Cash Trouble Prompts Some Dealers To Opt Out Of Cash For Clunkers
The Cash For Clunkers program has been a hot topic in the media as well as with satellite radio investors. The program was implemented to spur sales in the auto channel, while at the same time making the American roads a little bit greener. Some New York dealers aren’t seeing enough of the real green (money) though, and have opted out of the program.
It has been reported that hundreds of New York dealers have already withdrawn from the program which thus far has sold 435,102 vehicles with rebate claims totalling $1.8 billion. According to the Greater New York Automobile Dealers Association about half its 425 members have left the Cash For Clunkers program because they cannot afford to offer more rebates, and payment on rebates already given are as yet not honored by the government.
As SiriusBuzz readers are aware, the Cash For Clunkers program offers up to $4,500 in rebates for consumers who trade in vehicles getting 18 mpg or less for a more fuel-efficient car or truck. The issue here is that dealers are paying the rebates out of pocket and having to wait to be reimbursed by the government. As with anything that involves the government, the process is tedious and slow moving. Current estimates for the New York group are that only 2% of the requested rebates have been paid out so far by the government. Essentially, the dealerships are fronting the money, have to destroy the “clunker”, and then have to wait what seems an eternity to get their reimbursement.
According to Mark Schienberg, the group’s president, “…it’s in the hands of this enormous bureaucracy and regulatory agency. If they don’t get out of their own way, this program is going to be a huge failure.”
The program has spurred car sales and shows potential to work, but the money needs to flow quickly, and this simply is not happening. Dealerships love to move cars off of the lot, but they also need cash to order new inventory. Simply stated, the dealers are finding themselves in a cash crunch which they can not afford to expand upon.
Whether other dealerships in other areas are facing the same hurdles is unknown.
[Associated Press]
Position – Long Sirius XM Radio
i quess this about sums it up.
http://www.cnbc.com/id/32478468
Thank God that the Health care reform program is much more efficient and less complex then the cash for clunkers–
Dealers love to whine.
And whine, and whine, and whine except when they ultimately get the money.
But Gary that was really very funny. Touche.
You forgot though about the other side of the coin however. what about the mess we are in right now with our privately run health care system? And who wants to talk about private enterprise messes such as almost bringiing the worlds financial system to the brink of total collapse. Its so much more fun to blame everything on the Govt isnt it.?Simple arguments make for zombie citizens just the way lobbyists like them.
Having said all that. Come on Ray lahood lets get this all straightened out quickly. I
Oh i almost forgot! isnt Ray Lahood a Republican? No wonder. LOL.
This is MORE biased reporting. My Dad owns a dealership and the money IS flowing. If there are some hold ups….I feel they are GROSSLY exaggerated.
Bottom line….the dealers are GETTING their money. And those that haven’t yet…at least the ones I talked to ARE 100% confident they WILL get it. It hasn’t slowed them down or lessened their support of the CASH FOR CLUNKERS program one bit. Not ONE BIT.
I have to say….can’t anyone see thru the agenda? This story is obviously being PUMPED by the anti Obama team to promote fear and doubt in the current administration.
Come on people….it’s ripped right out of the Iraq War and the current Anti-Health Care reform playbook.
Using fear and doubt and misinformation to make it APPEAR something that it’s not. The republicans are brilliant at it.
It’s time the Dems fight back. It was SO GOOD to see Barney Frank grow a pair today and intelligently knock down these nut jobs screaming at the town hall meetings.
Tyler….let me ask you this. WHO do you think floated this story to the media? And who is leading with it? Fox News of course. They had some car dealer guy on a few days ago that looked about as honest as a….well…a USED CARE SALESMAN. Lol. He looked as rehearsed as rehearsed could be and sooooo obviously a Republican supporter. You know Joe the Plumber? Well this guy was Joe the Care Salesman.
Anyway…this guy starts saying he hasn’t gotten any money from the government yet and how Obama is destroying the country BLAH BLAH BLAH.
Meanwhile EVERY car dealer I KNOW my DAD included is LOVING….absolutely LOVING the $ 4 Clunkers program. They’ve never seen so much traffic into their showrooms.
