Now I don’t know about the rest of you but in my boat or other big vehicle a 1.4 liter motor would not so much as move it. So there is a need for bigger motors and vehicles besides driving the housewife to the store.
Put it to you this way. If I had the need to buy a motor and it was a choice of something built this century or something that was made in the 80’s I think I would do the newer motor and the environment would thank me for it. Also by them destroying all these motors will make a shortage in after market salvage parts business. So if you are holding on to the “bigger car or truck” because you need the size just keep in mind that salvage parts will never be cheap for it.
Last, who says you can’t take one of these turned in vehicles, buy it and put in an even older motor to get it running again? I bet the guys that run the service bays are loving this. It must be like Christmas. If they do anything to it at all they can fix it after they buy it for salvage prices.

Good points. (One minor thing though: regarding the service bay guys, if I understand it right, I think the whole "clunker" is destroyed, shell as well asa motor, no?)

One other thing I would add to what you highlighted: the charity vehicle-donation thing gets clobbered here too. Who in his right mind would donate for about $500 back when he could CFC the thing for $4500? So this takes from a bunch of charities, and gives to the beneficiaries of CFC.

Further, what is a bit harder stat to know but can be estimated, is how many MORE cars were bought than would have been bought anyhow at higher prices? Once you back this number out, the taxpayer cost-per-car-purchase-that-would-not-have-happened-otherwise is a LOT more than $4500.

Oh yeah, and there remains that pesky problem of the future demand that is stifled.

[handfulz28]

I think you all are missing the point of the post.

I know I won't miss the Aurora parts, the '80s Chevy/GMC conversion van, the '80s Pontiac/Buick/Chevy/Olds beaters. Now those Chrysler K-cars....the 5 or 6 of those that haven't already rusted to memories may be worth something one day. :D

Really, look at the volume and quality of what's being turned in. Not much stuff that's ever been, or ever will be, on the Barrett Jackson auction block. I doubt many service guys will make the effort to re-constitute any of these things because...they're just not worth it.


Further, what is a bit harder stat to know but can be estimated, is how many MORE cars were bought than would have been bought anyhow at higher prices? Once you back this number out, the taxpayer cost-per-car-purchase-that-would-not-have-happened-otherwise is a LOT more than $4500.

Run that by me again? I "think" I know where you're trying to go with that, but since the program is a fixed benefit (probably the only govt program of its kind with an actual, although now adjusted, cap), the "cost per car" is fixed. But along where I think you're going with that thought, looking at sales volume over the last X months and comparing it to volume while the CARS sale is going on, I'll wager a slice of pizza and a beer that you won't be able to seperate "regular" sales from "CARS advantaged" sales. Volume during the CARS sale will exceed the additional 250-280k units because of additional incentives by the manufacturers. So if more cars are sold than the program provides, I don't think that would increase "per car" costs.

[BUIZILLA]

it's all about your carbon track... :bonk:

[show-n-go h2o]

I think you all are missing the point of the post.
Having these motors in the second hand market would also be a plus. I know they only show the 78 Dodge Dart in the dumpster but for the most part these folks are not turning in these cars and trucks. They are most likely from the last 4 to 7 years and they are bigger cars and trucks. To get better economy people are going to smaller cars and trucks. Now that’s good but on the other hand there is nothing wrong with these bigger cars and trucks except that they are bigger.
Now I don’t know about the rest of you but in my boat or other big vehicle a 1.4 liter motor would not so much as move it. So there is a need for bigger motors and vehicles besides driving the housewife to the store.
Put it to you this way. If I had the need to buy a motor and it was a choice of something built this century or something that was made in the 80’s I think I would do the newer motor and the environment would thank me for it. Also by them destroying all these motors will make a shortage in after market salvage parts business. So if you are holding on to the “bigger car or truck” because you need the size just keep in mind that salvage parts will never be cheap for it.
Last, who says you can’t take one of these turned in vehicles, buy it and put in an even older motor to get it running again? I bet the guys that run the service bays are loving this. It must be like Christmas. If they do anything to it at all they can fix it after they buy it for salvage prices.

We have to kill the engine, then have a scrap yard that is approved by the government come and get it, they have to shred it and we have to prove all of this or we get no money. it takes almost an hour just to apply for the money of one clunker. So we had 80 of these, just the administration of this program cost our dealership a ton of money. plus we have fronted almost $400k with no date of when we might get paid.
There is no chance of not killing the motor then buying the car dirt cheap, they have to be shredded or we get nothing.

