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Industry News: Ford Executive Wants A Sequel To "Cash for Clunkers"

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The COVID-19 pandemic has basically brought most of the world to halt. Orders to stay at home, businesses either having workers to their work from home or closing down, and unemployment skyrocketing is causing the economy to crater. There are efforts to try and jump-start the economy such as $1,200 stimulus checks. But an executive at Ford wants to see a return of a "cash for clunkers" like program.

“We think some level of stimulus somewhere on the other side of this would help not only the auto industry and our dealers, which are a huge part of our overall economy, but will help the customers as well,” said Mark LaNeve, Ford’s vice president of U.S. marketing, sales and service to Bloomberg.

“Cash for clunkers was very effective at that time. It would be nice to think we could have something equally as effective for 2020 when we get out of this because it was a great program.”

According to LaNeve, internal discussions are taking place at Ford about doing a similar program and there are plans to bring the Government in to these talks.

When asked by Automotive News about this, Ford spokeswoman Rachel McCleery said, "The auto industry is America’s economic engine.We are encouraging Congress to look at a variety of ways to drive job creation, increase demand, support customers and provide long-term stability for the entire auto ecosystem."

A brief refresher on the Cash for Clunkers program. In 2009, the U.S. Government introduced a billion initiative called the Car Allowance Rebate System, which gave a voucher worth between $2,900 and $4,500 to anyone replacing a vehicle newer than 1984. Their old vehicle would be taken away and disposed of. The program was nicknamed Cash for Clunkers.

On the surface, the program was a success. Within first month, all of the funds were exhausted. This prompted the U.S. congress infuse an addition two billion into the program, which would be all gone within 17 days. But begin to look deeper and the results are mixed. In 2012, a study published in the Quarterly Journal of Economics described the program as being a bit of a wash,

"...the effect of the program on auto purchases is almost completely reversed by as early as March 2010 — only seven months after the program ended.”

Other studies have come to the same conclusion.

There's also the question of how many perfectly good used cars were taken off the road due to the program.

Source: Bloomberg via Automotive News (Subscription Required), The Drive, The Truth About Cars


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It will fail.

The big difference? There will be way, way more people out of work. At this stage, folks aren’t even sure that the world will end. Back during the Great Recession, you knew at least some point things would get better. And it did. But we’ve never seen damage done this bad. So even if the deals are good, people may still not jump on this....

Second- Automakers will adjust to demand this time around. They even have other things that they can build. For the first time- some profit (maybe) will not be from the cars. I would be surprised I’d sales of cars even touch 10 million this year. This all depends when people can get out again......

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Posted (edited)
58 minutes ago, daves87rs said:

But we’ve never seen damage done this bad

Yes we have. We've seen worse. A whole lot worse.  And there are people still alive and still remember those bad bad times...

We are a weak society as compared to prior generations...

The bombs were not dropped and exploded on North American turf, but the effects of the war on the economy side of things affected North Americans.

RATIONS

And Im not even talking about Europe and how Europe was devastated by bombs and lack of food and disease on the streets along with dead bodies from war and internal in fighting and sabotaging and back stabbing and soldiers murdering innocent civilians and the list goes on and on and on.  Not to mention self isolation when the bombs hit and Europeans prayed it was not their house exploding

Im talking about America.

The war effort in America had a severe economic impact.  Detroit produced war machines. Not cars for about 3 years. It wasnt the boys who made them. It was the girls. The boys were off to war.  The girls, the married ones, prayed that they didnt get a certain letter from Uncle Sam.....  Many boys came back home in body bags...

The only thing is, there was no self isolation in America during WW2 as there was in Japan, Europe and in today's situation. But there was no internet and no TV either back then...no video games.  Some places in America barely had electricity and lights...even in 1942...