Just 2 weeks ago they were all over the news practically grinning from ear to ear. It was all you heard about. It was such a success that they ran out of MONEY. So the government passes a 2 BILLION extension.
And you believe this negative spin? This BULLSHIT FEAR MONGERING? I mean REALLY now. Shame on you for buying into it.
I guess the Republicans thought the Health Care scare worked so well that they’d try to make it seem like the cash for clunkers was a failure as well.
Don’t make me friggin LAUGH.
Tyler….PLEASE go down to your local car dealer again and ASK them if this is TRUE before you go repeating this right wing fear mongering propaganda.
It is a friggin LIE.
I dont believe it. FrigginRegan its a pleasure to meet another person on this website who is not a wide eye crazy right wing radical. LOL>
Good to hear some dealers are getting their money. I am sure whats probably happening beside the transportation department being overwhelmed by the response to the program, is that many dealers are desperate and need the money sooner than later. I have no idea what was promised to them as far as how quickly they were supposed to recieve the rebate money. You have any idea?
This is a bogus argument. You tell me which is better:
1. Cars sit on the lot and don’t sell. No one makes any money, dust starts to settle. Dealers don’t need cash for new inventory cuz they can’t reduce the inventory they have.
2. Cars are selling so fast that they are having problems keeping their inventory up? They are slow to get reimbursed so they can’t afford to replace the cars that sold (the ones they made money on).
Hmmm.
What kind of profit margin do you think a car has for a dealer?
Don’t you think that the $4,500 they are fronting for the cash for clunkers rebate eats up all of that profit….at least until they get money back?
Assume a car costs the dealer $20,000. They sell it for $22,000, but shell out $4,500 in the rebate. At the time of sale they only got $18,500 for a car that cost them $20,000 to restock.
Yes, they will at some point get their money from the government, but they until that happens, they can not replace their inventory to the same levels…AND they are fronting the money for the rebate. Thus, dealerships are pushing out the profits to a later date.
I can see how there would be a limit to how many cars a dealer can afford to sell under the program before they simply have to wait for the check to come in.
Meanwhile, they are not getting trade-ins to resell because these cars have to be destroyed. If the money flows, the program can work, but the money needs to flow.
Dearlerships that have an unhealthy mix of program and non-program cars can get into trouble without the cash flow to make it work.
In my mind it is not a political issue. I could care less about the politics. It is a cash flow issue for dealers, and because satellite radio relies on the OEM channel, this is news worth reporting.
The whole program has been blown out of proportion. Less than 500,000 cars have been sold under the program. Yes, foot traffic is up, and that is good. Yes, dealers are selling other cars as well that are not under the program, but there is a LONG way to go.
It would take 5,000,000 additional units to get to 2007 sales levels. Cash for Clunkers with $1.5 billion left is not going to bring those numbers in.
Just my opinion, but the auto channel needs more than cash for clunkers….it needs the overall economy to pick up.
Tyler…what I’m trying to say…and I’ll be less vitriolic this time is that I believe this “report” to be misleading. I believe it to be exaggerated and not true for most dealers.
Like I said, my Dad owns a dealership and he HAS gotten paid.
I understand your logic….but it seems like you’re buying into the Fox News started rumor that this is wide spread among all car dealers.
NOT TRUE.
I’m not saying there aren’t SOME delays for some dealers. But it is not the sensationalized majority Fox News is trying to report.
I don’t know wether to LAUGH at…or KICK the tv screen.
The cash for clunkers is a HUGE success….and it’s GALLING the Republicans. They’re WHOLE future as a party is dependent on Obama being pegged as the one who destroyed the economy. They can’t have a “success” story happen with anything Obama does concerning the economy. That is why they attacked the cash for clunkers program from the get go.
And as soon as it was announced as a run away success…they went into panic mode.
They tried to spin how approving 2 billion more for it would be wrong.
But it backfired. The public was HUNGRY for a success story…and this was PROOF of a program that WORKED.
So it passed immediately.