[joseph m. hahnl]

Yes: well I see!:wink:
That is unfortunate, But the truth of the matter is. Most cars that are junked do not sit in a junk yard very long to begin with. They are crushed and trucked away for scrap recycling.Only late model cars are kept.They may remove some essentials and inventory it.Then it's off to the Crusher with them.
We have place up here where you can cut out the middle man"The Junk Yard" and bring it right to the recycler "The Scrapper".
The junkie gives you $20.00:shocking: the Scrapper gives you $200.00:eek:.How much do you think the scrapper gets ?????:crossfing::crossfing::crossfing:


We live in the new of age recycling in America:kingme:.

[handfulz28]

I've torn down a couple cars for race car parts. WE took one stripped unibody chassis straight to the shredder... $5.80; the other I let a "stripper" (:D) come get and got $250.


The guys that get to kill the clunkers are at least getting a little joy in their day....

[Ghost]

I know I won't miss the Aurora parts, the '80s Chevy/GMC conversion van, the '80s Pontiac/Buick/Chevy/Olds beaters. Now those Chrysler K-cars....the 5 or 6 of those that haven't already rusted to memories may be worth something one day. :D

Really, look at the volume and quality of what's being turned in. Not much stuff that's ever been, or ever will be, on the Barrett Jackson auction block. I doubt many service guys will make the effort to re-constitute any of these things because...they're just not worth it.



Run that by me again? I "think" I know where you're trying to go with that, but since the program is a fixed benefit (probably the only govt program of its kind with an actual, although now adjusted, cap), the "cost per car" is fixed. But along where I think you're going with that thought, looking at sales volume over the last X months and comparing it to volume while the CARS sale is going on, I'll wager a slice of pizza and a beer that you won't be able to seperate "regular" sales from "CARS advantaged" sales. Volume during the CARS sale will exceed the additional 250-280k units because of additional incentives by the manufacturers. So if more cars are sold than the program provides, I don't think that would increase "per car" costs.


Sorry, was slow getting back. I think you read me right, but I'll confirm. I'll make up numbers to make the math easy.

Let's say that during the program, 1000 cars were sold.

$4500 per car is still the incentive. Ignoring administrative costs (which may be significant, not sure) that appears to be $4500/car, or $4.5 million.

But let's assume that if there had been no program, 500 cars would have sold in the same period. (I don't know the real numbers, but there is SOME answer even if we don't know the exact amount.)

So the program "created" an addition 500 deals, doubling the sales for the period. So the true cost of changing anything was $9000 per car. Further, the damage done to near term future demand is probably pretty close to the number of deals that were stimulated, 500. Every new deal removed a deal from future demand.

So, in my example, to make 500 deals happen now rather than later, the taxpayer got soaked for $9000 per deal of subsidy. It's morally reprehensible anyhow, but depending on the trending of car sales overall, it may be ugly for the future. If sales are still slowing toward a new and lower plateau, we just stole a bunch of deals out of that future, and it could make the bottom of the sales curve even lower than before, rather than smoothing out a dip in the sales curve.

(I realize I am ignoring differences in choices of models in those deals as well, just trying to keep the main concept clear.)

Mike

[handfulz28]

:confused:

I think I need Joe (Cuda) to come in here and explain some logic to me. Because I don't think you can "logically" assign the cost of 1000 cars in the program, to 500 that would've been sold regardless. If you want to assign the cost of the "additional 500" cars sold, well according to my calculator....at $4500 per car....that works out to....wait for it....$4,500 per car. :confused:

Part of the problem is you're assigning the total cost of the program, to only a fraction of the project. Also, the example isn't realistic because of the cap vs volume. Let's say that without the program, only one car would've been sold. But since an additional 250k were sold, you're example would conclude that it cost $1Billion for that first car?

I think probably the fundamental flaw in this program, is the size of the incentive. I'd like to see at what point the incentive would no longer be worth the effort.

As for government aid/subsidy programs go, this capped rebate isn't so bad. Imagine if we put a cap on lifetime SS benefits, disability payments, Medicare/Medicaid. It's those kind of open-ended programs that let costs go through the roof.

[BUIZILLA]

does somebody want to borrow my calculator? :kingme:

[Ghost]

...I don't think you can "logically" assign the cost of 1000 cars in the program, to 500 that would've been sold regardless

I didn't. I think I confused you with using 500 as the number of "anyhow deals" and also as the number of "stimulated deals".

