Cash for clunkers, march or die
First let me say that I have direct, second hand experience from the perspective of both the consumer and the retailer. That is to say, the car buyer and the car dealer.
So it is in that manner, that I see a few necessities for the US to not only honor all deals currently completed, up until the supposed moratorium, but also to extend the entire program, possibly even shifting the program's qualifying details.
The cash for clunkers program, or CARS (car allowance rebate system) in the general view, is a program which allows cars made within the last 25 years, and which have been registered current, and for the past year, and achieve a miles per gallon rating of less than 18 average (large vehicles have different criteria). The program was intended to run either until November 1st, 2009 or until the funds had been depleted. Dealers had adopted the practice of offering scrap value for the trade in (around $200USD), as most vehicles being returned were not worth a dollar to most dealers in any other circumstance.
The program has proven extremely popular, and has been heavily utilized.
Currently their has been a suspension of processing of new deals, as no one seems to have any idea as to what amount of the $1 Billion USD set aside for the program has been either depleted or reserved by deals completed. Car dealers are continuing to see large amounts of traffic, people looking to complete a CARS program transaction. Dealers however have to say no. Here is why; with the time it takes for a car deal (deal) to be completed, the paperwork to be processed and a number of other variables, such as vehicle swap with other dealers per stock issues or awaiting a vehicle that was ordered specifically, and will have to be sent from port of point of manufacture, their is no guarantee that even the deals completed will have the funds to be honored. Dealers could be left with the cost of these deals, which would include the cost of vehicles that are not resaleable which were taken on trade, the potential permanent destruction (per government guidelines) of vehicles from trade which might be resalable, and the cost of writing deals minus $4500 from the government, which the dealer/financier/manufacturer may have to fork over.
It is not difficult to see their is a potentially huge problem. The US has essentially made promises to small businesses (the dealer), allowed them to extend themselves on that promise, and maintained no accountability of how that promise was being fulfilled. Dealers are now in a race against time to file the paperwork necessary to receive the CARS rebate. Many dealers are left to believe that they may be footing the bill, or taking 'hits' off of these bad deals.
The problem however, is not just that, it is also the mechanics of the thing, the engineering and execution of a brilliant program, with great potential. It was a campaign promise, and a good one to keep. Again, however, the lack in understanding of how this would be received, indicates that this plan was implemented with little to no understanding of the current market. Apparently the US was "surprised' at the popularity. Imagine any other serious financial/strategic venture, hearing the word surprise is not the best thing I can imagine. A military campaign should not be 'surprised' at the strength of the enemy, it should have understood the environment in which it was operating. And that is the case here.
Their are other issues as well; with the way this program is turning out, I cede to you that at least some American's are already beginning to lose faith in the ability of this US to execute its mission, and complete its goals in a structured, efficient manner. At a time when what many to believe is a fundamental error in America, the health system, is being debated for major overhaul. This does not bode well for proponents of sweeping mass-reform. Reform I personally believe needs to occur as much as anyone (more on that some other time).
So, in order to ensure the financial revenue expected of this program, restore the confidence of small business, and the American people, and honor a commitment already extended and received, the US must extend the cash, responsibly.
One way to continue might be to guarantee the validity of all deals completed before the 31st of July (ink signed). The program might also be extended, and modified to include cars of certain model years known to contain the most inefficient vehicles, even extending the 25 year deadline. I know I have seen quite more than a few 197* 198* LARGE sedans and trucks on the road, spewing black smoke.
Is that something you would be interested in?