Not everybody had a job prior to 1939  either(start of WW2 for everybody else other than the US) so buying consumer products was not a thing...like we do today....even in a Covid19 lockdown.  We could still go to Wallmart and buy a Playstation 4, or workout equipment  because our favorite gym is closed...  We could still order take-out.  That kind of consumerism was not even dreamt of back in 1939...    Hell...even after the war in 1945...that concept wasnt even conceived.   Drive thrus though in the 1950s? maybe?

We also have credit today...unless of course those of us who over consume and are maxed out from buying too many Starbucks coffees and useless contraptions...   But even then... the US household does have on average 3-4 TVs and at least 2 computers and 2 smart phones at their disposal during this crisis with unlimited internet...

We also have 2-3 cars in our Average Joe homes...  

Jobs?

Yeah...those will be coming back after all this.  

Businesses will re-open. Those that went away...will spawn new businesses.

After all...American consumerism is a way of life.  That wont go away...

And to those that will have a hard time getting back on their feet BECAUSE of overspending in the past...

HOPEFULLY THIS will RESET THEIR mindset and we could get back to a much more simpler time and material objects are not coveted as much as we coveted them prior to this pandemic.

Stay safe. Lets be careful on how we interact with our immediate environment and hopefully their is a solution around the corner soon. But we have faced much much tougher economic times than this.  

Human Mortality is always grim,  so I wont downplay anything regarding that. THAT would be inhumane. 

IN OTHER WORDS:

We also have 2-3 cars in our Average Joe homes...  

CASH FOR CLUNKERS IS NOT ALL THAT IMPORTANT RIGHT ABOUT NOW...

To get the industry rolling again?

In another thread...I was a major contributor in arguing for and against what constitutes a luxury vehicle...

Well...all that is NOT IMPORTANT...

ALL auto manufactures may now need to  go back into time and re-introduce back to basics automobiles... 

Honda CVCCs,  BMW ISETTAs,  Ford Model Ts...

Forget about Longhorn Laramies and AMG E Classes for the moment after this crisis is done with...and then maybe cash for clunkers could work out...

50 000 dollar pickup trucks with all the frills, bells and whistles is totally not what is important and needed.

All the ApplePlay connectivity to tell us where to spend our money is not what is important and needed.

The 20 inch rims and Brembo crossdrilled ceramic brakes are not what is important and needed...

For our transportational needs going forward after this Coronavirus COVID19 thing gets resolved....

 

 

 

  

 

Edited by oldshurst442

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That Ford executive wants Cash for Clunkers because he sees an opportunity for Ford to get more money from the government.  That is the real issue.  I do not believe that we need a Cash for Clunkers program this time.

As for back to basics automobiles, maybe that will happen but I doubt it.  Not only are current new vehicles too expensive, but used vehicles can be bought at semi-reasonable prices.  Unless the fight is over a brand new $10K Chevy Trax, I suspect that automakers will make do with a market that only sells 8-12 million new cars a year for the next several years.

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Posted (edited)

No, this is a stupid idea.  Really ashamed that someone from Ford would suggest this.

How about concentrating on how many more new 2020 Escapes you can sell instead of 70,000 dollar Aviators now?

Likewise, GM, maybe something like the Cruze is a valuable entry in the car lineup now?

Watch GM spin this into needing all sorts more money to dump into autonomous and electric black hole now.  I would be for the development budgets of electric being increased if the charging grid were part of that investment but I haven't seen jack squat of that to date.  And in the meantime, how about instead of cash for clunkers, get more hybrid powertrains into volume lines.  Like an Equinox hybrid.  Give credit for continuing hybrids in some of its product lines.  

Edited by regfootball
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Bad idea, waste of taxpayer money that can go to more important things.

Also if did it, they would require the new car to be an EV (which are mostly too expensive, especially for people that have economic hardship) or it would have to be on a car that gets 30 or 35 mpg combined or something fuel efficient and Ford quit making their cars and has nothing fuel efficient, outside of an Escape Hybrid.

We don't need more corporate welfare, auto companies were making billions in profits a couple years ago, I didn't see them giving it all away to charity or to the government to pay extra taxes. 

