"Cash for Clunkers" program (c) Michael Osbun
Not everyone supported the
Overall, cash for clunkers: Thumbs up or thumbs down? It really is all thumbs up. I can't remember too many programs that it's hard to find anything negative about.
How is the program helping the economy? The auto industry is probably the industry that has the largest multiplier effect on the U.S. economy. So by this happening, what's going to occur is that all of the major auto manufacturers are going to increase production moving into the third and fourth quarters. That's obviously going to add jobs, because then we're adding third shifts and overtime, and perhaps plants that were down will come up. Employment increases, incomes rise, and people buy things. So the multiplier effect through the economy is pretty big. We think that GDP could go up a full point in the third quarter because of this program.
How much do you think the program will raise sales? We think the
A report from
Would you support a bill that made this program longer-term? Absolutely. We wish they would have just done the original plan,
How would it still be stimulus if it went over a year? If they had done it for a whole year, what would have happened is you would have had a bigger lift overall in industry sales. A lot of forecasters are forecasting next year [to be in the] 11.5 million range [for annual car sales]. If we had continued this thing on, it might have boosted this half a million above that number.
Some critics of the program have said the program plays favorites with industries. Rep.
Fact No. 2? Fact No. 2 is that we're giving lots of money to banks, and the auto industry has benefited, [so] why not give some money to consumers? A lot of the complaints have been people saying, "Why don't you just give us the money you gave to the banks? We would have spent it on goods and services and gotten the economy rolling." So why not give consumers a break here, too?
Have the multiplier effects of the program been undermined at all by foreign cars being sold? Four in five of the top-selling cars through cash for clunkers were foreign. Actually, we were a point higher in July than our normal share point. Our [U.S. auto manufacturers'] share of the program was 45 percent in July. We typically have been running 44 percent, so we actually had a point higher. So it's been fair to us. I wouldn't be surprised this month if domestic share goes up. I think we're going to have a really good month.
One worry has been that the program has been so popular, inventory levels at dealerships are now too low. Are you planning on ratcheting up production to address this? That's what we're looking at. Our executive committee met today on that very subject of where we want to increase production.
When? And by how much? I don't want to say, but I can say we've made public that our third-quarter production volumes are going to be up 35 percent versus quarter two, which is a big increase. And we're probably going to boost that further in quarter four. We haven't announced quarter four yet. But, yes, we're looking at what could be some sizeable increases in production.
Are there worries at GM that a program like cash for clunkers -- coming on top of the government bailout -- makes it look like you're leaning on taxpayers too much? To be honest with you, I really think the negativism that we went through with the bankruptcy, and the ugliness -- which was a fun thing to live through -- are behind us. Now really what I see happening, one month later after we physically emerged [from bankruptcy], is we're finally able to switch gears and talk about our great new products that have been doing really well over the years. I think we're causing people to go, "Wow, these products are good." And some of the innovative things we're trying are really pretty interesting. So this thinking of, "Oh, we're feeding into the public trough here because of cash for clunkers" -- we're not really afraid of that. Besides that, it isn't us. The imports and domestics are all equally benefiting from this. It's pretty hard to draw that conclusion.
Is the program influencing GM to develop more fuel-efficient vehicles? That's the irony of the thing: We've already made that decision. I came into this job a couple of years ago, and one of the first things I did was raise our long-term oil price forecast to a very high number.
Why? You're better to plan for high fuel prices because it makes you do all the right things. It makes you produce fuel-efficient vehicles; even if you don't produce them, your competitors are anyway, so it makes sure you're very competitive. Even if those aren't true, the government is going to mandate it anyway through CO2 emissions [regulations] and CAFE [corporate average fuel efficiency] laws, which they have. Only good things can happen to you when you plan for high fuel prices.
Auto Dealers: Cash for Clunkers a Needed Boost
John McEleney is the chair of the Virginia-based National Automobile Dealers Association, which represents more than 90 percent of new-car dealers nationwide and lobbied hard for the program. He recently spoke about how dealers have been reacting to the program and what the problem was with reimbursements.
4 Things to Know About the Cash-Strapped 'Cash for Clunkers'
The government set aside $1 billion for the "cash for clunkers" program, which is meant to give $3,500 or $4,500 vouchers to people who
trade in their gas-guzzling vehicles for new, fuel-efficient ones. But now that the
Cash for Clunkers Program Has Its Roadblocks
If you want to trade in your junker for a new vehicle under the federal government's 'cash for clunkers' program, you'll have to act fast. Plus, qualifying for the vouchers isn't as simple as you might think. In fact, you'll need to know three things to decide whether it's a good deal for you.
Making Sense of 'Cash for Clunkers'
With new-car sales slumping, automotive companies have been looking for ways to get consumers back into showrooms. Washington checked one item off car companies' wish list when it passed the Consumer Assistance to Recycle and Save Act of 2009 -- commonly known as 'Cash for Clunkers' ...
(c) 2009 U.S. News & World Report