So what was the Republican Party to do? Yeah, they had their Health Care Reform Spin machine working overtime and winning….but they needed to knock down the Cash for Clunkers program.
So they JUMPED at the “story” that there were some delays and tried to make it seem like a disaster that it was CLEARLY not. Sound familiar? Same thing that they are trying to do with Health Care lies.
But anyway….the TRUTH is that dealers ARE GETTING THEIR MONEY. There is NO WIDESPREAD problem.
LaHood just confirmed that there were SOME….repeat SOME claims that weren’t filled out correctly….but that was on the dealers side, and that those “FEW” cases were being sorted out and corrected.
Again…another example of the Republicans grasping for straws.
I am surprised you jumped on the bandwagon so quickly Tyler. We had a FRIGGIN GREAT DAY today with the stock BLOWING THRU MAJOR resistance….and THIS is your LEAD STORY????
Again…shame on you.
Boos all around. 🙂
They also pay interest on the loan to buy the car from the manufacture originally!
Speaking of FOX “news”. Neil Cavuto just did a segment on Barney Frank where he played clips of Barney – has a lets face it annoying voice- over and over again. Clips of him being really brunt with some of the people in the townhall meeting.
BUT HERES the thing….Neil left out the shots of the CRAZY woman he was talking to holding the Obama/Hitler poster….or the guy who was SCREAMING about the Dems destroying the country and how the health care reform would put him and future generations in debt.
NONE of that was shown. Just clips of Barney Frank appearing “rude”. Or at least that was the intention. This is the same tactic they are using with the car story. It’s all BULLSHIT.
I am sorry. I saw the WHOLE townhall meeting. Neil Cavuto left out all the crazies that Barney was responding to. He left out all the applause Barney was getting for his sound intelligent responses. Barney talked about how the Iraq war put us into debt. Of course Neil left this out. As he also left out Barney’s clear and calm response to one screaming person that their health care was NOT going to be taken away. That if they LIKED their current health care…they could keep it. But that for people that had no health care…or were DROPPED from their health care provider for some bullshit reason…that a public plan should be available as well.
The thing that cracks me up is that this is PROPAGANDA at its most dangerous. The Fox News channel is 24/7 lies, mistruths and complete and utter bullshit. They are feeding on peoples fears and spreading lies.
Right now they have a friggin PSYCHIATRIST on talking about how “OUT OF CONTROL” Barney Frank was….and still they haven’t even SHOWN the REAL CRAZY….the friggin NUT JOB PYSCHO eyed woman holding the Obama/Hitler poster. Are you friggin kidding me?????
This ain’t news people. They keep repeating phrases until the public accepts them as truths…but it’s all bullshit. The same way they said “FLIP FLOP” everytime they showed Kerry in the last election. or made Kerry, a friggin WAR HERO look like a coward and BUSH…a friggin draft dogging idiot who skipped out on the National Guard as a friggin war hero.
This is how powerful they are. It’s time to call bullshit bullshit. Not only on this story about the cash for clunkers failure….but on all of it. It’s time to fight back.
I want Obama to say…ok…you know what? I tried to reach across the aisle….now it’s GAME ON MUTHA F’er. I’ve got the majority. When congress comes back in September, we’re passing this health care reform WITHOUT you…AND with a PUBLIC OPTION front and center bitches!
It’s time to fight these lies and fear mongering. Death Panels? Kill Grandma? Cash for Clunkers failing? GIMME A FRIGGIN BREAK.
Kudos to Barney Frank for showing a spine today. Cause let me tell you this….if Bush was being attacked like that and he fought back or told that lady to shut up….these same BOZOS would be CHEERING.
ARGH! LOL>
Sorry to go off on a tangent Tyler….but this is totally related. Because the story you posted is part of this whole agenda. It’s a smear and a lie….and I’m sorry…I couldn’t hold back. 🙂
And on top of it all, Fox News blows doors on CNN and MSNBC in ratings. Right-wing nut jobs are growing in force…and they have won the debate with health care by calling Obama a Nazi and showing up to town hall meetings with assault rifles.