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7 hours ago, oldshurst442 said:

Yes we have. We've seen worse. A whole lot worse.  And there are people still alive and still remember those bad bad times...

We are a weak society as compared to prior generations...

The bombs were not dropped and exploded on North American turf, but the effects of the war on the economy side of things affected North Americans.

RATIONS

And Im not even talking about Europe and how Europe was devastated by bombs and lack of food and disease on the streets along with dead bodies from war and internal in fighting and sabotaging and back stabbing and soldiers murdering innocent civilians and the list goes on and on and on.  Not to mention self isolation when the bombs hit and Europeans prayed it was not their house exploding

Im talking about America.

The war effort in America had a severe economic impact.  Detroit produced war machines. Not cars for about 3 years. It wasnt the boys who made them. It was the girls. The boys were off to war.  The girls, the married ones, prayed that they didnt get a certain letter from Uncle Sam.....  Many boys came back home in body bags...

The only thing is, there was no self isolation in America during WW2 as there was in Japan, Europe and in today's situation. But there was no internet and no TV either back then...no video games.  Some places in America barely had electricity and lights...even in 1942...

Not everybody had a job prior to 1939  either(start of WW2 for everybody else other than the US) so buying consumer products was not a thing...like we do today....even in a Covid19 lockdown.  We could still go to Wallmart and buy a Playstation 4, or workout equipment  because our favorite gym is closed...  We could still order take-out.  That kind of consumerism was not even dreamt of back in 1939...    Hell...even after the war in 1945...that concept wasnt even conceived.   Drive thrus though in the 1950s? maybe?

We also have credit today...unless of course those of us who over consume and are maxed out from buying too many Starbucks coffees and useless contraptions...   But even then... the US household does have on average 3-4 TVs and at least 2 computers and 2 smart phones at their disposal during this crisis with unlimited internet...

We also have 2-3 cars in our Average Joe homes...  

Jobs?

Yeah...those will be coming back after all this.  

Businesses will re-open. Those that went away...will spawn new businesses.

After all...American consumerism is a way of life.  That wont go away...

And to those that will have a hard time getting back on their feet BECAUSE of overspending in the past...

HOPEFULLY THIS will RESET THEIR mindset and we could get back to a much more simpler time and material objects are not coveted as much as we coveted them prior to this pandemic.

Stay safe. Lets be careful on how we interact with our immediate environment and hopefully their is a solution around the corner soon. But we have faced much much tougher economic times than this.  

Human Mortality is always grim,  so I wont downplay anything regarding that. THAT would be inhumane. 

IN OTHER WORDS:

We also have 2-3 cars in our Average Joe homes...  

CASH FOR CLUNKERS IS NOT ALL THAT IMPORTANT RIGHT ABOUT NOW...

To get the industry rolling again?

In another thread...I was a major contributor in arguing for and against what constitutes a luxury vehicle...

Well...all that is NOT IMPORTANT...

ALL auto manufactures may now need to  go back into time and re-introduce back to basics automobiles... 

Honda CVCCs,  BMW ISETTAs,  Ford Model Ts...

Forget about Longhorn Laramies and AMG E Classes for the moment after this crisis is done with...and then maybe cash for clunkers could work out...

50 000 dollar pickup trucks with all the frills, bells and whistles is totally not what is important and needed.

All the ApplePlay connectivity to tell us where to spend our money is not what is important and needed.

The 20 inch rims and Brembo crossdrilled ceramic brakes are not what is important and needed...

For our transportational needs going forward after this Coronavirus COVID19 thing gets resolved....

 

 

 

  

 

Much of that depends. ( I am a history buff 🙂 )

If this drags out too long, it might make the Great Depression look good. Much of this remains to be seen. I do agree with much you have said. I think from the ashes good will come- how quick will depend on the damage.....

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41 minutes ago, daves87rs said:

If this drags out too long, it might make the Great Depression look good.

