Cash for clunkers was good for all, even Polar Bears

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Published: August 31,2009

Tags: Cash for Clunkers, government

Well, Cash for Clunkers is over and I want to give you an insider’s view and try to put the whole thing into perspective. First, a quick question: Which would you rather have?  An incentive to do what big government wants you to do … or a penalty or imprisonment?  For all the criticism about Cash for Clunkers, you probably would prefer an incentive to a $2 per gallon gas tax or just simply decreeing or outlawing thirsty (read larger) vehicles.  I believe it would take at least a $2 per gallon price increase via an additional tax on top of the free market price of gasoline to motivate consumer behavior radically towards fuel-efficient vehicles or electric vehicles.  That would be devastating to our already fragile economy.

It should not be surprising that when we elected politicians last year that those politicians would use their influence and taxpayer money to pursue the political aims they were elected to represent.  That is what politicians do, and that is what Cash for Clunkers (CFC) is all about… offering an incentive for U.S. citizens to move towards more fuel-efficient and less-polluting/cleaner vehicles.  The political aims being to reduce our dependence on foreign oil by consuming less fuel and to reduce global warming by swapping high polluters for much cleaner burning vehicles. 

Regardless of your thoughts about the polar bears or global warming, you have to concur with the fact that older vehicles do not meet the same pollution standards that 2010 vehicles do.  When you are behind them at the red light, you can readily smell the noxious fumes. Eighty percent of the vehicles we “clunked” were 10 years old or older and didn’t meet 21st century tailpipe emissions standards.

I will freely admit that I love it when the government subsidizes someone to buy my product, especially when I spent over 20 years selling Dodge vehicles, which almost 100 percent qualified as a clunker and virtually all of our fuel efficient Kia’s and Hyundai’s qualified as a replacement vehicle.  By the way, we did right at 100 CFC deals and over 22 percent were old Chrysler products that we traded people into a new Kia or Hyundai! Talk about poetic justice.

Timing is everything in business, and this could not have come at a better time for us.  May 14, we got “the letter” from bankrupt Chrysler telling us we had only till June 9 to sell off all our inventory of Dodge vehicles.  We had 136 new Dodges and sold all but six during our going out of business sale.  We then ordered heavily from our Kia and Hyundai manufacturers to replenish our inventories.  Just as all these fuel-efficient vehicles were arriving, on June 24 President Obama signed CFC into law … going into effect July 1.

 While everyone else was running out of small to mid-size cars and SUV’s, we had truck after truck of factory fresh units arriving! Now our challenge is to liquidate an abundance of inventory without CFC in a short period of time now that model year change is upon us.

One criticism of CFC centered on the perception that these were usable vehicles that were being sent to an early grave.  While that is certainly true in some cases, 80 percent of the vehicles we “clunked” were manufactured in the 80’s and 90’s.  Only 20 percent were year model 2000 and up. Some of these vehicles had over 200,000 miles on them. But wouldn’t the program have to stipulate running vehicles?  If it didn’t, wouldn’t we be paying people to get rid of the non-operable vehicle sitting in their yard? That wouldn’t reduce emissions very much, would it?

Finally, I have stated that CFC could have been called “The 2009 Act to Subsidize Foreign Vehicles And Trade Out of a Domestic Vehicle.”  But what is a foreign vehicle?  My former manufacturer, Chrysler, is run by Fiat in Italy and most of our vehicles were produced outside the USA while Hyundai has a huge manufacturing plant in Alabama and Kia, one on the Georgia/Alabama line, employing our Southern neighbors and utilizing supplier plants, some of which are located in Mississippi.

CFC was great for our business and will definitely reduce carbon emissions and improve the overall fuel economy of the U.S. fleet. Considering the price tag — $3 billion — compared to the $787-billion “stimulus” package, it was a bargain. If Congress would give the car industry just 10 percent of that stimulus and put the 90 percent back into the U.S. Treasury, car dealers would get this economy rocking again, employing thousands of southern plant workers, supplier companies, truck drivers, salespeople, radio/newspaper/television/advertising personnel plus many more as the tentacles of the automobile business reach into virtually every crack and crevice of the economy — all the while giving state and local governments a nice shot in the arm also from increased sales tax collections. 

 

Doug Wilson, a 30-year veteran of the automobile business, is the CEO of Wilson Auto Group and is a lifetime resident of Jackson.

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