I assigned the entire cost of the program to the 500 deals that were stimulated, and took the 500 that would have been sold regardless out of the math. You can't spread the cost over the ones that would have sold without the program. The REAL cost per unit of a stimulus has to be measured based on the DIFFERENCE it makes as a stimulus, and the true cost of the stimulated deals has to include the money wasted paying for deals that would have happened anyhow.

I think I can show why more clearly with an example.

For instance, suppose we had a Cash For Sunrises program tomorrow. We pay 1 million dollars per sunrise to stimulate more of them.

Tomorrow comes, and there is one sunrise, so we pay out 1 million. The program costs 1 million dollars. As a sunrise stimulus, the cost per stimulated sunrise is infinite, 1 million per ZERO stimulated sunrises. If I read it right, your math above would have miscalculated the unit cost as 1 million per stimulated sunrise. If, magically, there had been a second sunrise, we'd have paid 2 million out and gotten one extra sunrise, and the cost per stimulated sunrise would be 2 million.

Make sense now?

Mike

(Please don't ask who got the million for the sunrise that happened anyway. The answer is, of course, Al Gore. :))

[handfulz28]

For instance, suppose we had a Cash For Sunrises program tomorrow. We pay 1 million dollars per sunrise to stimulate more of them.

Tomorrow comes, and there is one sunrise, so we pay out 1 million. The program costs 1 million dollars. As a sunrise stimulus, the cost per stimulated sunrise is infinite, 1 million per ZERO stimulated sunrises. If I read it right, your math above would have miscalculated the unit cost as 1 million per stimulated sunrise. If, magically, there had been a second sunrise, we'd have paid 2 million out and gotten one extra sunrise, and the cost per stimulated sunrise would be 2 million.

OK, so Jim has us calculating Al Gore's stimulus for carbon footprints...:D

So let me turn my last example the other way. 250k cars regardless, throw in the $4,500/car, and end up with 250,001 cars sold. So THAT extra car cost $1Billion. And that marginal cost per additional car continues to decline until we reach an additional 250k cars sold ($1Billion/$4,500ea).

So your original hypothesis was that the "actual" cost per car is more than $4,500/ea, implying that less than 250k ADDITONAL cars were sold over what would've sold without the stimulus. Do I have all that right?

My slice and a beer still says we sold MORE than an ADDITIONAL 250k cars. Which would put the per car cost below the "advertised" cost. Oooooh...voodoo....we might've actually had a "successful" stimulus package...:party:

Disclaimer: No TARP funds were used in the production of this reply. :D

[zelatore]

Since the majority of the folks driving cars that qualify as clunkers are most likely in the "can't affford a new car" bracket anyways, when and where do we add into the programs cost the repo fee's?? :D :D

I've wondered about that. I've heard two different dealers on call-in shows say the exact opposite. 1st guy says a lot of the people clearly can't afford the cars and he expects a higher percentage of repos down the road. (Of course, his dealership doesn't care because that's the bank's problem.)

2nd guy says banks are tougher than ever on qualifying people and he expects a lower than historic repo rate.

The only coloration I have to this is that it's clearly harder to get a marine loan these days. Then again, car loans are generally easier to get than boat loans. Not many people drive the boat to work.

[Ghost]

OK, so Jim has us calculating Al Gore's stimulus for carbon footprints...:D

So let me turn my last example the other way. 250k cars regardless, throw in the $4,500/car, and end up with 250,001 cars sold. So THAT extra car cost $1Billion. And that marginal cost per additional car continues to decline until we reach an additional 250k cars sold ($1Billion/$4,500ea).

So your original hypothesis was that the "actual" cost per car is more than $4,500/ea, implying that less than 250k ADDITONAL cars were sold over what would've sold without the stimulus. Do I have all that right?

My slice and a beer still says we sold MORE than an ADDITIONAL 250k cars. Which would put the per car cost below the "advertised" cost. Oooooh...voodoo....we might've actually had a "successful" stimulus package...:party:

Disclaimer: No TARP funds were used in the production of this reply. :D

Ummm.......no. I think you need to check your math. The "stimulated unit cost" (how's that for a great term? :)) CANNOT go below the advertised cost of $4500 per car. The lowest possible "stimulated unit cost" is $4500, and that can ONLY happen when no cars would have been sold without the stimulus.

