Comments on: Initial Analysis of Cash for Clunkers http://www.robsaker.com/2009/08/27/initial-analysis-of-cash-for-clunkers/ Marketing Insights and Analysis Fri, 05 Mar 2010 03:50:52 +0000 http://wordpress.org/?v=abc hourly 1 By: robsaker http://www.robsaker.com/2009/08/27/initial-analysis-of-cash-for-clunkers/comment-page-1/#comment-131 robsaker Mon, 31 Aug 2009 01:09:06 +0000 http://www.robsaker.com/?p=322#comment-131 Actually, I didn't make the claim that gas savings was the reason they promoted this program. As you'll note clearly in the first paragraph, I believe they intended it as a stimulus to the automotive industry. The stipulation for the carbon reduction clause (by way of improved mileage) wasn't the justification of the program, it was a political move to ensure enough support from members of Congress who are more environmentally concerned. The point of this "wacky post" is that the true benefit of the Cash for Clunkers won't be known. You mention a $14B impact to the economy. That may happen, but a study from the German government that was released after my post raises the same concerns as I did (<a href="http://online.wsj.com/article/SB125167281358170797.html)." target="_blank"><a href="http://online.wsj.com/article/SB12516728135817079...</a>" target="_blank">http://online.wsj.com/article/SB12516728135817079...</a></a> This may not have stimulated unique demand, and may not lead to sustainable recovery. Actually, I didn't make the claim that gas savings was the reason they promoted this program. As you'll note clearly in the first paragraph, I believe they intended it as a stimulus to the automotive industry. The stipulation for the carbon reduction clause (by way of improved mileage) wasn't the justification of the program, it was a political move to ensure enough support from members of Congress who are more environmentally concerned.

The point of this "wacky post" is that the true benefit of the Cash for Clunkers won't be known. You mention a $14B impact to the economy. That may happen, but a study from the German government that was released after my post raises the same concerns as I did (http://online.wsj.com/article/SB12516728135817079... This may not have stimulated unique demand, and may not lead to sustainable recovery.

]]> By: robsaker http://www.robsaker.com/2009/08/27/initial-analysis-of-cash-for-clunkers/comment-page-1/#comment-132 robsaker Fri, 28 Aug 2009 16:13:28 +0000 http://www.robsaker.com/?p=322#comment-132 Recent update, the Cash for Clunkers incentive is taxable income. <a href="http://www.keloland.com/NewsDetail6162.cfm?Id=0,89084" target="_blank">http://www.keloland.com/NewsDetail6162.cfm?Id=0,8...</a> Recent update, the Cash for Clunkers incentive is taxable income.
http://www.keloland.com/NewsDetail6162.cfm?Id=0,8...

]]> By: Rohn Miller http://www.robsaker.com/2009/08/27/initial-analysis-of-cash-for-clunkers/comment-page-1/#comment-133 Rohn Miller Fri, 28 Aug 2009 03:26:39 +0000 http://www.robsaker.com/?p=322#comment-133 The idea that gas savings was the reason for "Cash for Clunkers" is like saying that the reason the Fed lowers the prime is so people can re-finance their mortgages at better rates. Every dollar spent on a new car manufactured in the US (and that's more than 75% of all cars bought under C-for-C according to the US Chamber of Commerce--remember Toyota, Honda and Nissan cars sold in the US are made in the US) returns eight dollars back into the economy through jobs at car companies, jobs at auto mfg suppliers, and the pass through effect in local economies. By the numbers you cite in this wacky post, the $2.88B cost of C-4-C actually leads to more than $14B in total cash flow through the economy. If you tax that at 25%, it means we're making about a 40% profit on the investment as taxpayers. The idea that gas savings was the reason for "Cash for Clunkers" is like saying that the reason the Fed lowers the prime is so people can re-finance their mortgages at better rates.

Every dollar spent on a new car manufactured in the US (and that's more than 75% of all cars bought under C-for-C according to the US Chamber of Commerce–remember Toyota, Honda and Nissan cars sold in the US are made in the US) returns eight dollars back into the economy through jobs at car companies, jobs at auto mfg suppliers, and the pass through effect in local economies.

By the numbers you cite in this wacky post, the $2.88B cost of C-4-C actually leads to more than $14B in total cash flow through the economy.

If you tax that at 25%, it means we're making about a 40% profit on the investment as taxpayers.

]]> By: A Torchio http://www.robsaker.com/2009/08/27/initial-analysis-of-cash-for-clunkers/comment-page-1/#comment-129 A Torchio Thu, 27 Aug 2009 22:50:36 +0000 http://www.robsaker.com/?p=322#comment-129 Great analysis. I think one of the most interesting things was how quickly car salesmen reverted back to jerk status once they got a little demand. Great analysis.

I think one of the most interesting things was how quickly car salesmen reverted back to jerk status once they got a little demand.

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