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Cash For Clunkers Hangover Is Here: Edmunds Predicts September SAAR Of 8.8 Million, 28 Year Low
Newton's third law of motion: F1 = -F2
Obama's first and only law of economics: Stimulus Today = 2x Hangover Tomorrow
In 10 days auto companies will announce their September auto sales. If auto specialist Edmunds.com is right, expect to see an unprecedented decline in the September SAAR number: from 13.7 million in August to a 28 year low of 8.8 million!
September’s light-vehicle sales rate will
fall to 8.8 million units, consumer auto site Edmunds.com said. That
would be the lowest rate in nearly 28 years, tying the worst demand on
record.
After the cash-for-clunkers program boosted
August sales to their first year-over-year increase since October 2007,
demand has plunged. In at least the last 33 years, the U.S. seasonally
adjusted annual rate has only dropped as low as 8.8 million units once
-- in December 1981 -- with records stretching back to January 1976.
Demand increased to 8.9 million in the first five days of September,
with 3.6 percent of sales from cash for clunkers. The rate slipped to
8.7 million from Sept. 6 to Sept. 12, Edmunds.com said, with 3.3
percent of deals leftover from cash for clunkers.
The slide in
demand also has lowered the average dealer profit per vehicle, the
consumer auto site said. The average was $981 the week leading up to
the July 24 launch of cash for clunkers, and that steadily increased to
$1,494 the last week of the program. As of last week, average dealer
profit had slipped to $1,303 per vehicle.
“Many people regard February as the darkest month of the recession, but
even then the SAAR was higher, at 9.1 million units,” Edmunds.com
senior statistician Zhenwei Zhou said in a statement.
And the simple observation that anyone in Obama's crack team who had ever read Econ 101 would have figured out:
Now that consumers can’t receive $3,500 to $4,500 for trading in gas
guzzlers for new vehicles with better fuel efficiency, they aren’t
rushing to purchase vehicles.
The silver lining: thousands of Americans took out new lines of credit and other loans that will add to the increasing monthly bill, while their wages (if they are lucky to be employed) decline in real (and nominal) terms, or have less and less emergency unemployment benefits left. Thus money which could have been spent more efficiently to pay down consumer debt, ended up propping bank balance sheets, with the blessing of the President, whose primary agenda purposes are to i) recreate the credit/housing bubble and ii) to transfer any and all residual middle class wealth into the coffers of Wall Street, not necessarily in that order.
And here is Obama's economic brilliance in all its estimated splendor:
h/t John
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Reminds me of "The Never Ending Story".
Cash for clunkers has led to the demand for nothing. We better be careful or the nothing will consumer everything.
I love that movie, the dragon looks just like my beloved great pyr, Tiny, who is now in dragon heaven. Long Live Great Pyrenees, fearless gentle giants.
Anyone else catch the irony of GM's new ad slogan? :
"GM, an American Revolution"
No irony there... have you seen Detroit?
my favorite is when he said "put our money where our mouth is"...
Who let that slip through, since it is really MY MONEY....
He should of said "we are so confident we put YOUR money where our mouth is"
HA!!!!
"Consumers" will now stay away in anticipation of "C4C The Sequel"
Obama's economic advisory team not only failed Econ 101 but also Psychology 101.
Right on point. C4C only pulled demand forward AND created the expectation of another round later on. This is the problem with incentives, once you go down that road you never come back, and the benefits of the incentive only last while they are doled out. And if you want to continue that level of sales you have to keep up the incentive or devise a new one. It was a bad idea that will probably play out as Edmunds has forecast.
Idiots making idiotic decisions....we got a special on those today.....and everyday, two for one. (Qualification to special offer, Larry Summers counts as two)
And god knows how many bagholders aren't selling their homes because they're hoping for a bailout there too (or debt forgiveness).
The market is dead. Long live the market.
The real purpose of C4C was to keep the rally (in the markets, in public opinion, in economic numbers, whatever) going for a few more months.
Extend and pretend. Then repeat.
And all those clunkers that were forced to be destroyed
could have been given or sold to people who need a car.
Obama is all about redistribution of wealth. This is just
another example.
Was any "proof" ever offered that the clunkers were actually destroyed? If they were destroyed, I wonder who got the platinum/palladium from the catalytic converters?
Many weren't destroyed - they only had their engine destroyed. You now can find the intact chassis at auto auctions or junk yards. All it takes to put them back on the road is a rebuilt engine+tranny. So pick up the chassis for under a grand and get a rebuilt engine for say $500-700 and you're on the road again.