To be clear, your math was close to right in your example where stimulus created one deal, upping what would have been 250,000 units to 250,001. In that example, the program cost $4500 per deal times 250,001 deals, and it yielded one extra car, so the "stimulated unit cost" was $1,125,004,500 per car. But I assumed you were just calling that big number a billion, and the principle was dead bang on.

Then your math got all pear-shaped when you talked about the marginal cost dropping until we reach an additional 250,000 cars sold. The marginal cost drops forever, approaching the limit of $4500/deal. (Unless no cars would have been sold without the stimulus, and all the deals were stimulated. In that case, the stimulated unit cost sits at $4500 no matter how many are sold. Here's the equation:

stimulated unit cost = total payout of program / # stimulated deals, OR
stimulated unit cost = $4500(# stimulated deals + # anyhow deals) / # stimulated deals

As you can see, nothing magic about the halfway point where the number of stimulated deals equals the number of "anyhow deals", except that the cost per stimulated unit is double the advertised $4500, or $9000.

The point is, that $4500 will always be an artificially low claim of the true cost per stimulated deal, because the true cost per stimulated deal has to cover the money handed out needlessly to those who would have bought anyway.

Pepperoni and High Life Lite please, when the light shines. ;)

Mike

(As an aside, I think the "stimulated unit cost" was only around $2500 for Eliot Spitzer.)

[Euro 95]

Mike, $1,125,004,500 minus 4500 is handed to those who wouldve gotten a car anyway. Thats a whole lot of money those people will (in theory) spend on a more expensive model or any other purchase. This will get the ball rolling again.

[Just Say N20]

Ummm.......no. I think you need to check your math. The "stimulated unit cost" (how's that for a great term? :)) CANNOT go below the advertised cost of $4500 per car. The lowest possible "stimulated unit cost" is $4500, and that can ONLY happen when no cars would have been sold without the stimulus.

To be clear, your math was close to right in your example where stimulus created one deal, upping what would have been 250,000 units to 250,001. In that example, the program cost $4500 per deal times 250,001 deals, and it yielded one extra car, so the "stimulated unit cost" was $1,125,004,500 per car. But I assumed you were just calling that big number a billion, and the principle was dead bang on.

Then your math got all pear-shaped when you talked about it the marginal cost dropping until we reach an additional 250,000 cars sold. The marginal cost drops forever, approaching the limit of $4500/deal. (Unless no cars would have been sold without the stimulus, and all the deals were stimulated. In that case, the stimulated unit cost sits at $4500 no matter how many are sold. Here's the equation:

stimulated unit cost = $4500(# stimulated deals + # anyhow deals) / # stimulated deals

As you can see, nothing magic about the halfway point where the number of stimulated deals equals the number of "anyhow deals", except that the cost per stimulated unit is double the advertised $4500, or $9000.

The point is, that $4500 will always be an artificially low claim of the true cost per stimulated deal, because the true cost per stimulated deal has to cover the money handed out needlessly to those who would have bought anyway.

Pepperoni and High Life Lite please, when the light shines. ;)

Mike

(As an aside, I think the "stimulated unit cost" was only around $2500 for Eliot Spitzer.)

Is anyone else's brain starting to hurt? :boggled:

[Ghost]

Mike, $1,125,004,500 minus 4500 is handed to those who wouldve gotten a car anyway. Thats a whole lot of money those people will (in theory) spend on a more expensive model or any other purchase. This will get the ball rolling again.

Well, I differ on whether it will change anything, because the money they have to play with came from somewhere. (Like, from you and me.) So you and I will have less to spend, if spending is what was going to make things better, right?

Mike

[CJmike]

http://www.youtube.com/watch?v=3SXA1oZnj98&feature=channel

http://www.youtube.com/watch?v=Qj5gzvGnGP4

Stupid program.

[Cuda]

I don't think logic comes into effect when you are talking about the federal governments beauracracy.

I don't see how destroying a car that is most likely paid for, and buying a newer one, along with the newer payments, therefore driving the poplulace to carry more debt at a time when we should be saving money, is going to help the economy one bit.

A billion here, and a billion there, and pretty soon you are talking real money.

Pretty soon, the president and congress will have to answer to the real boss of this country: The people.

