Boy, time sure does fly when you are reliving bad memories. The summer of 2009 brought many wholesalers (such as myself) with the government-funded Cars Allowance Rebate System, or Cash for Clunkers, to their proverbial knees. If memory serves, the whole new-car industry was down, not topping 10 million in sales in 2008, and the economy was in a general malaise, if not free-fall.
From my recollection, Cash for Clunkers would pay up to $4500 for what at the time was considered a gas-guzzler; back then, I remember seeing a bunch of Crown Vics, pre-historic Jeep Grand Cherokees, Chevy Blazers, just about every pre-2002 Dodge Ram and Dakota you could think of, and of course, the venerable Ford Explorer rattling into the Toyota dealership I used to buy cars from.
A good number of those cars were truly $500-$2000 cars, all commanding $3500-$4500 from the government depending upon which category it fell in. However, there were many cars that I salivated over (they were cheap), but I was unable to buy them, as President Obama and Congress had designated them for the crusher, but not before they were (usually) scavenged for stereos, tires, interior pieces, and whatever else the grubby paws of the unethical types could get their hands on. From there, liquid glass or some other engine-destroying substance was poured into the carburetor/intake while it was running to cause it to seize up and die an (un)timely death. I’m certain there were more than a few good cars killed during that “program”.
Here is the Automotive News article linking to our salute to bad memories:
As this article indicates, many were pleased about the results of Cash for Clunkers; new car sales made a slight rebound and for awhile, sales were good. However, what I remember was the better part of 4 months, wholesale inventory drying up, and little guys like me starved, while the junkyards and parts recyclers got rich… good for them. After all, money cannot be destroyed–whenever someone loses, another one wins. I distinctly recall believing that we were just stealing the fall/winter business in new cars and bringing it into the summer, which was just shifting revenue, not creating it. I also remember being puzzled about how this was supposed to “prop up” (maybe I’m mistaken) the U.S. Auto industry, specifically, Government, err, General Motors. If that was so, why were import car dealers such as Toyota, Nissan, Hyundai, and Kia eligible for this program? It never made sense to me. I always felt I could have gotten behind it more had it benefited the U.S. new-car industry more directly.
In any event, five years later, and I’m blogging about auctions and working the used-car desk; my, how things change. Thank god for the Internet to remind me about the summer of 2009.
See you in the auction lanes!