Fox’s numbers are only high because the Right Wingers have one place to go to get their daily dose of nut job dribble. Everyone else had choice with CNN, MSNBC, CBC, ABC, and NBC.
friggen….
No need to apologize. I am looking at this outside of the political spectrum.
There are indeed dealers who can not afford to finance the governments program. You have to admit a dealer will not see his profit on a cash for clunker sale until the govt. sends the check. in fact, in most cases the dealer is in a negative situation until that check comes in. If that check takes 60 days, it puts a crimp on the dealers.
I would stop well short of saying that the program is a huge success. So far we are only talking about 400K cars. Sales in July were boosted pretty much solely by cash for clunkers sales.
Dealerships were initially happy because it finally moved cars that the dealers themselves were having to start paying on. Dealer holdback only lasts about 2 to three months. If a car sits on the lot longer than that, the dealer is paying on the car monthly.
Cash for Clunkers helped solve that financial crisis, and in terms of that it is a success. It is also a success in getting people to showrooms and getting oems to advertise more, but the volume of cars is not at all staggering. Think about it….Two years ago this country had sales of 400K cars every two weeks. Selling the same amount in 7 weeks is hardly an overwhelming success.
My opinion is that the program has been over sensationalized for quite a while. NOTHING comes without a price, and what we are seeing now is a cash flow issue. Over 200 dealers in new york have pulled the plug. This does not happen for no reason at all.
An overwhelming success would be US sales for 2009 getting above 11,000,000 units.
Enjoy it while you can.
2010 is coming and the end of your majority!
Tyler….you almost remind me of the Motley Fools who spun the success of the class for clunkers as a failure for Sirius BECAUSE they said and I quote “the people trading clunkers in the first place were not FINANCIALLY secure enough to PAY for Sat Radio!”
I COMPLETELY disagree with you Tyler. I DO think it’s an “overwhelming” success, and the numbers will bare that out.
If some dealer is going to “drop” it…then anyone looking to trade in their “clunker” is just going to go to ANOTHER dealer. END OF STORY.
It’s not going to stop anyone from getting the deal they want.
And another thing, did you SEE the report today about GM increasing their production? And actually rehiring THOUSANDS who LOST their jobs.
Oh….but the FOX news channel runs with this politically biased and FALSELY EXAGGERATED story of how the clash for clunkers(part 2) is failing….and THAT gets your attention.
Sorry my friend. I think you are tunnel visioned when it comes to this story and are not willing to see that 1) the program IS a success and 2) that it is GREAT for Sirius.
But keep up the good work. Love the site. 🙂
Ha. Rman. Although I get pissed at the Dems for not having a backbone and letting the Republicans define them by NOT fighting back….I have every confidence in Obama and the Dems drawing the line in the sand and growing a pair. There ain’t no way Obama is going to let this go on much longer. He reached out an olive branch to the Repubs…and they bit his hand.
Mark my words…come September, the Dems will unite and pass SWEEPING reform that includes a public option(which unlike what FOX NEWS leads you to believe…the MAJORITY of Americans WANT).
The Republicans only hope is for America’s president(aka Obama) to FAIL. That is why they attack EVERY thing he does or says.
In a year from now Obama will be back on top, and this pathetic attempt by the Republicans to smear him will be a distant memory.
So no….RMAN…I wouldn’t count on winning Congress back from the Dems. It ain’t gonna happen. It may seem like it will if all you watch is the FOX channel….but….I got news for ya….get used to the Dems being in charge. I will bet you any amount of money that they stay in power and that come 2012….Obama gets re-elected….beating Sarah Palin(LOL) in a landslide.
Keep dreaming. The Republicans actions right now are downright treasonous. Kinda reminds you of how the Republicans called anyone against the illegal war in Iraq as treasonous. Only this time….the Republicans an Fox news attack Obama EVERY DAY on EVERY issue. Our president. They want him to fail. Glenn Beck calls him a racist who hates white people?
Tom Delay was on HardBall yesterday actually bringing up Obama’s BIRTH CERTIFICATE again.