[BigGrizzly]

Actually $4500 is the top to be paid. the average is around $3000. Now a newly discovered loop hole- some dealers found so not to destroy the cars. Wait till BO finds out he signed it and did not read it again. Some locals are not doing it because most buyers have marginal qualifications. It is getting tight. BTW I think this belongs in Political.

[show-n-go h2o]

I don't think logic comes into effect when you are talking about the federal governments beauracracy.

I don't see how destroying a car that is most likely paid for, and buying a newer one, along with the newer payments, therefore driving the poplulace to carry more debt at a time when we should be saving money, is going to help the economy one bit.

A billion here, and a billion there, and pretty soon you are talking real money.

Pretty soon, the president and congress will have to answer to the real boss of this country: The people.

And as of yesterday the "clunkers" program just got another 2 billion. Just yesterday we sold 20 new toyota's, last saturday we sold 46. Today we are expecting at least 40 more sales. Thats way over our "normal" numbers, but when the program is over it will be a ghost town for a while.
Each one of the "clunker" deals fills out a survey, almost all of them say they would have been in the market to buy within the next 12 months, there are only a few that say they wouldn't have bought without this program and a few that say within the next 24 months.

[BUIZILLA]

do you own a Ford store? I think your dad told me he had a Hyundai store that was kicking ass?

[Cuda]

And as of yesterday the "clunkers" program just got another 2 billion. Just yesterday we sold 20 new toyota's, last saturday we sold 46. Today we are expecting at least 40 more sales. Thats way over our "normal" numbers, but when the program is over it will be a ghost town for a while.
Each one of the "clunker" deals fills out a survey, almost all of them say they would have been in the market to buy within the next 12 months, there are only a few that say they wouldn't have bought without this program and a few that say within the next 24 months.
It sure didn't stimulate the Big Three.

[BigGrizzly]

Actually it did stimulate them but not like they hoped/were told it would. Of course look who though up the package. wait till they get taxed on the free stimulus. I hear that is next. Like show-n-go says look for the ghost town down the road, this will be a good time to buy with out a trade.

[handfulz28]

Further, what is a bit harder stat to know but can be estimated, is how many MORE cars were bought than would have been bought anyhow at higher prices? Once you back this number out, the taxpayer cost-per-car-purchase-that-would-not-have-happened-otherwise is a LOT more than $4500.

Going back to the original hypothesis. Would you agree that your hypothesis implies that even under this program, there WILL NOT be an ADDITIONAL quantity of cars sold equal to the average qty covered by the program, which is MAX $1Billion @ $3500-4500 per car? In laymans terms, that less than approximately 250k EXTRA cars were sold.

I'm with you on stimulated unit cost exceeding "advertised" unit cost, but only for ranges where total stimulated is less than the program MAX. In this range, anyhow sales are subsidized by the program. But every stimulated unit sold OVER the program allotment, reduces the stimulated unit cost.

Consider:
Anywho (:D) = 1
Total = 1,000,001
Payout = $4,000 per, MAX=$1Billion
Calculate stimulated unit cost.

[show-n-go h2o]

do you own a Ford store? I think your dad told me he had a Hyundai store that was kicking ass?

Dad has, Acura,Honda,Chevy, and 2 Hyundai stores and a few used car lot's. I am now at Toyota. No Ford for us and probly not in our future.

[Ghost]

Going back to the original hypothesis. Would you agree that your hypothesis implies that even under this program, there WILL NOT be an ADDITIONAL quantity of cars sold equal to the average qty covered by the program, which is MAX $1Billion @ $3500-4500 per car? In laymans terms, that less than approximately 250k EXTRA cars were sold.

I'm with you on stimulated unit cost exceeding "advertised" unit cost, but only for ranges where total stimulated is less than the program MAX. In this range, anyhow sales are subsidized by the program. But every stimulated unit sold OVER the program allotment, reduces the stimulated unit cost.

Consider:
Anywho (:D) = 1
Total = 1,000,001
Payout = $4,000 per, MAX=$1Billion
Calculate stimulated unit cost.

You lost me.

Stimulated unit cost always exceeds advertised cost unless all deals happened because of the stimulus.

I think you may have read something into what I wrote, or I misspoke. Not sure what the hypothesis you are referring to is. I can't make sense of it. I only used numbers of cars sold to illustrate my point about stimulated unit cost. I make no claims about how many anyhows there were, how many stimulateds there were, or the ratio of those to one another. Spoke of them purely to illustrate the lie in the stimulated unit cost.

Mike