I believe unemployment reached 25%. but I'll bet the real number was higher (pride).
Some of these steam tractors were 6 or 7 grand in 1930 :

Screen Shot 2020-04-05 at 1.41.22 PM.png

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1 hour ago, balthazar said:

I believe unemployment reached 25%. but I'll bet the real number was higher (pride).
Some of these steam tractors were 6 or 7 grand in 1930 :

Screen Shot 2020-04-05 at 1.41.22 PM.png

I agree....

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5 hours ago, balthazar said:

China's car sales in Feb were down 79% vs a year ago.

Wow.  Down 79% in one month?  I suspect that will probably happen here soon, if it hasn't already.

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This blurb is from insideevs.com RE sales reporting. GM got criticized for going to quarterly yet once again, look at how many other OEMs then began 'getting shifty' with reporting

IMG_1497.PNG

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12 hours ago, balthazar said:

China's car sales in Feb were down 79% vs a year ago.

well, there goes Buick then!

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37 minutes ago, regfootball said:

well, there goes Buick then!

Buick outsold Tesla in China 21:1 in 2019.

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14 hours ago, balthazar said:

Buick outsold Tesla in China 21:1 in 2019.

Tesla does not matter in China.  I am not sure if China matters to Elon Musk.

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1 hour ago, balthazar said:

^ He's supposed to build a FACTORY there. I think it matters.

Thanks,  apparently China does matter to Elon Musk.  The question is whether Tesla SALES will actually rise anytime soon.

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With the price of gas cheap and the price of Teslas high, it may take a few years to get back on track of 2019 levels.
Much like the Model X hasn't assumed it's sales leadership over the Model S, I wonder if the Model Y will also falter hard against the Model 3 and NOT provide the volume boost Musk is hoping for.

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6 hours ago, riviera74 said:

Tesla does not matter in China.  I am not sure if China matters to Elon Musk.

China Matters to Tesla, major investor and they have already expanded to cover auto production with expansion to now also cover power train and now we have the latest news that Tesla is expanding again to cover in house parts production to reduce turn around time.

https://www.reuters.com/article/us-tesla-china-idUSKBN20X0HN

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Absolutely horrible idea. Not surprised coming from Ford who needs gov't bailout money, but want to cover up the facts again. 

We lost 10's of thousands of classic cars in this country last time (some still in decent shape) from greedy, clueless people dumping them off for a new model and they had to be destroyed as part of the failed C4C gov't program. It was a total disaster last time and it would be just as bad if not worse this time.

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Posted (edited)
11 hours ago, USA-1 said:

Absolutely horrible idea. Not surprised coming from Ford who needs gov't bailout money, but want to cover up the facts again. 

We lost 10's of thousands of classic cars in this country last time (some still in decent shape) from greedy, clueless people dumping them off for a new model and they had to be destroyed as part of the failed C4C gov't program.  

Most were just high mileage 90s-00s FWD generics and trucks and SUVs, though..I remember in Phoenix at the time a lot of dealers were taking in worn out Explorers, Expeditions, minivans, etc..

Edited by Robert Hall

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2 hours ago, Robert Hall said:

Most were just high mileage 90s-00s FWD generics and trucks and SUVs, though..I remember in Phoenix at the time a lot of dealers were taking in worn out Explorers, Expeditions, minivans, etc..

For sure, but many classics went that Grandparents gave to or were inherited by grand kids who had no clue what the cars were. I have buddies who deal with cars who were shocked.

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2 hours ago, USA-1 said:

For sure, but many classics went that Grandparents gave to or were inherited by grand kids who had no clue what the cars were. I have buddies who deal with cars who were shocked.

Mistakes are always made, especially when the recipient does not know a thing about the car in question.  C4C was probably not a good idea, especially given that the financial system was the source and cause of the last recession.  Shuttering bad banks would have corrected more issues with less harm to the larger economy.

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Only thing of remote interest I saw at my dealer was a circa ‘80 Riviera. The rest was a couple decent trucks and modern junk.

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