The fact is the Republicans got CREAMED in the election. They lost and they were fractured. Obama is left with Bush’s mess and an economic meltdown(which by the way he’s helped turn around!!!)….and the Republicans found their “hook”. They’ve been on the attack ever since. The game plan? NEVER give Obama credit for ANYTHING good….and BASH him on EVERYTHING by spinning and cherry picking and outright lying.
They are doing EXACTLY what they did to sell the war in Iraq. By using FEAR and appealing to our knee jerk patriotic side. Instead of it being war this time, it’s about BIG GOVERNMENT, BIG BUSINESS and BIG SPENDING. Never mind the fact that Bush was the biggest spender and supporter of BIG BUSINESS and GOVERNMENT and got us into this mess. They throw out buzz words like “SOCIALISM” “KILL GRANDMA” and “DEATH PANELS”. It is downright insulting.
Do yourself a favor. Turn of Fox News. Watch Bill Maher’s Real Time or John Stewart or Steven Colbert if you want intelligent commentary. Fox News is an oxymoron.
Holy crap, what a complete tool you are frigginregan.
The fact is only about 2% of CARS funds have actually reached the dealers.
That is an indisputable FACT.
Half of the membership of The Greater New York Automobile Dealers Association has pulled out of the CARS program because of this mess.
By the way, both Gallup and Pew show Obama and the Dems in very real trouble.
Gallup shows Obama’s approval rate at an all time low.
Pew hows the dem party’s approval has dropped 10 points since April.
Your meandering diatribe is just that, a meandering diatribe, devoid of facts and being spouted by a complete and utter moron.
Typical leftist liberal.
You want all the benefits of a free and modern society but NONE of the responsibility for actually maintaining it.
Michael Savage is correct, Liberalism is a mental disorder.
Hey Bah BAh. I found this Detroit Lions cheer outfit online. Going with the theme of the topic. Looks like it could be just the ticket for my cheer squad. C’mon out of the closet Bahbahbigboy, and let’s play rah rah bahbahlooeeeeyy.
LOL !!
That’s the Key……..;)
LOL…………………Check the Link !!
LOL !!
http://www.cheerleading.com/19.....forms.html
Ha. Don’t make me laugh Bababonehead. Even with Obama’s “temporary” dip in “popularity” he still has a higher approval rating than Bush ever had.
And thanks for calling me a Liberal. I don’t let right wing loons such as yourself make me feel SHAMEFUL of being a Liberal. I’m damn proud of it. The Republicans friggin RUINED this country for 8 years….and yet you jump all over Obama in his first few months as President? But yet never ONCE questioned that bone head Bush for his entire presidency?
LOL.
And the FACT about the Clash for Clunkers program is that it IS A SUCCESS. You right wing bozos CANNOT accept that fact. But trust me, it’s going to get worse for you guys. Sure, your minions of crazed, screaming, unintelligent racists that were sent out to disrupt town hall meetings MAY have temporarily taken the focus off of REAL INTELLIGENT DISCUSSION….but Obama will steer us back to rationality again.
All those retarded screaming morons will grow tired and people will see them for what they are….a MINORITY. I bet you ANY amount of money that HALF of those loons don’t even KNOW what they are screaming about! They hear retards like Rush Limabaugh or Glenn Beck say something, so they just parrot it back. The irony is that MOST of them probably wouldn’t even be covered under the current health care system. Or if they are, I bet they’d be denied for procedures. It’d be friggin hilarious if it weren’t so tragic. They are angry sheep who are being used by their lord and master…Fox News and the radical right. Exploited and too STUPID to realize they are puppets and pawns in a high stakes game by the Republicans to win back power at all costs.
But the Republicans will LOSE. And Lose BIG.
Obama(with NO help from the Republicans) is going to turn the economy around and the Republican party will be lost for a generation. Mark my words.
How can it be that you can’t acknowledge that Bush F’d up this country. And while you were BASHING Obama in the first few months of his Presidency, he single handedly SAVED this country from the 2nd GREAT DEPRESSION???
I just find that so pathetic. Because you KNOW if Obama hadn’t taken drastic action, we surely would be RIGHT NOW….this MOMENT….in the midst of a GREAT DEPRESSION.
