Friday, November 13, 2009

Cash For Clunkers

Remember the infamous $4,500 car credits provided to car buyers, that traded in their less-fuel efficient cars, by the United States government this year?


Results: A total of 690,000 cars were sold under the program but only 125,000 of those were vehicles that would not have been sold anyway.




In layman terms, even without the cash-for-clunkers, 82% of the cars sold will still be able to sell.


Okay, point noted but what is the appalling point here? Evidently, the point is that the dismal policy has wasted a total of


$4,500 multiplied by (690000-125000) which comes up to a gargantuan sum of $2.54 billion.


Hasn't it ever come across their mind that they should have stopped this program long ago? Now that it has bled $2.54 billion, the damage is already irreversible.


But the worst part is, they are still not the least conscious of their unconscionable mistake. Instead of stopping the program immediately, they were even ruminating about the continuation of the program since it is so well-received and that many cars are sold.


A while back on the 30 October 2009, the whitehouse released a blog post saying that Edmunds.com is deframing them and that the calculation of the number of cars that would have been sold even without the help of the program is inaccurate based on implausible assumptions, basically a mere postulation.


From my point of view, the government is simply saying that people are buying the cars because they are drawn in by the hyped-up program and that they went on ahead to purchase cars even when they realised that they did not qualify for the rebate. Honestly speaking, how can you attribute that to the rising sales of cars? That is pure bullocks I will say.


Let's say you are buying the car because of the cash-for-clunker program, and that you realise that you do not qualify for it, naturally you will go back home. Conversely, if I have decided to go ahead with the purchase even though I realise that I do not qualify for it, it is because I have already set my mind on purchasing a car regardless of any incentives I am offered. The program is mainly something that I might be able to exploit on but it is not a compulsory pre-requisite to my purchase, hence I do not really care if I qualify for it. The point is, I want to buy a car.


In this case, the government is trying to take credit for that conscious purchase of the consumers to reduce the damage and criticisms casted upon the White House. They are obviously trying to navigate their way out of this shit by taking credits for the rising sales.


They have made a mistake, so they should simply hold their hands up and apologise rather than making claims which is so baseless.


The aim of the program was to kick-start the sales and to boost the production and manufacturing of cars. However, they seem to have grown to be overly-reliant on it to boost sales now and that they are getting addicted to this sticky problem.


For now, I surmise that the industry is more than stable enough to move on independently already. By providing more help at this stage is synonymous to breeding an insidious virus within the industry per se. Till then, it will have to take a tour de force to get the industry out of its spiraling problems.

Credits -cnn, -maniacworld

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