While the Cash for Clunkers Gas for Guzzlers Program proved to improve the economy over its short lifespan I fear the aftermath will be felt much longer. Overall, rebate applications worth $2.877 billion were submitted by the Tuesday deadline. This covered 690,114 applications.

The top 10 most purchased list includes:

1. Toyota Corolla  2. Honda Civic  3. Ford Focus FWD  4. Hyundai Elantra

6. Nissan Versa  7. Toyota Prius  8. Honda Accord  9. Honda Fit  10. Ford Escape FWD

My Fear? What's left to sell??? We already know the standards for credit approval to purchase these days are far tighter than in recent years. Car buyers who could once purchase a vehicle with less than stellar credit find it challenging to get approved at all and if they do succeed in acquiring a car loan the interest rate is ridiculous! How many of the Cash for Clunkers participants had less than A credit? If the majority of the car buyers taking advantage of the program had high "B" to "A" credit and purchased new vehicles how did the program help those with less than perfect credit?

If the vehicles traded in were demolished where then will the pre-owned inventory come from for those sub-prime credit buyers? I know many people who have low beacon scores yet perfect credit, who cannot qualify, or simply do not have the monthly income to support new car purchases and yet the pre-owned inventory available for them to choose from is now limited at best.

And what about the "Independent Dealer"? Did the government forget to include them in this big economy boost? Not only were they unable to participate in the program they are now left without pre-owned inventory to purchase for their lots because the Cash for Clunkers trade-ins were required to be destroyed! Don't misunderstand my point of view here. I do understand that we need to help the environment and purchase more economical vehicles. I even understand the need to boost the economy but at who's expense? The cost of the small dealer? The Independents? The credit challenged car buyer? The single Mother? The Self Supporting College Student?

I voted for Obama myself and certainly do not hold him solely responsible for the fallout that will surely follow this program. I understand he has advisers and votes are required before implementing any program. What I don't understand is why they did not think this program all the way through and why they didn't consider how it would affect all auto dealers and car buyers, large. Why didn't they didn't consider the market after the program ended.

The way I see it they succeeded in getting people jobs, now instead of right before the holidays when business in the auto industry typically picks up on its own. So what does that mean? That means that when business would typically pick up it will lag, simply due to the fact that hundreds of thousands of consumers have already made their purchases a few months earlier...but again...at what cost? Now those that would have typically purchased pre-owned during the holiday season or at the yearend have purchased new. Where does that leave the used car industry? Those less fortunate car buyers that would have purchased pre-owned now are left without cars to buy... I don't know...

My Advice? 1. Hire experts in the auto industry within the auto industry, not just researchers, but people that work in the auto industry. They have a different perspective of how the program will affect their industry. 2. Think the program completely through, beyond the actual time of its run. Consider how it will affect all involved, not just the franchise dealers.... heck the franchise dealers are going to be kicking themselves later when they are paying astronomically high prices for pre-owned (used) vehicle inventory due to "supply and demand". Consider the little guy. Will everyone be able to participate, or is the program just for those who can afford a new car payment and have excellent credit?

Oh.. and let's not forget about companies like mine... http://www.autotechnologiesinc.com/ - Auto Dealer Marketing Companies. Sure Cash for Clunkers needed to be advertised so some direct mail companies welcomed the promotion but not me. No, I'd have had the mail business whether they launched Cash for Clunkers or not. The dealers would have simply been taking advantage of successful creative programs my team and I developed for them. We'd have still had the marketing jobs. Now however, with dealers waiting on funding for "CARS" applications, their budgets are limited, at best. Not only that, their inventory is limited. They say "We have nothing to sell". That's right. Vehicles were destroyed so trades they would have otherwise resold on their lots or sold to "Wholesalers" who would have then made money (their living) by "re-selling" the vehicles to Independent Dealers are now left holding the bag.

That said my clients are holding off on pre-scheduled mail until they evaluate the aftermath of Cash for Clunkers. Independent Dealers without inventory aren't buying either, because they have little or nothing to sell. So, the snowball effect continues...it doesn't stop with me, it affects my employees and their children. It affects the vendors who supply the promotional items for my innovative events. It affects the printer who would be printing my mail each month, and the drivers who would be delivering the mail and it did I mention the companies who apply the descriptive window labels to the pre-owned vehicles, and upload them to the internet for our prospective buyers to see? They aren't just a huge conglomerate left unscathed from Cash for Clunkers. They have employees just like you and me and the list goes on. So again I ask you, did this program genuinely help our economy, and if so at what and whose expense?

Stumped,

Roberta Long
President/CEO
Auto Technologies Inc.
Kansas City
{866) 673-5476 Toll-Free
(530) 236-7774 Fax
rlong@autotechnologiesinc.com
 

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