Instead, we are showing signs of life again. Does the Fox News channel admit that the economy is improving? Yes and No. They’ll admit the stock market is improving….but at the same hand NOT give OBAMA ANY CREDIT. And then in their news stories they’ll say HOW F’D up the economy is and how Obama is destroying it.
In reality, if you READ between the lines….these blow hards are NOT SCREAMING for YOUR rights…they are SCREAMING about their rich business buddies losing power.
Face it, your time is over…and all the screaming or comparing Obama to Hitler ain’t gonna change that. The people….the majority of AMERICA voted for change. And Obama is doing it. Change is painful for the power elite who cling to their power. These Idiots don’t represent America. They represent the greedy who have crushed the little guy for far too long….and they can’t STAND the fact that they are about to lose their power they wielded over the average American.
Nuff said.
Liberal and Proud. Long and Strong. 🙂
Friggen. I warned you about those “Red Bulls”. LOL.
To whoever said clunker owners can’t afford Sirius, you are grossly mistaken if this this statement is the rule for everyone who is participating in the program.
First, we own two “clunkers” that run “too good” to ditch and are too devalued to sale. So we decided to keep them.
We have 4 sirius satelite radios and a greater than 700 credit scores.
So we plan to purchase a new vehicle under the clunker program. Plus we will make sure sirius is in this vehicle too!
Exactly Saunders. Thats what I am saying. You are truly representative of the typical Cash for Clunkers participant. And NOT the lies that are being spun by the Motley Fool writer who said that the people taking advantage of the program were too poor to afford Sirius.
It is this kind of lying and smearing in the media that got me started on my rant. LOL.
The truth is that the MAJORITY of the Clash for Clunker customers are just like you…middle class and most likely going to become long term Sirius subscribers.
Peace out. 🙂
Tyler,
Why does it seem like whenever us investors are finally getting a reprieve, you eitehr put an article out that has some type of negative or pessimistic tone to it or you find a need to reiterate this bullshit propoganda. If not that, the titles of your articles are a bit to the questionable side.
Don’t you have anything bullish ever to say ?
Come-on, we’ve been in the shitter getting out fingers and toes cut off for the last 4 years and need people on our side here.
SiriusXM….
It is not that I fgeel a need to write anything. However, reporting on things that impact the sector is something I do. If you set aside all of the political debate and read the article again, you will see that the tenor of it is that the program can be a positive for Sirius XM, but the cash needs to flow, and dealers can not foot the bill forever.
If a couple of hundred New york dealerships have opted out, what does that tell you? Somnething in the model is broken.
I am cautiously bullish. i have written cash for clunkers articvles that look at the bullish side of the program.
It is not my place to be on one side or the other. As a consumer I love satellite radio. As an investor, I need to look at ALL of the information. If you want cheerleading, there are sites that will give that to you. If you want both sides of the coin, you likely get that here.
Well said SXM investor. Gotta second your post.
EXACTLY Sxminvestor. I know I went off on a political rant, and I apologize for that. LOL.
But you are SO right. Today was a friggin HUGE DAY for us Sirius investors. We broke .60 in the STRONGEST possible way and HELD.
And I pop into SiriusBuzz excited about what Tyler had to say about it….and we get this article? Why? It makes NO sense.
What pissed me off even more was that Fox News started this story and was hammering it all day….when in reality….the money IS FLOWING in.
I am sorry Tyler….I don’t want sunshine blown up my ass….but COME ON. Today was a major victory….and all you can talk about is this CRAP? Yes…CRAP.
The program is a success. It WILL make a HUGE difference in the 3Q and YOU KNOW it. How can you say it won’t??? I am absolutely flabbergasted.
Anyway….I’m done with this thread.
Peace out.
Friggen……
I have followed this equity for quite some time. I was among the first 25,000 to subscribe to Sirius. Because of this I have learned to temper myself with regard to the equity. In addition, I do not trade the eqiuity. I already made my profit in satellite long ago, and simply hold and maintain a position that I am not emotional about.