For example check out IAAI - they are big auto salvagers who are now auctioning "Cash for Clunkers" vehicles minus the enginers:
Here's a link(hint look for the white box where the picture of the car shound be):
https://www.iaai.com/Auctions/BranchListingView.aspx?branchCode=111
The government required that the engines on all C4C be destroyed, in order to prevent "fraud". This was done by draining the oil and replacing with a damaging solution and then revving the engines until they died. You can check out videos of this being done on Youtube.
It is sick when we'd rather destroy an engine than provide someone who can only afford cheap used cars with a vehicle to use. Less used cars = less used car supply = more expensive used cars. Once again, government favors auto manufacturers and banks over everyday Americans.
And everyone should know that Japan did and is doing the same thing. After a certain amount of time, the Grubvernment required one to "trade in" their "clunker" for something new...
Japan has good employment but when was the last time anyone heard the line "Growth in Japan." Welcome to Amerika.
as per Ken Fisher's "we need more debt" mantra
this is bullish right?
And as Fed-man Bernanke said he would do in a 2003 speech he wrote, he would "drop money from a helicopter" to fight deflation. We're living through the helicopter drops, thank goodness fuel prices have gone down (as compared to last year) and it's less costly to fund the helicopters in flight. :-/
Bullish, I would think, in the short term but it does little to address the real problems we are facing.
I want a CASH FOR CONDOMS and CASH FOR COFFINS plan to be approved by senate
LOL. You made my night. Thanx
Wasn't there a Cash for Wankers program
The Obama administration following advice from Goldman Sachs, has decided to pass a second stimulus package to target the "Sin" industry to prevent job losses in that sector. Titled "CASH FOR WANKERS", this package will give rebates for anyone buying American Made Porn DVDs or magazines.
http://ispeakofpeak.blogspot.com/2009/08/abby-joseph-cohen-sees-s-and-p-...
no cash for condoms.... we need more new taxpayers born so we can retire sometime.....
Sooner or later;
CASH.
That's it. Just cash.
Cash for dollars
Whadaya say now Mr Krudrow?
How about a little Cramer pep-talk every morning this week to keep the cheerleaders "on message" while the market tanks.
Avis still rocketing up....
Dollar/Thrifty now up 2500% off the lows.
A once in a lifetime gain...
Watch AutoNation gap up once the horrid Sept. numbers are out...
WTF??? is up with that??? Businesses making workers drive instead of fly??
I propose Cash for Commies. Anyone who wants continued socialization of industries gets paid to move to socialist countries for their awesome health care.
Make my reservation for New Zealand... (snark)
Just wait for Novembers numbers. We have calculated about 4.8 - 5.1 million units. I'm almost positive that the real Nov-ie numbers will not be released until a April revision comes to light but there are a few different ways to get real data in December for Nov-ie sales.
It's a death spiral and our cockpit jockey has blacked out. I don't think many of these cockpit jockeys had kamikaze intentions but that is the way it's going to work out.
All the Big 3 rehires are going straight back to the unemployment lines. At least they will get benefits for about 2 years straight.
Obama's crack team....that was a pun right?
"Obama's crack team" must be the team that ensures they have enough drugs to come up with these great new programs.
and next on tap will be the soon to end 8000 dollar first time home buyer credit. Expect a last minute rush to get houses and then a massive failure from Oct09-June10.
no no no....these programs are permanent....they
are not going away....
in fact, senator issakson, the paris hilton of
the senate, has introduced legislation
extending and expanding the real estate
program to include folks of any income level
and increases the payout i believe and of course
increases program duration....this
effort is to aid his real estate business
which must be floundering in well heeled
atlanta and north suburbs...either
that or he is simply contemptuous of the system
and wants his cut....probably a bit of both....
all of these so-called expirations are pr
gimmicks....they will go away for a short time
until an emergency is declared at which point
they are trotted out for a replay....
Clunkers were supposed to be destroyed by draining oil and filling with silicate mix. Run engine till dead. I don't know who exactly audited this.
I thought it would be more recycling efficient to take the good condition clunkers and put smaller engines in them for better mpg and then selling them to lower incomes.
Otherwise, I bet the local scrapper bought the cars from the dealers. Even scrap steel is 3-5 cents per pound
Someone has to know how the cars were disposed of and by whom. Or did they become part of the hodge-podge Mexican police fleets? My inner cynic wants to know!!!!!
