‘Clunkers’ and whine

Dec 3, 2009

No whiners.

Back in May I wrote about what then was a U.S. House resolution to revive the Consumer Assistance to Recycle and Save (CARS) Act, later to have the acronym become Car Allowance Rebate System, but popularly known as “Cash for Clunkers.” I said how the program, which earlier in the year had been a success in Germany, could be successful in the United States. I saw it as a program that might spur car sales, thus adding an economic jolt to the worst automobile recession in decades.

Back then I could count on one hand how many groups agreed with me: the automakers, the autoworkers and the auto dealers. I don’t have enough fingers to count how many were opposed to it; let’s just say there were a lot of fingers raised against it.

The fact is the program worked: 690,000-plus new-vehicle transactions in about six weeks’ time. Ford, GM and Honda said they’d add work shifts to their assembly plants to replenish vehicles that dealers suddenly found themselves drained of.

Yet even with CARS’ success, the sour grapes eaters spat out their sour seeds. To wit: Glitches in the system stalled, locked up or crashed, and dealers weren’t paid within the 10 days outlined. OK, that’s true, though the dealers did love those sales. One Michigan House member called the CARS program “a disaster” when dealer applications came in so fast and furious that the original number of people hired to process them were overwhelmed. Yep, there was so much “this ain’t gonna work” shouted about, that even the feds staggered when CARS sales hit Mach 1; but they recovered. Another Michigan representative said the rebate program might have been “more successful if it were better managed.” More successful? These legislators knew that new cars were being sold, some perhaps made by now-laid-off Michigan autoworkers, but they couldn’t bring themselves to acknowledge the “clunkers” program worked without adding an insult. All this from well paid, well insured House members from a state with 15% unemployment, the highest in the nation.

Even Edmonds.com’s auto experts and Ph.D economists seemed to play with their stats to get them to counter those of the U.S. Department of Transportation. Edmunds, not exactly a pro-CARS cheerleader, was wrong in jumping to statistical conclusions before all the numbers were in; it later offered a veiled mea culpa.

Some critics even used the dealer-rebate hitches to compare CARS to the health care debate. Say what?

Then, too, were those who fell to absurd theories that federal auditors making the many, but random, checks for potential “clunkers” fraud by car dealers were singling out those of a particular political persuasion. After being taken in by Wall Street, the banks, the housing industry, the Ponzi schemers, etc., wouldn’t it be in our interest, since the rebates are our tax dollars, to look for fraud?

C’mon, folks, this was a first-time program that no one knew how well it might run. For a bunch of bureaucrats put in charge, they succeeded where many corporations fail.

What didn’t happen, and this is regrettable, was the trickle down of the CARS program to the restyling industry. It should have. Maybe it was because so few believed the program would actually stimulate vehicle sales that the industry didn’t prepare for it. Maybe it was because, even after the first set-aside billion dollars ran out in four days and the second batch of $2 billion was gone in weeks, neither restylers nor car dealers could muster quickly enough to get aftermarket products offered, let alone sold and installed, on a healthy percentage of those near-700,000 sold vehicles.

It should be a post-“clunkers” opportunity for auto dealers to capture the momentum, do their own creative marketing and bring people into their showrooms. Restylers then could take advantage and get some of their best-selling packages together as people begin to return to the showrooms.

Then our industry would be prepared – and just say no to those whiners.