Getting to $0.60 is not “HUGE”. It is a step. The fact that the equity held the price on decent volume is positive.
Cash for Clunkers will add 750,000 vehicle sales in Q3. A good chunk of those were already in the Q2 subscriber numbers. Yes, these sales help, but it is not “HUGE”. Q3 has a good chance of positive subscriber numbers, and CFC will contribute to that.
For satellite the REAL question is whether CFC is able to kickstart car sales. If $3 billion is the end of the program, what happens after that. This is what we need to think about. In July, the numbers show that the CFC sales were the bulk of the “growth” for the month. August will be better, but the money is now 2/3 of the way gone.
Our opinion on the success of the program is not the issue. the issue is how this program impacts SDARS.
I have not said that it wont impact SDARS. What I have said is that 10,000,000 vehicle sales in 2010 is not a huge success when compared to 15,000,000 in sales only two years ago.
A huge success would be leveling out inventory, stabalizing sales, and seeing growth outside the program.
Yesterday’s article was not much brighter.
Yeah. I don’t get it. I do appreciate a well rounded devils advocate approach…and this IS Tyler’s site….
I guess I just think to focus on what he did today was an odd choice.
There is nothing wrong with celebrating alittle. Today was HUGE….and I was just surprised at what he chose to write about.
OK…thats really it. Gotta run.
Peace out.
Think this is more like what you where expecting, Friggin…………………
😉
Get out the Cheerleaders Clothes !!
LOL !!
General Motors is delivering good news, for a change.
The distressed automaker is ramping up its production. It’s adding overtime shifts to some of its plants to keep up with “Cash for Clunkers” demand for new, fuel-efficient vehicles. The end result should be 60,000 more cars produced by GM this year.
GM’s spurt follows Ford’s (NYSE: F) similar announcement last week. The steadier domestic manufacturer will boost its output by 26% during the second half of the year to keep up with the flurry of trade-ins.
This may be welcome news for the automaking industry, and
encouraging news on the economic front, but it’s downright spectacular
for Sirius XM Radio (Nasdaq: SIRI).
GM and Ford have been early believers in factory-installed satellite
radios. Sirius XM could use the infusion of new drivers, after losing 590,421 net subscribers through the first six months of the year.
The new buyers may not be an easy sell for premium radio. One could
logically assume that folks driving older cars worth less than $4,500
as trade-ins — the only subset of the market drawn to the “cash for
clunkers” program — don’t make up the ideal satellite-radio target
market. Some may shy away from modern dashboard conveniences. Many
can’t just afford the service. In its latest quarter, just 44% of car
buyers with satellite receivers installed chose to become paying
customers. The conversion rate should, in theory, be lower here.
However, many of these buyers are in rural areas, where terrestrial
radio is threadbare. Since satellite radios come with free trial
subscriptions, many of these first-time users will be blown away by
programming options.
There’s always the fear that GM and Ford are overestimating the
marketplace’s appetite. Edmonds.com claims that “purchase intent” has
fallen sharply in recent weeks. The first wave of “Cash for Clunkers”
claims was naturally robust, but the pool of eligible participants
thins out with every passing bucket of bolts that’s surrendered for
scrap.
I only fear that the rest of the potential buyers — those without
“clunkers” to hand over — may be staying away, worried that dealers
will be less reluctant to haggle their way down to great deals. As long
as “Cash for Clunkers” is subsidizing drivers of stodgier cars,
showroom bargains will be harder to find.
This will still be a net positive for companies such as Sirius XM, LoJack (Nasdaq: LOJN), and perhaps even Garmin (Nasdaq: GRMN),
all of which feast on new car sales. However, investors will want to
make sure that there’s more to “Cash for Clunkers” than just the
initial exhaust fumes of success.
I quess my only real complaint about this article is that i would have waited a few days or weeks to see how it sorted itself out before i posted something like this. Its just too easy to get caught up in the political minefield that everything has become these days even if thats not whats intended. You are telling the truth Tsavery when you say you dont have a political agenda to serve with your reporting on the clunker program?