Where I live the C4C cars are presently being auctioned off by a local auto auction. If the dealer sold them for more than the $50 the difference had to be credited back to the consumer and a bunch of paperwork had to be filled out. To avoid that they struck a deal with a local auto auction to pay $50 for the cars and handle the disposal so the dealer avoided the extra paperwork. I believe they've already begun the auction process, but how they're going to track the vehicles, which need to be destroyed within 6 months (or is it 60 days) is an outstanding issue.
And this is held up as the shining example of a govt program that "worked".
Fedgod offered up free money and the hoi polloi lined up at the trough to slurp it up until it was all gone.
For a group that couldn't stay in business selling booze and hookers in Nevada, this is a major accomplishment.
Beam me up Scotty, there's no intelligent life here.... ;)
+1
I'm holding out for cash for beauticians because makeup sex is the best.
Made enough of a bump in industrial production that all the calls for the end of the recessions don't ring quite so hollow.
Pathetic, really.
I love the smell of intertemporal misallocation in the morning.
"better than expected"
http://www.nytimes.com/2009/09/21/opinion/21krugman.html?_r=1
"I was startled last week when Mr. Obama, in an interview with Bloomberg News, questioned the case for limiting financial-sector pay: “Why is it,” he asked, “that we’re going to cap executive compensation for Wall Street bankers but not Silicon Valley entrepreneurs or N.F.L. football players?”
That’s an astonishing remark — and not just because the National Football League does, in fact, have pay caps. Tech firms don’t crash the whole world’s operating system when they go bankrupt; quarterbacks who make too many risky passes don’t have to be rescued with hundred-billion-dollar bailouts. Banking is a special case — and the president is surely smart enough to know that."
nope, he is an idiotus.
That's a scary remark because it almost sounds like others are next. Those who produce nothing for wealth shouldn't be able to control wealth.
Clunkers had to be one of the stupidest manipulations of the market in the history of mankind. It encouraged additional spending when we are already broke, destroyed cars that are better than millions already on the road here (and in Mexico), and took entry level cars out of the market so young job seekers cannot afford a car to get to work. Priceless!
If you think clunkers was just a one month flash in the pan wait until the $8k credit for first time home buyers goes away at the end of November. Home sales, like car sales, will collapse when the subsidy to purchase ends.
That probably means that the housing subsidy will be extended or expanded. It doesn't matter. It will end someday and when it does the re-collapse of housing will begin.
Without subsidies for consumption there will be little consumption. The longer the subsidies are in place the greater the collapse will be when they end.
Cash for any car coming soon.
Gee, so pulling-forward demand works (if at all) precisely once. Who knew? < /Obambi >
The circle jerk won't end until somebody cuts the head off one of the participants publicly and everybody else in the circle gets afraid.
In memory of the venerable Tanta "Hoocoodanode?"
MSM reports... "Better than expected..."
how about these stats. i think the 8.8 million only in 1981 is nonsense.
I think the graph's x-axis is messed up - the "actuals" are shifted by a year. Shouldn't they go through August 2009, instead of August 2008?
good catch and you are right.
Uhh, and the 2 months average 11M or so a month which is where we were before the CfC program in the first place another brilliant program - handouts to a few, on the backs of the rest (and their grandchildren) all to get back to square 1.
By the way, just a thought, How are the working poor going to get to work without the cheap clunkers available for them to purchase. DUH?
As I undrestand, the stated purpose was to remove cars from the road that were "gas guzzlers". Here is something I received in an email:
A vehicle at 15 mpg and 12,000 miles per year uses 800 gallons a year of gasoline. A vehicle at 25 mpg and 12,000 miles per year uses 480 gallons a year.
So, getting rid of each average clunker will reduce US gasoline consumption by 320 gallons per year.
They claim 700,000 vehicles – so that's 224 million gallons / year
That equates to a bit over 5 million barrels of oil.
5 million barrels of oil is about of one day's US consumption.
And, 5 million barrels of oil costs about $350 million dollars at $75/bbl.
So, we all contributed to spending $3 billion to save $350 million.
AND THESE CLOWNS WANT TO RUN OUR HEALTH CARE???
I love c4c, it removed about 700,000 obama bumper stickers from the roads...........
Something is wrong with that bar graph,which has September 2009 following August 2008. It looks as if more care needs to be taken with this data.
Government Sachs use the bailout money to make One Million $ a day on Wall Street. Money taken from the people that get sucked into the market after it is manipulated by millions of dollars worth of bailuot money.
Inflation will make every one`s savings worthless thanks to Bernanke and company.
Bernanke should rather print comics.
Alot of people didnt realize when they traded in their old car that the savings would be eaten up by higher insurance rates.Another brilliant idea-sheesh.At least we will get hit by uninsured motorists with air bags
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