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Tuesday, August 4, 2009


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THE OFFICIAL WORD from the WWW.CARS.GOV website: CARS is a new program from the government that will help you pay for a new, more fuel efficient car or truck from a participating dealer when you trade in a less fuel efficient car or truck.

IMHO: The Car Allowance Rebate System is a $1 BILLION dollar program to further stimulate the auto industry by paying Americans to trade in their old junkers for new cars. The alleged theory is the elimination of these cars will help reduce bad air and our dependency on oil while improving the US economy through car purchases.

HOWEVER, if the truth be told, 1. Most of these old cars dont go more than 8,000 miles per year.
2. Many CLUNKER owners lack the financial resources or credit worthiness to buy a new ride.
3. Current availability of alternative fuel vehicles cannot meet the demand of interested car buyers.
4. Most new car buyers are shunning Chrysler, GM and Ford for Toyota, Nissan and HONDA, for late model pre0owned cars, so they will not benefit from the cash for junkers program.
5. BTW, Whos getting the money from the scrap metal, salvaged parts and recycled rubber sent to the crushers?

PLEASE note the final rules will not be available until JULY 24th, 2009. The CARS program website clearly states the rollout isnt expected to start until July 24th, 2009 as many of the components of the program have yet to be determined.
As a result of this frenzy-freeze, consumers will idle their buying for another 30 days, or longer, if you judge the ability of the government to administer this program based on the success of the recent ANALOG to HD converter box distribution.
In this scenario, the dealers will either lose a client or try to rework the REBATE to make the deal now, which will not eliminate the CLUNKER trade from the roadways. A CLUNKER trade-in that could be sold for more than the $4500.00 max. rebate, will be a loss to the dealer that sends it to the CRUSHER. This program could cost dealerships, countless thousands in USED CAR sales, as cars in the $4-8k range are needlessly SCRAPPED, when infact, they are in very high demand.

The other BIG UN-ANSWERED QUESTION is how does the dealership get paid? VOUCHERS, VOUCHERS, VOUCHERS
Imagine car dealerships selling 100 CLUNKER CAR DEALS a month at $4500.00 each, carrying $450,000.00 owed to them by a government program. Dealerships cant float that kind of cash. I see dealers opting-out. Will the taxpayers end up paying interest on top, or will the dealerships cut-off their participation when the banks turn-down their lines of credit? Will the auto manufacturers provide extra flooring or credit lines for the millions of new cars they are making to fulfill every Americans NEW RIDE?

IMHO: The government should DEMAND the car factories participate in the program by lending more openly to both dealers and consumers, especially when their brand is being traded for a new version of the same brand. The cars coming off the road and replaced with a different make should also have to pay up on a percentage basis.
HOW DO YOU KNOW WHAT YOURE GETTING FOR YOUR CLUNKER? The value of the credit for the purchase or lease of a new passenger car depends upon the difference between the combined fuel economy of the vehicle that is traded in and that of the new vehicle that is purchased or leased. If the new vehicle has a combined fuel economy that is at least 4, but less than 10, miles per gallon higher than the traded-in vehicle, the credit is $3,500. If the new vehicle has a combined fuel economy value that is at least 10 miles per gallon higher than the traded-in vehicle, the credit is $4,500.

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