I cant believe i am actually saying to take a breath before one posts. If only i could follow my own advice. Lol.
Ray Lahood speaks.
http://www.huffingtonpost.com/.....63716.html
I quess you can say its a success if its already winding down. No one expected cash for clunkers to sell this many cars in such a short period of a time. There were many skeptical voices about the program.
LLoyd…..
While I tend to be conservative, I couldn’t care less about the politics involved. I was not a McCain man, nor an Obama man.
Thanks for being honest when you say you tend toward the Conservative.
That probably means though that you have a built in bias when it comes to Govt programs. Correct? Again i think you probably would have done better to wait awhile to publish an article on any “problems” of the cash for clunkers program or not published it at all. Why? Because in the end it is going to be way more successful then anyone expected. It will result in saies of 3 billion dollars worth of cars in a very short time, the dealers will all get their money ultimately and this “glitch” in payment will not have ANY impact on SXM whatsoever. So therefore you can see why people of the Democratic persuasion might be a tad annoyed or suspicious especially so because the story was also pumped by Fox as a way to tear down the Obama administration.
Lloyd…..
Again, this has nothing to do with a political agenda one way or another.rams” that sometimes happens. A country needs to have “programs”. I grasp that, and support that. I am not against “programs” at all, but am against abuse of “programs”. This is regardless of which political party launched the “program”. Frankly, cash for clunkers is only worth $3 Billion, and will sell 750,000 cars. This is not “substantial”, not “huge”, and not a “success” unless it kickstarts cars sales beyond the program.
If the progam can get vehicle sales over 11,000,000 for 2009, I will call it a success. If it only serves to sell an additional 750,000 cars, it will not be a success.
Successful “Programs” are those that can get someone or an entity back to being self sufficient. IMO, the last thing we would ever want to see is CFC become a permanent fixture in this country.
CFC is supposed to get auto sales back on course, not become a perpetual lifeline. July’s numbers were good, but sales outside of the program were still not “earth shattering”. We will see what August delivers.
So we can avoid debate here, what would all oonsider a successful August for car sales? Personally, the number needs to be above 1,400,000 for me to say the trend is getting better.
August 2007 sales – 1,400,000 (down from 2006)
August 2008 sales – 1,190,000 (-15%) up slightly over July 2008
August 2009 sales – ?
My basis is that absent the CFC program, August sales would drop by 15% to 20% from last year. That would bring “natural” sales in at between 950,000 and 1,000,000. Thse CFC program has sold 250,000 cars in August thus far. Given that pace, August CFC sales to a bit more than 300,000 units. Thus, with CFC, the number should be about 1.3 million for August.
What we want to see is that absent CFC sales, the number is at 1,100,000 or more. This would mean the decline numbers are getting smaller.
What if the Cash for clunkers serves to allow some or many car dealers to remain in business until there is a bit of a turnaround. Wouldnt that be the defintion of some success. A kind of bridge to the future.You cant expect one program to kick start the car industy to a 11 million car level. The larger economic forces have more influence on that. Its simply one program meant to not only help some dealers and consumers, but also do a little bit to take some clunkers off the road and replace them with some better mileage cars.
Obviously its just a small step. I dont think it was ever sold as anything else. I am just happy that it seems to have sold all these cars so quickly. Remember it was originally 1 billion dollars and was supposed to last till December or January i believe. Now its 3 billion dollars and it will end by September
That is quite amazing.
U.S. Transportation Secretary Ray LaHood announced Thursday that after a wildly successful run, the cash for clunkers program will come to a close on Monday, August 24th at 8 p.m. EDT
Good…, as they say, all good things come to an end. Actually, this could be considered a BAD thing b/c it’s CRAZY, we are giving people money to live more vicariously and lavishly than before all this economical bust took place? What are we doing? Spoiling every single last American? Let’s learn to live in moderation, then we wouldn’t have so much debt…Well, the fish sticks from the head..so the head is the While House…right?
Good…, as they say, all good things come to an end. Actually, this could be considered a BAD thing b/c it’s CRAZY, we are giving people money to live more vicariously and lavishly than before all this economical bust took place